The financial services industry needs to focus more on creating innovative solutions that can make mobile wallets more secure, rather than imposing additional constraints and instilling fear into customers for problems that don’t exist.
Every time the topic of mobile wallets comes up, an inevitable conversation always occurs regarding the security of the wallet and the risk of phone theft. What happens when you lose your phone? Doesn’t this put the customer at risk? Won’t we see an increase in fraud?
Now answer this question: How secure is your current wallet? What would happen and what would you do if you lost your wallet? Odds are that you don’t have a password to open your wallet, but I would bet that you do on your phone.
The fact is that placing payment on a device SIM or in the cloud, protected by passwords and encryption technology, is more secure then walking around with your wallet in your back pocket or in a purse.
We went through similar concerns of hysteria when credit cards with the Europay, MasterCard and Visa (EMV) chip were rolled out in Canada and Europe. I remember watching “journalists” create an atmosphere of fear that criminals could walk down the street with devices capable of stealing from unsuspecting people as they go about their day. This concern has never become a reality.
I am not arguing that we should not be concerned about the security implications of putting payment information onto a mobile device. What I am arguing for is a better comparison between having payment information on a phone and a physical wallet. If your wallet is stolen today, there is nothing stopping a criminal from making purchases immediately until you or your bank request that the account be shut down. Why would this not be the same of a mobile wallet?
It would be great if the financial services industry could focus more on creating innovative solutions, rather than imposing additional constraints and instilling fear into customers for problems that don’t exist.
What steps do you think the industry should make mobile wallets more secure? Join the discussion.
By Michael Connor
About the author – Michael Connor is a Managing Principal at Capco, a global business and technology consultancy dedicated solely to the financial services industry.
Whitepapers
Related reading
Central banks best suited to issue digital currencies
By Aaran Fronda A recent report by the Official Monetary and Financial Institutions Forum (OMFIF) said that central banks rather than private ... read more
Instant payments: innovations inbound for corporates
In 2020, instant payments look set to continue their current trajectory to become the biggest trend in payments. While these schemes already offer numerous benefits to corporates, leveraging innovations such as APIs and request to pay will go some way to unlocking their full potential, argues Michael Knetsch
Obstacles exist for banks to meet ECB’s instant payments goal
The cost of joining instant payment platforms will be one of many hurdles banks and payment services providers must overcome to meet ... read more
Banks must be aware of “biases” in data used to train ML models
Financial institutions need to be conscious of biases in the historical data that is being used to train machine learning (ML) models, ... read more
