Wednesday, January 5, 2011

Are You Ready For Cell Phone Commerce?

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Just in the past couple of years advancements in payment processing have brought consumers from swiping the card and then signing the credit slip or keying in a pin for a debit transaction, to chip and pin on both debit and credit cards and now tap and go technology now found on both MasterCard and Visa cards.  In the near term future technology that will even replace the plastic cards that consumers have loved (or hated) to make purchases with their own cell phones will emerge.

The idea of making purchases with a cell phone instead of cash has existed for several years.  In some asian countries vending machines with text messaging ordering and payment has existed for some time.  A customer sends a text message with the name of the product to be dispensed, the purchase price is then added to the customer's next cell phone bill or deducted from their pre-paid account.

Paying for purchases could move from vending machines to the point of sale terminals in retail stores within the next couple of years.  One such system backed by Google and potentially Apple known as Near Field Communication works exactly like PayPass enabled MasterCard or PayWave enabled Visa transactions, an RFID chip embedded in the phone would send it's information to the store's point of sale system.  This could require the purchaser to key in a PIN into their phone in order allow a transaction to proceed.  This could add a layer of security that current PayPass and PayWave systems being implemented by the credit card issuers don't have.

Another system being proposed is using a display screen on the point of sale terminal that shows a bar code that the customer takes a picture with their phone, an app on their phone would make the customer verify and authorize the purchase being made. 

Canada's largest by volume payment processor, Interac has not stated any intent or interest in mobile commerce, If retail establishments implement cell phone payment processing, it could leave those who do not have credit cards on the outside looking in, similar to online shopping is now. 

For every new technology, there are going to opportunities to exploit it to steal credit and debit card numbers along with PIN's assigned to cardholders.  It would not be impossible for criminals to park a van in front of a store set up a completely open WiFi access point.  Most smartphones have WiFi capability that automatically connects to open WiFi access points that would allow for sensitive data like credit card numbers and PIN's to be captured and allow potential identity theft.

For cell phone based payment systems to take hold and displace plastic cards security will have to be a major issue that needs to be addressed.  Even when it's proven that mobile commerce can be secure it will be a hard sell to both retailers and consumers. 

1 comment:

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