Are Mobile Payments Gambling With Consumer Identities?

by Joseph Walent 0

The industry-wide drive to realize the perceived ideal of unencumbered identification and transaction credentialing has gained critical mass in the marketplace. As stated in the article, much of the output form the Mobile World Congress last week in Barcelona was reported as having a focus on security verification.

You can understand the appeal of the proposition for consumers looking to take advantage of the convenience of mobile payments. Meanwhile, MasterCard aims to use this technology to reduce the number of false declines that cost it dear: in the past year, the value of false declines has hit $118bn (£85bn) per annum – more than 13 times the total amount lost annually to card fraud.

Payment networks and issuer banks will be rightfully seeking to achieve a more favorable balance between the flow of commerce and fraud prevention. The promise offered by biometric based identity verification seemingly offers a panacea to this conundrum, but is itself fraught with peril, as the article goes on to point out.

But there are bigger questions to be considered here. Whilst not ideal, passwords can be changed. Fingers and fingerprints can’t be. As an industry we need bullet proof methods of storing this data securely before we play Russian Roulette with people’s identities.

Mercator Advisory Group anticipates the drive to improving conversion rates will certainly necessitate enhanced data security associated with biometric information, and will eventually yield a hybrid solution that will draw on intrinsic and self-determined factors to verify identity. Individual choice in identity verification, coupled with increasing levels of stringency dependent on the value of the transaction will become commonplace. The value of the transaction will determine the level of biometric verification and the associated level of data security.

Overview by Joseph Walent, Senior Analyst, Emerging Technologies Advisory Service at Mercator Advisory Group

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