Thanks to the major tech companies such as Apple, Google, and Samsung, many consumers are now using mobile payments to buy products within apps and in-stores. More retailers are accepting digital payments now more than ever and this trend will continue to grow. According to a 2014 Forrester report, U.S. mobile payments towards local merchants and national brands will grow from $52 billion in 2014 to over $142 billion by the year 2019.
However, with the growth of this recent technology comes the worry of security breaches. Luckily, there are ways both consumers and merchants can protect themselves against mobile payment fraud.
Secure Wi-Fi networks
Around one in five users who surf the Internet do so on a public wireless connection. Whether they realize it or not, these users are putting their safety at risk, as cyber criminals commit the majority of crime on free public Wi-Fi connections by stealing users personal information and using it for fraudulent purposes.
Kevin Murray, vice president of product marketing at iPass, discussed why many consumers use Wi-Fion their phones. “The more likely dynamic is that 3G becomes overloaded and, because of that load, it slows down and customers start to look for alternatives. And the easiest alternative is Wi-Fi," said Murray.
One way merchants can prevent mobile payment fraud from happening in their stores is by establishing their Wi-Fi connection on a secure, discrete network. Integrating encryption within their Wi-Fi network lessens the risk of fraud from happening, since any data that criminals could possibly intercept would be encrypted and useless to hackers.
Ensure PCI Compliance
All merchants who accept mobile payments must comply with the guidelines and safety regulations in the Payment Card Industry Security Standards Council. These standards enforced within PCI are upheld to protect cardholder data and sensitive transaction information in addition to eliminating security exposure.
The PCI SSC guidelines have 3 main purposes that cover the main risks associated with mobile payment transactions:
- Prevent account data from interception while being transmitted from the mobile device.
- Prevent account data from being intercepted when entered into a mobile device.
- Prevent account data from compromise while being processed or stored within a mobile device.
If a merchant chooses to not comply with the PCI standards and suffers a data breach, they can face hefty fines. With this in mind, all merchants should make sure they are PCI compliant to protect the safety of their business and customers.
“Increasingly, retailers are realizing that simply meeting PCI [or Payment Card Industry] compliance standards is no longer sufficient to protect customer data,” said Ryan Grogman, vice president of Boston Retail Partners. “Hackers are becoming more sophisticated, requiring organizations to reanalyze and revamp their current security protocols to adequately protect their customers’ payment and personal data. Retailers who have not implemented these technologies are at high risk, as the likelihood of being targeted by hackers increases every day.”
Upgrade terminals for NFC
Upgrading to a terminal that accepts NFC payments is an excellent way for merchants to prevent instances of mobile fraud. Due to the close proximity required to process a transaction on an NFC terminal, it would be extremely difficult for a hacker to obtain a customers personal payment information. On a similar note, merchants who make the upfront investment and upgrade their payment terminals to support both NFC and EMV can rest assured their customer’s confidential payment information is protected more so than using a non-upgraded POS or terminal solution.
Mobile payment fraud is a prominent issue that is on the rise due in part to the increase of mobile devices being used for purchases. The good news is merchants can protect themselves and enhance their security measures with the latest forms of technology. With the incorporating of a secure Wi-Fi network, becoming PCI compliant, and upgrading to NFC-enabled terminals, merchants can develop their business into a secure and safe business to accept mobile payments.