The mobile payments industry has seen rapid growth during the last few years due to increased mobile usage and the resultant mobile commerce. Today, more people prefer to buy products while they are on the move using their mobile device. A study by IBM showed that mobile shopping accounted for 16.3 percent of sales during last year’s Black Friday (News - Alert) shopping spree. This growth in mobile commerce has been due to the advancements made in mobile technology, especially mobile payments.
Despite this growing popularity, there are concerns about security and privacy that act as major roadblocks for rapid mobile commerce adoption. A new study of 25,000 customers conducted by Bain & Company revealed that customers spend almost twice more in other digital channels than their smartphones. The customers were spread across the US, UK, France, Spain, and Germany and in all these countries, the results were fairly consistent. This study goes to show that security concerns exist and companies have to work to improve the security of mobile payment systems.
To alleviate these security concerns, many companies have come up with different technologies. Out of these Near Field Communication (NFC) is emerging as the popular technology as it offers a higher degree of security when compared to other technologies, is backward compatible and uses the existing infrastructure for communication. However, this works only for in-store purchases as it uses a short-range radio signal to enable communications between the phone and the POS terminal. For remote payments, browser-based and app-based approaches are being developed. There are security problems that exist in both these payment types and this is where companies should focus on during the next few years. This is important to continue the momentum of growth in the mobile payments segment.
Edited by Cassandra Tucker
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