Mobile payment providers face legal risks including data reliability, authentication, fraud, theft, and privacy protection, according to experts at a Canadian conference Wednesday.
Lisa Abe, a partner with Fasken Martineau DuMoulin, said standards around mobile payments could be the key, as a standardized platform might help put consumers' fears to rest. Other advantages include a reduction in fraud and increased security. "Transactions can be speeded up, and more applications can be developed, which is good for the customer," said Abe, speaking at the Canadian Institute's Mobile Payments conference. "And it will increase competition, increasing the number of customer choices."
There are some disadvantages to such standardization, however. "Some vendors with existing readers probably don't want to have to replace them. You have to train people again, and there's the time investment," said Abe.
There would also be the relinquishing of proprietary systems that also required a lot of investment on the provider side, and the flourishing of other vendors on a standardized system would mean increased competition and thus lower profit margins.
The ongoing security and privacy concerns that loom in a lot of potential customers' minds is only fuelled by the recent outbreak of bad breach publicity, said Angela Power, a senior privacy consultant with Bell Canada. This perception infiltrates everything, she said: "Even if vendors are aware of this and building in the right security and privacy measures, if the public is not aware of this, perception will be as bad as a real breach."
Accountability, openness, and data minimization are key parts of the equation, and must be implemented right from the beginning from vendors, telcos, and hardware manufacturers.
And, to avoid such public perception snafus, Power suggested, the public must be engaged and educated about the actual levels of fraud. Said Power: "They also need to understand it in a Canadian context, as the Canadian perspective with respect to privacy issues is very different to that of the United States."
Conference attendee Kevin Chun, manager of payment innovation for TD Bank's personal lending and credit cards division, agreed, saying, "From a bank perspective, privacy is a big issue, so consumer education is key."
Then, he said, once they were educated, consumer choice would then allow them to use whatever level of security they felt comfortable with . "You have to start from the point of most security, and then go from there," he said.
Vice-president of e-business, incentives, and loyalty at Maritz Canada Carlo Pirillo said that the wide-open frontier of mobile payments is right now dealing with the same things faced by the Internet and e-commerce in the early days. He recalled speaking with people about buying things over the Internet, who were adamantly against it, due to the unfamiliarity of it and the privacy concerns.
"I'd point out that they had grown used to just giving their credit card number to complete strangers when paying in a restaurant or buying something over the phone," he said. "You have to have them understand, there's security, and then there's the perception of security."