Risks in Mobile Payments Get More Pronounced
With mobile payments systems becoming more popular, and a host of new competitors getting in on the action and hoping to land a slice of that payment processing market, it’s not surprising to see more bad actors get involved as well.
A recent look at the mobile payments market suggests that it’s about to get a little riskier, as major firms get in on the action and regulation is left hard-pressed to keep up.
One of the biggest things to note is that mobile payments—and some similar technologies like peer-to-peer lending, small business lending, and the like—are basically using technology to undercut the traditional banking infrastructure.
Banking and finance are some of the most major operations on Earth, and it’s a safe bet that none of these firms will take sublimation lightly.
Tradition and inertia will certainly be factors in favor of the banks, but they may not be able to hold their markets completely in the face of advancing technology.
Regulation, in turn, will likely struggle to keep up, turning large sectors of the market into “gray area(s) of regulation”, which will in turn hike risk as no one’s a hundred percent sure just what best practices are, let alone how to put them in play.
Word about new industry standards like PSD2 will help, but it might also increase the number of non-bank firms that offer mobile payments systems.
Issues more limited to Europe, like the recent revocation of the Safe Harbor principles, will also play a factor here.
Issues of regulation, or the lack thereof, will likely make the mobile payments market—particularly in Europe—a riskier proposition.
However, there’s one point to consider that may change that: the force of the marketplace. Users will not want to use mobile payments platforms that aren’t safe.
If the government isn’t responding quickly enough with regulation, there’s a clear bottom-line motivation involved in making the platform safe without any regulation to step in and force the issue.
Still though, for companies who aren’t sufficiently on the ball without government regulation to step in, it could be a risk most companies wouldn’t want to take.
It’s a risky proposition, and hopefully companies offering mobile payments will step up and provide the security that users need.