Standing Still on Security Inhibits Development in Payments

I read an interesting piece earlier last week on imrg.org (the website of the UK Online Retail Association) arguing that consumer concerns over security could inhibit the adoption of many new payment methods and technologies.

It said that despite dramatic increases in technologies that would allow for smoother and more convenient payments, consumers are increasingly afraid of fraud and identity theft. It specifically referred to research in the UK (run by Jumio and Harris Interactive) which found that almost 80% of the 2,000 people surveyed were worried about their identity being stolen.

And customers are right to be concerned about security. Technology – particularly mobile technology – is moving at break-neck speed, and fraudsters understand that they have an opportunity to get ahead of the game. Cybercrime has become more sophisticated and effective, and we’ve seen numerous large-scale frauds in just the last few months resulting in hundreds of millions of dollars in losses.

Standing still is no way to counteract this growing threat. New mobile and online payment channels bring too many benefits for consumers to ignore, and the same is true of retailers and financial retailers.  But stronger security and fraud prevention methods need to be implemented alongside them.  

It’s clear that traditional security methods can be compromised and an individual password or PIN is no longer enough to protect us from the rise of cybercrime. I’ve written extensively on the need for financial organizations to upgrade these simple, “single-factor” authentication systems to include multiple layers without introducing complexity to the end customer. This security needs to be custom built for the new mobile channels, very strong, sensitive to privacy, and be able to maintain ease-of-use through low or no customer friction.

Solutions that achieve this are possible and available today. Some forward-thinking organizations are already implementing such systems. But surely it is time for more financial institutions to step up and use effective security systems that can protect against fraud, rebuild consumer trust and so pave the way for genuine advances in the payments industry.