Many merchants have been hesitant about mobile payments, but with the EMV compliance mandate at our doorstep in the U.S., the time for business owners to put out the "open" sign for mobile payments is now.
EMV compliance, the upgrading of point-of-sale systems so they can process chip- and pin-based cards, is not mandated for merchants, but those who do not comply will assume liability for fraudulent purchases. The liability shift makes adopting the standards critical for some businesses. For example, in the hospitality industry, the shift has already induced many restaurants to review their POS systems, including in-store hardware and software. At the same time, many are resistant, objecting to these costly POS upgrade investments, and are looking for something stronger than EMV to address security and potential fraud issues.
Mobile payments are not only less costly to deploy, but they are also poised for explosive growth in the U.S. Experts predict U.S. mobile payments will grow to $142 billion by 2019 with both national brands and local merchants. According to a 2015 MasterCard study, “The Emotion of Safety and Security Survey,” conducted by Braun Research, 56 percent of Americans use mobile digital payments via app or website or plan to try them soon. In addition, mobile payment apps up-level convenience for both businesses and users, as the payment process is streamlined.
Mobile payments can also deter fraud in ways EMV can’t. Mobile payment offerings are secure and PCI-compliant, meeting all security requirements enforced upon credit and debit cards. As a result, Americans are increasingly trusting mobile payments in a way not seen in the past. According to The Emotion of Safety and Security Survey, 77 percent feel that there are more secure ways to pay than ever before. And an equal number (77 percent) feel that new technologies such as mobile payments are having an overall positive impact on personal security.
Mobile payments minimize fraud due to the user profiles created on mobile devices, which leave a digital trail of activity (merchant location, device ID, email, user, etc). This trail reduces fraud and is a clear example of how mobile payments with POS integration can improve the hospitality industry’s operations while saving money. In addition, mobile payments can be integrated into any POS system regardless of whether a merchant plans to update its POS system to be EMV-compliant.
One key security capability revolves around the tokenization of credit cards inside mobile apps. This is a method for protecting card data by substituting a card's Primary Account Number with a randomly generated set of numbers or alphanumeric characters. This further reduces the opportunity for identify theft. As consumers’ security concerns around mobile payments diminish, their comfort level with using them will continue to rise, which will ultimately create a greater demand for businesses to accept them. As this evolution continues, mobile payment apps that incorporate mobile wallet capabilities (Google Wallet, Apple Pay, etc) will pave the pay for even more efficient payment methods.
The time has never been better for businesses to embrace mobile payments. For many, mobile payments will be a viable alternative to costly POS updates. Regardless, by embracing mobile payments in 2015, they will be welcoming the future of payments.