By Bill Trueman, CEO of fraud prevention group UKFraud
An in-depth analysis of the mobile payments market by UKFraud’s own Mobile Payment Special Interest Group (SIG) recognised the need for all financial product stakeholders to develop risk reduction strategies capable of matching the projected rapid growth of the global mobile payments sector over the next eighteen months.
There is they felt, a real need for companies operating in this area to be simplified and also to be structured and directed into a common ‘industry’ direction with strong standards, disciplines and built-in anti-risk security. There are so many parties operating in this ‘space’ so many different standards and directions that are being progressed and also so many mistakes being made.
There is no doubt that practices are developing around a growing infrastructure, where strategic advice and direction is much needed across a wide range of mobile payment sector organisations. These organisations are aiming to reduce the risk of moving their products and services to an emerging wallet architecture, but in some cases they are doing so without fully understanding the wider risks or without building their infrastructure into a ‘safe’ and ‘future-proof’ architecture. However, because of the sheer size of the market, and some of the people who have interests in the development of the market, who in the market is capable of providing truly independent ‘best-of-breed advice’ on how to proceed? This surely has to be the role of the consultant and it is an essential role at that.
The areas that are changing fast include, but are not limited to: new devices (such as phones, PDAs and tablets), software (including Apps and browsers) and most importantly to the authentication systems that are to be considered, validated and used. But the payment vehicles, data-transmission routings, encryption service providers, and risk-screening tools are all key and essential parts of the changes and challenges that face us all. There should be advice available on all of these areas of solutions as well as the overall strategy and direction. This should also extend to the fraud risks of transporting mediums such as the internet and/or mobile carriers, including NFC, Bluetooth or Wi-Fi. Overall, the service and indeed the community as a whole should come together to ensure that any money and time invested is not wasted by developing superfluous wallet based products that will not ‘fly’.
Kevin Smith, the Chair of UKFraud’s Mobile Payment SIG, has been widely reported as seeing a role for the provision of detailed guidance to mobile wallet and mobile payment organisations. This is against a backdrop of key sector bodies grappling with how the markets need European wide codes of practice. In his view, “The European Payments Council is just one leading body that is working hard and well to evolve a common understanding and nomenclature for this complex and fast changing environment. We are keen to see both their vision and the on-going fruits of their labour. However, in the meantime, the global mobile payment market and other key stakeholders have recently been influenced in a very positive and promising way by a series technological launches by market leaders such as Apple, Google and locally by mpowa.
“Those who choose to hone their products around these technologies need urgently now to ensure that there are clear technical rules and constraints, understandable principles and frameworks around what they develop. This includes the related requirements of authentication, reliability, interoperability and transferability. There is therefore clearly a role for advisors to deliver defining guidance to such organisations as how they can minimise the risks involved to both their organisations and their customers. This guidance should also point to the likelihood of emerging standards both at a European and indeed global level.”
Kevin Smith‘s view seems to hit the spot. There are already so many new technology developments in mobile payments and we still haven’t heard from many of the main traditional players yet, probably because they are still gathering their thoughts or formulating business cases. Fortunately, the recent launches by sector leaders such as Google, PayPal and Apple have had an extremely positive impact and have influenced the market greatly for the better. One should recognise both the beneficial impact of these recent developments and the positive prospect of announcements from Europe. These will help organisations to navigate the best route forward for their products and to help them reduce the risks of their own solutions within the broader mobile wallet ‘space’.
In light of the above and with a careful eye on seeking to act for the good of the community as well, both Riskskill.com and UKFraud.co.uk have combined to set-up our own mobile wallet consultancy practice which will help to unravel these issues. In doing so, we are trying to help organisations to structure the industry direction and to simplify the challenges. Our primary aim is to help them to plan what to do effectively and also to try to help them avoid some of the expensive pitfalls. We are going to make a number of announcements shortly regarding the specific areas of help related to particular mobile wallet and payment device products and propositions. We will be delighted to help any organisation seeking clarity in the market as to what they need to do.
We have also submitted our requirements in the consultation with the European Payments Council (EPC) and we recognise their admirable drive to determine how the market direction should evolve. We look forward to being involved with this in due course as the initiative within the EPC is right, very laudable, but also very important too. We expect to be very busy in this area over the next few years, as this is a key area for market evolution for a long time to come, not just in the area in which the EPC is trying to set direction for, but across the globe. And the news involving other bodies joining together on global initiatives (often involving some highly respected major global payments groups such as Amex, Visa and MasterCard) is also very exciting.