The rise of payment-enabled smartphones, which can replace cash, credit cards and debit cards via technologies such as near field communications (NFC), is a fascinating new option for consumers. However, before smartphone payment systems can reach their true potential, some issues must be addressed.
The Benefits of Payment-Enabled Smartphones
Smartphone payment systems have a number of advantages. These include enhanced money management capabilities and higher levels of user security, adding to the convenience of consumer financial transactions.
Since smartphones will have access to users’ bank and credit accounts, account management will be simplified. A smartphone payment app could immediately warn the user when his or her bank balance drops below a certain level, or block payments that might result in overdraft fees.
The enhanced security of a smartphone, including using the individual’s image and the use of password protection, makes it nearly impossible for thieves to use a lost or stolen smartphone. This is a radical improvement compared to current ATM or credit card security measures.
Consumer Concerns About Payment-Enabled Smartphone Technology
However, some issues must be resolved before smartphone payment systems can live up to their potential. These include security issues, the reach of smartphone payment systems, and the question of consumer privacy.
With the rising importance of data security in today’s world, smartphone payment systems must be rendered immune to data breaches. Companies will have to ensure that they are protected from external and internal data threats alike.
Additionally, consumers will only adopt smartphone payment systems if they are convenient to use. This requires ensuring that as many retail stores as possible accept smartphone payments. It may be necessary to subsidize the purchase of equipment needed for smartphone payment processing in order to expand the number of stores where consumers can use their smartphones.
Finally, consumer privacy will be a major issue. Payment processors must be completely open about how much information is being collected and have strict policies to ensure that the consumer’s information is not distributed to third parties.