The day that we can walk into a retail store and pay for an item with a smart phone is coming. Is the loss prevention community ready?
It is undeniable that reliance on mobile devices has become a way of life for today’s consumer. Savvy retailers who appeal to customers’ needs and preference for mobile transactions, from merchandising to check out, will drive sales and loyalty by putting the power of convenience into the hands of the consumer. At the same time, there are risks inherent with the convenience that mobility affords the industry and its customers, and security appears to present the greatest obstacle to its adoption.
An August report by Juniper Research asserted that “the scale of global mobile payment transactions is expected to rise nearly fourfold over the next five years to more than $1.3 trillion.” On the heels of that report, twelve major retailers, including Wal-Mart,Target,7-Eleven and SunocoInc., announced an effort to create a mobile wallet. None of this is surprising given the consumer’s growing dependence on mobility and attraction to the convenience it affords.
As the proliferation of retail mobile technologies occurs at lightning speed, the security challenges that arise from these technologies range from issues at the point of sale, to consumer concerns over personal information and personal property and, of course, theft and fraud. When it comes to adopting new technology, an additional challenge can come in the form of the security function itself.
Security Impedes Adoption
According to the 2011 Mobile Payments Global Survey by KPMG, the majority of companies believe that mobile payments — including mobile wallets, mobile banking and contactless card systems — will become mainstream in the next five years; however, while convenience will foster growth, security will impede adoption. The survey respondents agreed that “convenience and accessibility are the key ingredients to success (of mobile payments), and security is the impediment to broad adoption.” Seventy-one percent of respondents said security is the main challenge companies face as they develop mobile payment strategies.
The conversation around adoption of mobile technology, and mobile payments in particular, harkens back to a similar line of thinking concerning IP technology in the slow-to-adopt video surveillance space. While it is true that some retailers continue to rely on analog video systems, it is clear that when it comes to mobility, no one can afford to wait to adopt the latest technology.
Retailers who ignore the trend risk losing out to the competition in the current “I need it now (and can get it elsewhere)” retail environment.
Security’s Role in the Mobile Migration
The application of mobility in retail is still in its infancy. At this time, there is no single standard methodology, which in-and-of-itself makes adoption difficult. However, rather than resisting the unknown, there is much to be gained from getting on board early and working across functions to lay the groundwork for adoption, and to identify ways of making mobile payments secure and executable across the organization. Strategies for addressing the challenges that come with mobile payments are developing, but savvy security professionals will join the conversation early, helping to identify steps retailers can take now to prepare.
To illustrate this point, consider that loss prevention professionals have been credited with easing the transition from paper gift certificates to plastic gift cards. In the NRF Stores magazine article, “Piloting Progress: LP executives strategize approaches to mobile payments fraud,” Joseph LaRocca, senior asset protection advisor to NRF, says: “Loss prevention, in conjunction with other departments, helped stores rapidly adopt anti-fraud gift card technology by tying it to similar credit and debit card procedures. Loss prevention’s ‘operational perspective about how overall programs and strategy can work better’ helped to ease the transition.”