“Digital Wallets” change how payments are made and consumer information is protected
As major credit card companies Visa and MasterCard continue to develop and deploy mobile payment applications for smartphones equipped with NFC technology, payment processing between merchants and consumers will continue to evolve.
Many traditional brick and mortar retailers may not necessarily see the need to update their current POS terminals to accept mobile payments, as this emerging technology seems more suited to e-commerce. That said, the idea behind the “digital wallet” as a payment method may dramatically shift how sensitive client information is handled during a transaction.
Consumers are increasingly concerned with identity theft and likewise merchants worry about being sued for information leaks in their POS systems. Mobile payment applications change this very dynamic by giving the ability to consumers to keep all important payment information contained in their “digital wallet,” linking only to their respective banking institutions and cloud data management service, the two safest places to store this information.
Digital wallets will effectively turn the mobile payment enabled smartphone into a Personal Point of Sale (PPoS) device, which includes all the current features and capabilities of a standard retail POS terminal but with added levels of information security and less transfer of info between payment terminals.
Initially set-up for online shopping cart transactions, these new mobile payment applications will no longer require consumers to give out sensitive payment information during the checkout process, rather a transaction number will be pasted into the PPoS. This new PPoS system gives consumers the added ability to keep control over sensitive payment information and merchants no longer need to handle sensitive information and keep it secure.
Online merchants will also benefit from the added element of the mobile payment transaction being considered a “card-present” sale, reducing discount rates, limiting charge-back incidents and decreasing opportunities for fraudulent payment activity.