ID verification essential for mobile payment systems

While consumers have shown they prefer making payments via ACH cards and mobile technologies, many businesses and financial institutions have yet to adopt these methods, as some have concerns.

One of the major issues is ID verification, as simply waving a smartphone to pay for a product can make it difficult to ensure that the correct person is paying.

According to Mobile Payments Today, there are numerous ways to verify a person's identification when they are paying with a mobile phone. The popular Square mobile payment system has a registered user's face appear on a display when they make a payment.

One expert believes this shouldn't be as big a concern as it is, as Kolja Reiss, managing director for mopay Inc, wrote in an article for Mashable explaining that mobile payment systems are the safest form of online transactions.

The reasoning behind this thought is the fact that mobile payment systems don't require consumers to enter their name, address and credit card information in order to make a purchase.

However, there is still a risk of identity theft when using this technology. Consumers who see their credit scores dip as a result could use short term lending, as applications for financing are approved using alternative credit solutions.