Mobile payment security key for further industry growth

The mobile payments sector has been rapidly expanding over the past few years, while merchants, debt collection services and more have adapted processing services to heed the call. However, one important facet of the mobile revolution is payment security, as regulators and payment processors alike have to keep pace with the ever evolving device landscape. Bank Systems and Technology recently reported that standardization of mobile payment processing security practices and software must occur before the capabilities of devices become too unwieldy. This is happening at an incredibly fast rate, while mobile payment totals are forecast by Juniper Research to surpass $50 billion by 2014, the source notes. Through a visible improvement to security practices and processing integrity, the news provider believes the industry will grow even more rapidly. Several groups comprised of the sector's leading providers have formed to make this happen, and once it becomes as safe, especially in the eyes of the consumer, as traditional banking, the revenues are expected to be unprecedented. One major reason behind this explosion of mobile payment popularity is the way the convenient method has lured the massive number of underbanked U.S. citizens. Estimates vary, but many believe a substantial piece of the population could be considered in this class. Javelin Strategy and Research reported last month that 15 percent of the U.S. adult population - or 35 million individuals - could be considered underbanked, and these new payment processing methods have already proven to effectively reach this group. "Mobile banking can be used to reach out to the underbanked segments for financial inclusion," Mary Monahan, EVP and Research Director at Javelin, explained. "Smaller banks have a lower fee structure for traditional banking in place that is more appealing to this segment, but aren’t as likely to have mobile banking services. Larger banks are more likely to have the mobile banking infrastructure, but also charge higher fees on average than the smaller banks." Earlier this month, American Banker recommended industry players focus on this population when deploying mobile strategies. According to the source, studies from the Federal Reserve Board have revealed that a high percentage of the underbanked have smartphones, while the same group use mobile banking 8 percent more than all consumers. The advantages are clear, but as Bank Tech noted, security must be at the forefront of strategies, as a failure to keep data protected will deter much of the interest in mobile payments at large.