Secure Mobile Payments: Why Robust Authentication Is Important

The surge in the popularity of mobile payments and the rise in cybercrime make it paramount for service providers to develop robust security measures.

By Ravi Battula

The ubiquity of mobile payments allows individuals to make purchases or transfer funds using their smartphones. Mobile payments have redefined convenience over the last few years, empowering consumers. With just a few taps on a smartphone, people can effortlessly make purchases, whether buying groceries, booking travel tickets, or ordering food. Gone are the days when carrying bulky wallets or fumbling for loose change were common scenarios. Mobile payments offer a seamless experience that saves time and simplifies transactions, with added offers and loyalty bonuses that cannot be missed.

Whether through email, SMS, bank account logins, digital payments, or social media, cybercrime is increasing its reach in every aspect of our day-to-day lives. All of a sudden, you get an SMS alert stating that your account has been debited for a certain amount of money you did not spend. This alert is enough to send a shiver down your spine. Well, the monster behind this disaster is a cybercriminal misusing your personal and financial data to rob you of your life's savings.

The surge in the popularity of mobile payments and the rise in cybercrime make it paramount for service providers to develop robust security measures. Strong authentication is essential for safeguarding sensitive financial data in mobile payments.

What Is Authentication

It is basically uniquely establishing who you are (mobile number) and what you know (pin, biometrics, etc.). These are table stakes for any financial transaction; hence, any app we use on our mobile should have these capabilities embedded for greater security and protection to protect not only the consumer but also the merchants from liability and chargebacks that the customer could pass on to merchants. It is imperative that while merchants and PSPs (Payment Service Providers) adopt these technologies, the broader ecosystem across issuing banks, acquirers, and intermediaries should also be ready to support stronger biometric authentication methods beyond the regular OTP, which is beset with multiple issues like scaling, non-delivery at times, sim cloning, coverage in remote locations, etc.

Issuing banks have an opportunity to enhance their authentication systems beyond biometrics to offer a differentiated experience for various segments of customers who have the choice to opt into biometrics at certain merchants or across the board. In addition to customer convenience and higher security, banks can also save on SMS and the operational overhead associated with it.

Likewise, acquiring banks can unlock the potential of biometric security for their merchants. Due to the proliferation of smartphones, this is no longer a novelty but provides an option for customers to choose their authentication mechanism for payments and financial transactions.

Protecting Financial Data

Mobile payments involve the transmission of valuable financial information, such as card details, bank account numbers, and personal identification. By implementing strong authentication mechanisms, businesses can protect customers' data from unauthorised access and mitigate the risk of financial fraud. Robust authentication methods, such as biometrics (for instance, fingerprint, facial recognition, voice recognition, retina, etc.) and two-factor authentication, are powerful deterrents against identity theft and unauthorised transactions.

Enhance Customer Trust

In an era of privacy breaches and data leaks, customers place a high premium on security regarding their financial transactions. By prioritising strong authentication, businesses demonstrate their commitment to customer protection, earning their trust and confidence.

Comply With Regulatory Standards

The mobile payment industry is subject to various regulatory frameworks designed to safeguard user data and ensure secure transactions. Strong authentication measures often serve as a requirement for compliance with these standards. By adhering to industry regulations and proactively implementing robust authentication methods, organisations exhibit responsibility and reduce the legal risks associated with non-compliance. Various countries offer varied levels of biometric authentication, e.g., in the Middle East, biometric authentication is very common due to the higher adoption of smartphones, infrastructure, etc. Whereas India, being the largest Digital payments market in the world, has still not opened up biometric authentication, which is ripe for adoption and the next wave of disruption.

Minimise The Risk Of Fraud

Mobile payment platforms are prime targets for cybercriminals seeking to exploit vulnerabilities in the system. Weak authentication methods can offer unauthorised access, fraudulent transactions, and malicious activities. Strong authentication measures provide an additional layer of defence, significantly reducing the risk of such attacks.

Drive Innovation

Strong authentication goes hand in hand with technological advancements in the mobile payment sector. Organisations that invest in advanced authentication solutions position themselves as forward-thinking leaders in the industry. By embracing innovative authentication methods like biometrics, adaptive authentication, and tokenization, businesses can stay ahead of the competition, adapt to evolving security challenges, offer a seamless and secure payment experience, and save themselves from chargebacks and liabilities.

Robust Authentication A Must For Mobile Payments

In the mobile payments landscape, strong authentication is not merely an option but a need of the hour. As the digital landscape evolves, organisations must understand the pivotal role of robust authentication mechanisms in securing mobile payments. By doing so, businesses can demonstrate their commitment to their customers while fostering a secure and convenient payment ecosystem.

The author is the Vice President of Merchant Acquiring Business, Wibmo -- a PayU company.

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