How mobile POS and payment systems prevent fraud

Sept. 7, 2012 | by Ilan Oosting

In the past few weeks, I’ve been reading a lot of blogs and news sites heralding the security risks mobile payments and POS systems will bring for retailers.  They’ve cited issues from validating e-receipts to verifying the identity of the customer, and they are all valid concerns. 

That probably would have been a problem last year, but this year, mobile technology has advanced to a point where it can be utilized to be safer than today’s manual store methods.

Mobile technology is advancing at a rapid pace on multiple fronts, from the operating system itself to the developer tools available and the third party technologies that can be linked to mobile!  Today, several key technologies and innovations are coming together to create a more secure POS system:

Electronic signature technologies are advancing

Electronic signature technologies are advancing at a rapid rate.  You are now able to sign contracts, receipts or forms using a tablet or smartphone from the convenience of your home, or while having coffee.  So what’s to make them safe from people pretending to be you?

Modern electronic signatures are becoming increasingly harder to forge.  Advances in digital technology allow signatures to be cross-referenced with a huge database of signatures and graded according to the confidence of its authenticity.  Companies such as Settleware and SQN Banking Systems employ these methods and more.  These signatures are sent via SSL and usually encrypted with 128-bit encryption to ensure the user’s protection.

Electronic signatures also benefit from other technologies made possible by mobile such as…

Visual scanning technologies can be used to verify customer identities

Visual scanning technologies such as those employed by Jumio or can be used to verify your identity along with your electronic signature.  These two methods of verifying identity are actually more secure than today’s standard e-commerce verification methods.  

These technologies are secured by a number of back-up layers to prevent identity theft.  In Jumio’s case, rules can be set based on normal customer behavior.  Jumio’s Fraud Detection Suite can look into a number of parameters, from the number of transactions coming from a specific card, or the amount of transactions and where they are coming from based on the IP address they were sent from.  Normally, transactions from legitimate users would go through within seconds with minimal fuss, but should any of the rules be breached, the system automatically routes these transactions for additional verification and transactions will be set as temporarily pending.

e-Receipts can be digitally signed and verified via QR or NFC in mobile

Now your customer has made his order and paid for the goods, you can issue digitally signed electronic receipts.  These can be claimed by verifying these receipts via NFC or QR codes at your POS counter.  While in the past, e-Receipts were easy to duplicate, alter or fake, newer e-Receipts for mobile are very hard to fake, and would be much more convenient for your customer. 

By using NFC validation or QR codes, merchants will be able to verify the validity of these e-Receipts against their database.  These can also be combined with visual scanning technologies in order to further verify a customer’s identity in seconds.

Those above are just a few examples of what modern mobile POS systems can do to prevent fraud.  How about your mobile device?  How can it protect your money should the device be stolen?  Your mobile device is much more secure than your normal wallet:

Your phone can be password/PIN protected

Modern smartphones can now be protected with a password or PIN.  People with malicious intent will not be able to access the device without them provided the devices are not jailbroken.  This is a security feature your wallet doesn’t have.  Once someone gets your wallet, they have free access to all of your cash and credit cards. 

Device Encryption

You can encrypt most modern smartphones so that any unauthorized users cannot access your device’s memory without a proper password.  This is an extremely useful feature for enterprise users as well who may carry sensitive data in their mobile devices.

You can track a stolen device after it is stolen

There are a lot of solutions out there that would allow you to find a stolen device.  Lookout Security and Cerberus are examples of this software.  In addition to finding your device, these programs can…

Wipe all data from your mobile device

If you wish to protect your data, you can have the option to wipe your device’s memory remotely using third party apps.

That said, mobile technology is still evolving, and new better security measures are being innovated as we speak.  While it pays to be vigilant of the risks, your mobile device is more secure than what most of the press say it is, and it’s only getting better.

Topics: Contactless / NFC , Mobile/Digital Wallet , POS , Retail , Security , Trends / Statistics

Ilan Oosting / Ilan is one of the founders and current CEO of JMango. As CEO, Ilan has been key to JMango’s rapid growth, responsible for setting the strategic direction for the company and securing key alliances and partnerships with telecom operators, distribution partners and payment and content providers. Based in Hong Kong, Ilan is passionate about the way in which mobile and payments are rapidly changing how we live and interact.
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