What are the risks of mobile payments?

By Kelly Davidson

In today’s changing global market, new technologies are driving new opportunities for payment processing. Now that each of your customers and clients has a smartphone in their pocket when they walk through your door, it only makes sense that you should capitalize on the opportunity to facilitate payments through the device.

The payment industry is moving faster than we can keep up with. In 2014, Apple broke ground by introducing Apple Pay, the first-ever mobile wallet app, which was followed by Google and Samsung in 2015.

Since then, mobile payments have exploded in total transaction volume, with some reports estimating over $14 trillion facilitated via mobile devices by 2022. In other words, mobile payment processing is here—and here to stay.

The question remains, however, whether mobile payments are as risk-free as they seem. In this article, we take a deep dive into the issue to explore whether mobile payments are vulnerable to hackers or theft, and how you might be able to mitigate these threats for your customers.

Mobile payment risk factors

While mobile payments present several expense-reducing benefits, improved cash flow, and a more convenient payment platform for tech-savvy customers, they also encompass a few risks. First among them has to do with security vulnerabilities.

Biometrics and tokenization have made mobile payment processing fairly secure over the past few years. However, it’s still possible that you may lose your phone, have your wallet spoofed by a thief, or accidentally fall victim to malware installed on your device.

There’s also a chance that your customers’ phones will no longer be compatible with your POS system in the near future. As we mentioned above, the pace of technological change is rapid, and surely there will be new payment processing technologies right around the corner. This means new hardware and infrastructure upgrades.

Watch your fees

It’s important to not get burned by the fine print when you adopt mobile processing technologies. For example, Square, one of the leading mobile payment processors, tacks on 2.75% “swipe fees” for every transaction through their system.

If you think that’s bad, consider that Stripe charges a 3.5% fee for manually inputted transactions, on top of a $0.15 surcharge. The downside is that many business owners fail to realize this when they first adopt the Stripe system, causing them to miscalculate their prices and bleed cash when they need it most.

Platform crisscrossing

Although the big-name players like Apple and Samsung dominate the mobile payment processing industry, there are several other smaller service providers that are gaining ground in the market. Here are some of the other popular mobile app-based payment platforms on the market today:

  1.      PayAnywhere
  2.      Square
  3.      Shopify
  4.      PayPal Here
  5.      Intuit GoPayment


While the growth of the market bodes well for customers interested in paying more conveniently, it can cause headaches for business owners. This is because not all mobile payment systems operate using the same technology. Therefore, POS hardware that may work for one system might not for another.

Consider the fact that some leading mobile payment apps, like Apple Pay, are backed by a Secure Element (SE) system to protect users’ personal information. By contrast, Android’s payment system utilizes Host Card Emulation (HCE) architecture to provide an added layer of protection to users.

Risks vs. benefits

It’s not all doom and gloom in the world of mobile payment processing. There are immense benefits to adopting payments from smart devices. For one, there’s the convenience factor. If your customers can interact with your business on a platform that they’re comfortable with using (like their smartphone or tablet), then this will result in more conversions and loyal return shoppers.

Second, mobile payments can drastically improve your cash flow situation. Unlike some other forms of payment, mobile payment processing results in deposits into a business account in as few as three days. Plus, many customers, especially among younger demographics, are more willing to pay with their phones over cash.

Third, mobile payment processing reduces expenses for business owners because it eliminates the need for paper and ink receipt printing. Instead, one-time hardware installation for a card or NFC reader is required to get your new POS equipment running, which then sends paperless SMS or email receipts.

It’s also important to note that digital payments allow for improved customer data. The feedback you receive regarding average customer demographics and shopping preferences can help you improve your marketing strategy and inventory.

The future of commerce

Mobile payment processing isn’t going anywhere. As adoption rates continue to soar, it’s crucial that business owners and entrepreneurs stay ahead of the curve and invest in the latest cross-platform mobile wallet POS systems to satisfy this increasingly popular customer demand. Your bottom line will thank you.


Kelly Davidson works at Merchant Savvy, a comparison site that reviews and rates ecommerce platforms, retail hardware and small business software.

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