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Security is key issue for mobile payment adoption

Jenny Williams

Mobile security will be increasingly important as mobile payment adoption increases over the next four years, according to research.

A report by analyst Juniper Research predicts the number of mobile payment transactions will grow by 40% to reach 2.5 billion globally by 2015.

David Snow, senior analyst at Juniper Research, said a recent study showed 25% of mobile payments via premium SMS and direct billing were fraudulent. As a result, mobile operators are increasing fraud detection measures.

"It is becoming evident that mobile operators are increasing their in-house fraud detection resources both in terms of expertise and tools," said Snow.

"In itself this will not impact adoption of mobile payments as in this scenario the cost of fraud is borne by the mobile operator or content provider, not the user."

Orange and Barclaycard recently introduced the first near-field communication (NFC) mobile payment system in the UK. O2 also plans to launch its own mobile wallet before the end of 2011.

The Google Wallet system is being piloted in New York and San Francisco and uses NFC to make secure payments by simply tapping a mobile phone on any Mastercard PayPass-enabled terminal.

But Snow said there are industry barriers limiting greater adoption of mobile payments.

"The payment user numbers are mainly driven by the increase in mobile users, the capability of networks to deliver a faster interactive service and the user convenience factor," he said.

Snow said that key barriers to UK adoption revolve around business model issues across the value chain between the merchant and the consumer.


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