As payment facilitators see an increasingly high percentage of their transactions going through mobile, it’s critical to acknowledge the many ways mobile payments could be harm. For example, I got a new debit card last month. Nothing unusual about that in itself. However, I may add that this is the third card in less than a year from the same issuer.
The reason: card data breaches. A few years ago, this would have been a minor inconvenience, but today a fresh card results in the myriad of digital connections I have being unceremoniously cut off. For the last couple of weeks, I’ve been revisiting the experience of a few months back when I had to re-establish card details with Netflix, Amazon, Spotify, Starbucks, my gym membership and countless others. It’s frankly a huge pain in the ass. Again.
There is one difference this time, however. Since the last card reissue and the current one, I started using Android Pay and the card reissuance cut me off from paying by phone in my local Walgreens (the only time I ever use it). Now, unlike Netflix and Amazon Prime, which are as necessary as oxygen to me, discovery at the checkout that Android Pay was not going to work with an old card caused zero inconvenience because I had a shiny new card in my wallet. Now, this was last month and I have yet to reload my card into my phone. In fact, I deleted the Android Pay app entirely.
This is probably a troubling dynamic that is going untracked. If I, a self confessed payments geek, am completely apathetic about the value proposition of mobile payments, then what does this mean for every man and woman that is also likely to have a reissued card once or twice a year? In 2014, more than 31 million US consumers were affected by data breaches, 3x the year before. There is a reasonable chance that some of these were existing users of a mobile wallet of some flavor and that they, like me, took the issuance of yet another card as a time to evaluate the benefit of mobile payments today and decided nope.
This knock-on effect of card data breaches impacting digital billing and mobile payment usage should be pretty concerning for card issuers and networks, yet little seems to be done to fix this coherently. The card networks offer card updating services such as Visa Account Updater and MasterCard Automatic Billing Updater, which would seem to be good candidates for updating cards in mobile wallets. There are also various tokenization offerings that get to the crux of the issue by replacing static card data with a dynamic proxy. However, there is a way to go before it is commonplace.
Where possible, I now connect my billing to PayPal or directly to my bank as my own workaround. But for mobile payments where POS transaction volume is still less than one percent, the cycle of get card, activate, reload to wallet, repeat could be sufficient to drive consumers to use the cards and cash they already have with them. Mobile payments need to get a lot better than they are today for ignition to occur and this is just one more reason not to use them. For now, I (and probably many others) can happily revert to archaic but totally functional legacy payments with little to no pain.