Summary: Mobile payments can upgrade your life, but it is equally important to be aware of risks involved therein, to take essential precautions and make your experience really enriching.
The significance of mobile money is becoming increasingly evident with more and more people choosing the channel for handling financial tasks such as money transfer and bill payments. According to technology research firm Gartner, value of mobile payment transactions is set to go beyond $235 billion in 2013, which is a substantial increase by 44% from 2012. The number of people using mobile payments is likely to be 245.2 million in 2013, according to the same research , which is an increase from 200.8 million in 2012 (Source: Gartner).
In addition to increased convenience, mobile money has been to known to bring a brighter impact in rural regions of developing countries where banks or other financial services are mostly non-existent. People in these areas leverage the cost-effective mobile channel to receive and save money, and improve their standard of living.
Real Life Applications of Mobile Payments
You can use mobile money for a range of activities, from paying for your car parking; transferring money to your child’s school; sending money to the hospital to handle a medical emergency; to transferring money to another country. The most common real life applications of mobile payments include:
- Payments at retail outlets
- Bill payments
- Micropayments (Payments involving low amounts, which cannot be paid through debit or credit cards ($5, £7, etc.))
- Money transfers (domestic or international)
- Salary reception
- Technological advancements widen the possibility of inclusion of more innovative services within the ambit of mobile payments.
Types of Mobile Payment Frauds
Vishing or Smishing – This type of fraud involves extraction of sensitive financial information such as your bank account numbers and PIN, through a tricky phone call or SMS. For example, you may receive a call or SMS that your bank account has been compromised and that your details would be essential to solve the issue. The message or call specifies either a website or a phone number that you need to use to give your bank account or credit card details.
Advance or Upfront Fee – You may be asked to deliver money upfront to avail a service or product, or to contribute to a cause. You are more likely to lose money if you follow the fraudster’s instructions and make a mobile payment in advance.
Money Reversal Requests – A fraud that most merchants may have fallen prey to, this happens when you sell products or services and get paid in mobile money. Your customer places a request for the order and once a delivery has been made, he or she calls the mobile network service provider to cancel the order; common reasons that fraudsters give for cancellation are that the order was made by mistake, or that the call was placed to the wrong phone number.
The fraudster then requests reversal of money placed for the order. You stand to lose money if the phone operator cancels the order without checking with you.
Such opportunities of fraud often occur due to poor technological infrastructure of the mobile network operator. With advanced technology, it is possible to integrate merchant systems with communication networks of mobile network operators and provide live transaction updates.
Identity Theft – Employees of your mobile network operator may make use of your financial information to gain unlawful access to your funds. Employees may also collude with fraudsters and leverage security drawbacks of the mobile network service provider to access your financial accounts. Agents of mobile phone operators, too, may be involved in such fraudulent activities.
Most of the time frauds can be averted by choosing a reliable mobile payment service provider. Ask questions about the service provider’s technology and policies to combat fraud. Companies must have strict Know Your Customer (KYC) policies, customer profile building and monitoring, employee and agent monitoring, and reliable technologies, to fight fraud.
Have you ever been a victim of mobile payment fraud? Share your story here. Tell us what we can do as a mobile payment service user to prevent becoming fraud victims.
