Retail Giants Team Up for Mobile Payments

Author: Craig Blaha
Published: August 21, 2012 at 5:49 am

According to Reuters, Walmart, Best Buy, and Target and other major retailers have created a new company called Merchant Customer Exchange in order to provide an app that will allow for mobile payments in their stores. The system would compete with Google Wallet and Square, which recently teamed up with Starbucks.

Mobile payments processes take different forms; Near Field Communications - where you can wave your phone at a device and debit your payment account, or the simpler online payment method where you actually make your purchase online and the point of purchase is informed of the completed transaction - more like picking up an item you bought online.

We are familiar with the risks of purchasing online, one small example is the hack or retailer Zappos this January that exposed 24 million customer records. In addition to this long running risk, if you lose your phone whoever finds it might be able to use your account to make purchases, and any single merchant on the payment system can introduce a vulnerability for all merchants, which we call the weakest link effect.

The privacy risk is even greater. By sharing purchasing habits across each of these different major retailers, not only will retailers have more information about WHAT you purchase, but where and when you purchase it, and how likely you are to respond to bargains and incentives. In addition, as researchers have shown, you can control people, to an extent, using their mobile apps.

From the article:

The group of retailers, which account for about $1 trillion in annual sales, wants to make sure it has a say in the development of standards for mobile payments, Terry Scully, Target's president of financial and retail services, said on Wednesday. 

"What we are looking for is a broad, seamless experience across all retail formats," Scully said. 

Mobile payments are expected to rise nearly four-fold to more than $1.3 trillion annually by 2017, a report from Juniper Research said on Wednesday.



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Article Author: Craig Blaha

Craig is a privacy, secrecy, and social media researcher pursuing his PhD in Information Studies at UT Austin. Craig teaches undergraduate classes on Social Media and Privacy and the Internet and Public Policy. …

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