PaymentOne, the global leader in mobile payments and carrier billing, released information regarding mobile payment security and consumers’ attitude towards online and mobile purchasing.  The study was conducted by  Javelin Strategy & Research and PaymentOne and found that 4 out of 5 consumers would spend more online if offered an easier and more secure way to pay. The survey also found that by a margin of almost 4 to 1, consumers believe direct carrier billed mobile payments are more secure than using credit and debit cards for online digital purchases.  The study also revealed that more than of online shoppers abandoned their transaction at checkout because of security concerns, as they are skeptic as to how secured their credit card information was on websites.  And 6 out of 10 online shoppers are likely to shop on sites with a “no credit card required” policy.

The Javelin survey finds that online merchants could add aggregated yearly revenue of $109.8 billion, simply by offering an alternative “no credit card required” way to pay at checkout.

“According to the 2011 Online Payment Poll, consumers are concerned about the use of credit cards online and related issues of privacy, fraud, security and convenience,” said Phil Blank, Managing Director at Javelin Strategy & Research.  “If digital merchants simply offered consumers an alternative way to pay, such as mobile carrier based payments, 79 percent of decisive consumers indicated they would spend more, driving significant new incremental revenue from subscriptions, transactions and purchases. With an estimated $110 billion in new revenue for digital merchants being left on the table each year in the U.S. alone, this ‘commerce gap’ represents a massive untapped opportunity.”

The main concern of consumers purchasing online is security, but it can be broken down to different issues surrounding security such as:

• Merchant or website will start sending me junk mail (55%)
• Personal information will be sold to other merchants (54%)
• Credit card information will be intercepted (51%)
• Unauthorized parties will access my personal information stored by merchant (51%)
• Credit card information will be misused by merchants (41%)
• The idea of providing private or personal financial information is concerning (38%)
• Personal financial information could be intercepted over the air when I enter it using my phone (32%)

Shoppers’ security and privacy concerns were universal across all age groups and income ranges, indicating that the vast majority of online consumers, regardless of their socio-demographic status, would be inclined to purchase more online if their security and privacy concerns were addressed with “no credit card required”  safer and more secure billing options.

Survey respondents believe that mobile payment methods are more secure, since they do not have to give out personal information, as their purchase would reflect on their carrier bill.  Wireless bill is the preferred method by consumers at 58%, followed by the landline/broadband bill at 22% as the safest and most secured alternatives for digital purchases.

Of the total number of respondents, 95% have mobile phones but only 36% used them to make payments, with nearly one in four purchasing digital entertainment, one in three purchasing entertainment tickets, and approximately one in four purchasing travel and apparel.  The 2011 Online Payment Poll finds strong interest for using a mobile phone for payments beyond subscriptions, service bills and mobile apps.

Beefing up security

Since mobile payment and shopping are becoming a big hit rather than the traditional shopping, mobile payment methods are beefing up their system.  Isis, the mobile wallet project from Verizon, AT&T and T-Mobile, chose Gemalto, the trusted SIM card maker and security specialist, to be their service manager.  Gemalto will hold the payment keys for Isis, control which service providers will be able to tap Isis for contactless payments, but it won’t be participating in the actual transaction.

“The secure element will not be an open asset to allow people to write content to it or it will lose the first portion of it birth name,” said Isis CMO Ryan Hughes. “Any suggestion that a secure element is an SDK that sits on top of an open OS is a fanciful argument.”

Isis is a top competitor of Google Wallet, especially with the fact that the much awaited Galaxy Nexus, a Google-Samsung product, won’t be equipped with Google Wallet but with Isis.

Google Wallet insecure?

Speaking of which, Google Wallet is in deep trouble, as it failed the security test performed by viaForensics.  Apparently, the mobile payment app stores too much of consumers’ personal data.  While it doesn’t really store the user’s credit card number, it holds user’s name, credit card balance, limits, expiration date, and transaction dates and locations on the phone itself.

“The viaForensics study does not refute the effectiveness of the multiple layers of security built into the Android operating system and Google Wallet,” says spokesperson Nathan Tyler. “This report focuses on data accessed on a rooted phone, but even in this case, the secure element still protects the payment instruments, including the credit card and card verification value numbers. Android actively protects against malicious programs that attempt to gain root access without users’ knowledge.”

And with opportunistic malware lurking in every corner, obtaining a user’s credit card number will just be a piece of cake.

Andrew Hoog, chief investigative officer at viaForensics, explained how easily one can be duped into giving out their card number since malicious individuals have knowledge of your information.  “You could send someone a message containing information about their transactions and balance and say you need to confirm their card number,” Hoog explains. “The fact that the sender knew you had conducted a transaction that afternoon would convince most people that it was legitimate.”