Mobile Payments: Is the Convenience Worth the Risk?

August 11th, 2011 by Brian Oliver Bennett, LAPTOP Senior Writer

Shoppers for Sale

For companies looking to kick your leather wallet to the curb, the wealth of data your smartphone wallet can share is one of the biggest incentives for jumping on the mobile payments bandwagon. In fact, it’s a marketer’s dream, with intensely valuable, detailed information about individual shoppers served up with each purchase. Crone summed up what’s at stake: “The one who enrolls is the one who controls. Merchants want to reach you, know your preferences, and influence sales before, during, and after payment.” And that’s exactly where a mobile wallet comes into play.

The more specific information is known about a customer—especially in real time and when compared against past purchases—the better a marketer can predict future behavior.

As you might imagine, a digital wallet app contains intensely valuable data about you. “A known, registered user with [declared] preferences in a known geography could command ad rates that have never been seen before, with CPMs of $500, unheard of in the market today,” said Crone.

The access to this treasure trove of personal data raises red flags with consumer privacy advocates, even if mobile phone users offer this information willingly. “Applications may be sharing more data than the user comprehends,” said Craig D. Spiezle, executive director of the Online Trust Alliance. “On mobile devices particularly, an IP [address] is tied to an identity, which creates a new paradigm.”

Spiezle also pointed out that while all of our private information lives in separate apps or separate web services, all of it could be cobbled together to form a very detailed picture of a person’s day-to-day personal activities. “At what point does the data no longer become anonymous?”

Checking Out

Certainly, the convenience of having all your credit and debit cards, loyalty cards, and special offers tailor-made to your individual tastes in one place is appealing. However, the companies putting their money behind mobile wallets clearly aren’t doing it just to make shoppers’ lives easier. It’s also about getting a cut of the next big thing, whether that’s taking a piece of each transaction or profiting from marketing of our personal information.

The question mobile shoppers must ask themselves is whether getting a killer discount on their favorite brand of jeans or next cup of coffee will be worth it.