A blog written by Harley Geiger, a policy counsel with the US nonprofit Center for Democracy & Technology, has zeroed in on what happens to consumer data during a payment made via a mobile phone. The blog points out that mobile payments open up consumer data to several companies that are not included in traditional credit and debit card transactions. These include mobile payment providers such as Google or PayPal as well as what the blog terms “internet service providers” by which they really mean mobile network operators (they give Verizon and AT&T as examples) as well as the firms behind third-party apps. These additional parties with access to consumer data come in addition to the credit card companies and payment processors included in traditional transactions. In other words straight away consumer data is being shared around more than previously.
Furthermore the blog says while today credit and debit card providers have access to consumer contact information including the who, what, when and where data behind a transaction in the future mobile payment systems will also track the specific items a consumer buys. The blog then makes a really interesting point: We have all experienced how an online purchase influences the advertising we see on the internet. Imagine what it would feel like if offline transactions in the real world influenced the online advertising we saw. The blog says we “should expect mobile payment services to use transaction information to hit consumers with offers, coupons and customised advertising”.
Never mind the mild irritation that consumers would likely feel from adding to their spam burden, I think there is a worse risk for companies here: They are likely to induce in their potential customers a feeling of paranoia as most users are not used to such an online/offline crossover, or at least in such a systemic way as the blog envisages.
Furthermore mobile payment services and apps can be programmed to offer details such as phone numbers, email addresses and transaction histories to merchants. “Consumers today are enrolled in loyalty programmes with only a few companies, such as their supermarkets, but mobile payment services will make it simple to establish the equivalent of a loyalty program for every merchant the consumer comes into contact with…”, says the organisation.
This could mean every cup of coffee and taxi ride could be logged in some way. The consumer reaction is likely to go beyond mild irritation to severe annoyance, a negative emotion that could rub off on the company supplying the mobile payment service.
It is traditional to argue that opt-in/opt-out rules provide an adequate protection for users from intrusive marketing. But the blog argues against this assumption. It says mobile payments systems will bypass some of the existing privacy protection in the US.
In case you are wondering the Center for Democracy & Technology styles itself as an internet freedom organisation. According to its website, its donors include eBay, Google, Facebook and Linked In but also American Express, Microsoft and Oracle and most of its backing comes from charitable trusts.
An intrusive mobile payments regime will likely arouse user anger which presents a dilemma: A company could engender a lot of goodwill by restricting how widely they distribute their customer’s data but market reality has traditionally dictated they give into temptation so how about another suggestion? Users would probably pay a small, monthly subscription in return for being the recipient of a low or minimal level of privacy intrusion. Or is this an impossible deal for mobile payments providers to offer? Does the scale of revenue generated by advertising dwarf what could be accrued via regular, small subscription fees?
Maybe I am crazy but a small additional payment added to monthly mobile subscription in return for peace of mind regarding an individual’s personal privacy seems like an offer a significant number of subscribers would willing take up. Read the Center for Democracy & Technology blog here.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.