Galaxy S4 enables NFC payments

Samsung latest smartphone launch is a harbinger of things to come, according to retail revenue and business assurance expert, Ana Cunha

The launch of the Samsung Galaxy S4 smartphone marks the first commercially available smartphone on the market with inbuilt Near Field Communications (NFC) payment technology.

The S4’s Visa payWave technology is designed to enable the Samsung device to communicate with contactless pay point readers instore in the same way as a contactless credit or debit card operates and will let S4 users securely connect any Visa card to their smartphone.

Ana Cunha, retail business development manager at WeDo Technologies, toldRetail Technology that, whilst this technology is still relatively new and retailers are only just beginning to adopt it as a payment option, mobile payments are set to increase with the introduction of additional NFC-enabled smartphones on the market.

M-commerce efficiency benefits

“As the technology spreads quickly across the UK over the next couple of years, time spent at checkouts in retail outlets should reduce, increasing the retailer’s efficiency,” she predicted.

But, at the same time, Cunha warned that this technology will bring a new set of advanced security threats that retailers need to be aware of and incorporate into their ongoing risk assessment strategy in order to minimise loss and impact on the bottom line.

“Fraud threats can result in a series of repercussions such as stock and cash loss, a drop in the company’s share price, low employee morale and a damaged brand reputation,”she explained. “Fraud prevention strategies and tools are evolving and are currently at very different stages around the world.” According to research conducted by Martec, 150 of the UK’s leading retailers revealed that they experienced losses of £3.4 billion due to theft and fraud in 2012, up 10% from 2011.

“As the retail environment evolves, retail companies are forming new business relationships with third parties, which are raising new challenges in preventing loss,” she continued. “NFC, more than any other payment technology being used by retailers, involves a wide variety of stakeholders, including technology providers, payment providers, content providers and mobile operators, so monitoring data from all these parties is a challenge from a retailer’s perspective.”

M-payments increase security risks

Cunha pointed out that the controls that were previously in place for payment providers are no longer sufficient in this new environment. “This means that retailers must consider a more advanced system that can monitor transactions and ensure that NFC is implemented in a secure way,” she advised. 

On the other hand, not all of the aforementioned stakeholders are ready for NFC and, as a result, retailers are forging ahead and developing their own mobile money solutions. “Starbucks, for example, launched its own mobile payment on Apple’s Passbook at the end of last year, which allows customers to pay instore via its mobile app,” she added. “This type of solution demonstrates that retailers are keen to adopt solutions in the new transactional landscape as consumers come to terms with mobile payments.”

As a result, Cunha said it is essential that retailers have measures in place to monitor transactional data closely so inconsistencies can be spotted quickly and acted upon before they have a detrimental impact. “A business control analytics system can monitor data in real-time from multiple systems and multiple parties to validate transactions and protect profit,” she continued. “Fraud prevention solutions establish e-payment ‘profiles’ for transactions which are used to detect ‘suspicious’ transactions and ensures that anomalies are identified rapidly so that they can be dealt with.”

Keeping pace with expectations

Cunha predicted that these capabilities will become increasingly important as more NFC enabled smartphones, like the S4, come to market. “Consumers’ expectations are changing as they seek to use mobile as a standard payment method,” she added. Retailers need to work together with business partners in order to ensure that NFC, as with any other payment method, is implemented in a secure and profitable way.

“Profit protection procedures and systems should protect consumers as much as they protect the retailers themselves and ensure that they receive the high standards of payment protection which they rightfully expect,” she concluded.