The number of mobile phone owners who use peer-to-peer payment systems in the United States is set to increase from 69 million to 126 million by the year 2020, cites The Payments Review. This innovation is one more adaptation to our shared economy adding convenience through technology.
Like any modern technological innovation, P2P payment systems come with risks as well as rewards. By learning more about the risks that P2P payment services pose, as well as building a team of professionals to keep watch to help avoid those risks, you can work to stay ahead of lurking dangers.
What Are Some Basic Security Precautions Associated with P2P Payments?
"Nothing connected to the internet is completely safe," notes Investopedia. Of course it is important for each company responsible for a customer's financial information to take every step possible to keep that data during P2P payments.
While specific security policies for each P2P platform is likely to vary, all of the major platforms feature ready support staffs and fraud monitoring teams that are available to customers who detect unauthorized transactions.
Risks That Your Business May Face with Person-to-Person Payments and How You Can Avoid Those Risks
The benefits of launching person-to-person payments are many, which include added exposure to your financial institution to encourage additional business, your organization's easy adaptation to and adoption of technological innovations for customer convenience, and generally meeting your customers—and in this case in particular, many of whom are millennials—where they are in their busy lives.
Anything that provides ease and convenience online, though, is liable to bring out the naturally predatory nature of cyber-criminals who seem to never tire of trying to find new ways to cause havoc and steal people's money, identity or both. The best you can do is learn the possible risks to your customers and find the best tools to help protect them.
Following are some of the most prevalent risks to P2P customers, along with some solutions to keep hackers at bay.
Fraud is a fundamental risk that customers face anytime they give confidential information to another party. Fraud long predates technological strides, but technology makes easy work of it in the hands of hackers. Fraud impacts both you and your customers by breaking the trust they have in your financial institution, no matter how diligently you work to protect their information.
The first step to creating a safe environment in the midst of potential online fraudsters is to limit each customer's P2P usage for a brief period, which may last from 60 to 90 days, while also limiting the amount of money a user can send. During that introductory time, you can monitor the account to learn how the customer uses their account to understand their patterns so you can detect deviations from those patterns.
A second solution for fraud is to work with your IT and your fraud prevention teams to create and implement "out of wallet" types of questions that only your customers will know the answers to.
A slightly different type of fraud—or scam—has emerged out of the easy use of P2P payments. This relatively new type of fraud occurs when scammers use a peer-to-peer platform that serve as crowdfunding avenues to defraud customers. The Federal Trade Commission states that "the mode is new, but the scams are old" since those doing the scamming are taking advantage of donors' generosity; much like someone who would steal from a donation collection when the crowd wasn't looking.
One possible solution to this type of scam is to do your best to research each crowdfunding campaign in your person-to-person platform to help ferret out deceptive campaigns and remove them to protect your users and your reputation. It is also important that you give your customers a voice, providing them with an easy-to-use means of reporting suspected or known fraud.
Your users may face an interception of their P2P transaction during their over the air (OTA) transmission of data between the mobile phone and your bank or the ultimate recipient. Such an interception can result in identity theft, information disclosure and repeat attacks.
Build Your Peer-to-Peer Payment Risk Prevention Team
No matter how enthusiastic you are about developing a peer-to-peer payment system for your business, you probably also worry about the risks. With a talented and experienced risk prevention team, you can rest easier as you launch this promising innovation.