One way of securing mobile payment offerings is through payment card tokenisation, which eliminates the need for merchants or operators of mobile wallets to store sensitive payment data on their networks, suggested Woo. With tokenisation, credit and debit card data is encrypted at the point where it is captured and sent to the merchant's payment processor where the data is decrypted and the transaction is authorised. The processor then issues a token - a unique, randomly generated sequence of numbers, alphanumeric characters - representing the entire transaction back to the retailer while the actual card number itself is securely stored in a virtual vault. The retailer can use the token to keep track of the transaction and handle refunds, returns, exchanges and other transactions. However, the token itself will be of little value to data thieves as it requires a specific decryption key for it to be linked to the actual card, Woo explained.
Mobile payment clusters in APAC
IDC's APAC Mobile Payments Landscape 2015 report says APAC will be a diverse battleground for mobile payments.
Mature markets with such as Hong Kong, Singapore and Australia are unlikely to abandon existing payments for mobile payments due to their high card usage and mature financial infrastructure. As such, consumers there are more likely to adopt mobile payments in the forms of NFC-type payments, said IDC.
Mobile wallets, on the other hand, will see an increasing uptake in Malaysia, China and Thailand. This is because such countries have low card usage but enough technology and smartphones to drive mobile payments to leapfrog past card-present payments
In APAC countries where cash is still dominant and Internet may not be widely available such as the Philippines and Vietnam, SMS-based systems will be the preferred form of mobile payments adopted by consumers there.
"Since the financial infrastructure in developing countries is often underdeveloped, mobile payments will be a practical and easy way for users to access financial services quickly and economically," commented Arya.
Future of mobile payments
As customers become increasingly dependent on their phones, the payment industry needs to look at ways to develop mobile payments to meet the changing demands of customers and gain competitive advantage. "In order to stay ahead, retailers and financial institutions need to improve their mobile capabilities and security infrastructure by forging new partnerships and alliances with players across industries. They could also invest in value-added features such as geo-location technology, multi-factor and biometric authentication, as well as context aware applications and real-time data analytics," said Knuff.
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