Millennials and Mobile Payments, What Is the Price of Convenience?


We are living in an age of accelerated technological advancement. With everything they need right at their fingertips, Millennials are having a significant influence on a consumer landscape that is quickly evolving. A force of 80 million Americans born between 2005 and 1981 with spending power increasingly prefer mobile payments via tablets and smartphones over shopping. Gone are the days of hanging out in the mall. Not only is changing the services and goods are being bought and sold on a grand scale, although the way merchants must connect with clients.

Convenience is King

Since they see it more convenient, millennials are choosing to bank and shop from their mobile devices. Millennial behavior illustrates exactly how important convenience is—and how ambivalent they’re to data security concerns. A poll conducted by TransUnion, one of the country’s leading credit reporting agencies, showed that while nearly half of millennials are concerned about cybercrime, their behavior states otherwise. According to the survey, eighty-six percent store bank account information on their phones and eighty-four percent report checking their accounts. What is more, sixty-seven percent do not password protect their devices.

The logical conclusion is that Millennials feel like their banks will keep their account information safe, and that same sense of security carries over to shopping—whether that’s via mobile browser or a native app. This means merchants must be agile in the changing technological landscape and quickly identify and stop fraud in the growing mobile payments channel.

“Merchants should be concerned with the security of the devices the customer is using to purchase from their site,” Verifi Vice President of Business Development Chris Marchand said.

“Security on a mobile device differs from the hardware and the software that is being used. A lot of the purchases that occur via mobile payments are done on unsecured wireless networks, which could also present risks to the merchant. This could push some type of malware to the merchant and compromise the security of their data.”

Marchand said it is common to see safety issues when a new tool or process is developed with the goal to make things easier or quicker.

“It’s a tough balance for a merchant to maintain when offering the convenience of mobile payments to the customer but also need to address the security concerns,” Marchand said. “Bottom line is, the mobile device was never designed for data security. They were designed to make things easier and more fun for the consumer. They’re user experience driven.”

Mobile Upgrades: Take the Good with the Bad

Merchants that have developed strategies to achieve these always-connected millennials are reaping the benefits. In reality, a Hanover Research report shows that fifty-two percent of millennials live by the “buy now, deal with it later” method of thinking. That is, millennials are showing to be impulse buyers. Throw in the fact that fifty-six percent are willing to share their location in order to receive quick deals from nearby companies, and of reeling them in, the odds get that far better.

While hyper-targeted marketing strategies directed at Millennials through their mobile devices have shown to be good for business, merchants still must be aware of the numerous security threats that arise in the mobile transaction arena. Mobile payments are gaining popularity, but many security professionals see a number of vulnerabilities.

Global cybersecurity association ISACA released its 2015 Mobile Payments Security Study after surveying 900 cybersecurity professionals, and their opinions suggest that security lags behind rapidly advancing technologies.

Of those polled, 87 percent believe there will be an increase in mobile payment data breaches over the course of the next 12 months. Forty-seven percent said they do not feel like mobile payments are secure, and only 23 percent think mobile payments are secure in keeping one’s personal information safe.

The demand for merchants to maintain speed is apparent.

Julie Conroy, research director of Aite Group, says, “While mobile fraud is still dwarfed by online fraud, criminals are well aware of the rapidly increasingly transaction volume passing through the mobile device, and we’re seeing them ramp up attacks targeting the mobile channel, from malware to SMiShing to account takeover.”


Millennials have left their electronic mark on payments. Their taste for mobile payments is clear, but their disregard for security makes mobile a lucrative—yet risky—channel.

“You could definitely make the argument that cellular is less protected, which means more fraud, which means more chargebacks,” Marchand said. “Determined by user interface and experience, there may be accidental purchases. The ease of use and ability may result in higher buyer’s remorse. Favorable fraud is easier, ‘I didn’t make that purchase,’ or ‘Someone stole my telephone or tablet.’”

Those merchants need to make sure their security and fraud prevention game is on point, although mobile will create opportunities for retailers to capitalize on this generation’s craving for convenience. While these new money streams are attractive to tech-savvy merchants, they’re also attractive to shrewd fraudsters ready to pounce on unsuspecting victims.

Merchants (and issuers) should stay vigilant in securing payments from end to end and throughout all stations. Outsourcing can be a feasible option for merchants who do not have funds or the internal personnel to execute a fraud plan. Working with a vendor to create a layered fraud prevention system which can be tested and toggled to fulfill each retailer’s custom needs is perfect, not only for procuring data, but also for preventing and reducing chargebacks.