Smart Phones Driving for Mobile Payments

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The widespread use of downloadable smart phone applications is igniting demand for mobile payments by both consumers and merchants. A smartphone is a mobile phone that offers advanced capabilities, such as e-mail, Internet and, more and more often, mobile payments.

In an April 2008 a Javelin research survey revealed that 9% of participants said used such smart phones. In April 2009, the percentage grew to17% of survey participants.

According to a report by Mercatus in June 2009, 18% U.S. survey respondents ages 18 to 25 said they had sent funds, paid someone or paid for something using their mobile phones. That is up 11 percentage points from 7% of respondents who reported making similar mobile payments in May 2008. Among the respondents aged 26-34, 14% reported having paid by mobile, up from 7%a year earlier.

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Debit cards are expected to account for 60 percent payment processing transactions. But unlike checks where most people record the details of the transactions, most debit-card users don’t’ track their transactions. As a result, debit cards users account for 44% of overdraft fees, while paper checks account for just 27%.

According to the Center for Responsible Lending 50 million Americans overdrew their accounts at least once in a 12-month period, and 27 million incurred five or more overdraft fees.  The average cost of overdraft transactions was $34 for each incidence.  As an interesting statistical aside, did you know Americans spend about the same amount of money on overdraft fees as they do on fresh vegetables?

Smart consumers will record their transactions and know their balances. One of the benefits of the debit card is that spending is automatically tracked. It’s easy to logon to an account get spending details. Investing a few minutes a day to be sure there’s enough cash to cover the purchases is a lot cheaper than absorbing the unnecessary overdraft charges.

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McAfee’s latest research paper called, “Inside the Password-Stealing Business: The Who and How of Identity Theft”, reveals startling facts on cybercrime. For instance, there was a 400% increase in malware designed to steal passwords in 2008. For the first 6 months of 2009, new malware surpassed the entire amount created in 2008.

Malicious software is sneaky and users have no indication of infection. Malware can be downloaded from bad email attachments or can be stealthily injected onto a computer by trusted websites that have been hijacked by cyber-criminals. It can also be sent automatically through social networks or games or by friends’ systems that have been infected.

Amazingly, gaming passwords are the most targeted logins for theft. There is a huge black market for gaming goods and currencies. , In fact, theft of gaming logins surpasses banking logins. Cybercriminals use the stolen passwords to sell off gamers’ virtual goods and gaming currencies for real money.

A good high risk payment processing gateway can guard against cybercrime.

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According to a survey by Tealeaf  Technology Inc., whose software analyzes consumer behavior online, 48% of US adults are buying more online this year than in 2008.

Most ecommerce transactions go smoothly. Still, 80% of online shoppers reported having a problem when buying online. Problems included error messages, problems logging in, and other negative experiences. Tealeaf estimates that online merchants will lose $47.6 billion in sales this year because of site glitches.

Consumers that do not have good experiences do not stick around and leave the site to go buy elsewhere. Customers complain about bad experiences on social networks and blogs rather than to the merchant. The viral effect of complaints on public forums is detrimental to merchants. More than half of the consumers surveyed said what they saw on social networks influenced their buying decisions and 82% said such material influenced which merchants they bought from.

A payment gateway and good shopping cart have tools to help you control ecommerce payment processing glitches.

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