The E-Commerce Cyber Security Advantage
In fact, you may be surprised to learn that most consumers now view online transactions as safer than POS transactions at a brick-and-mortar location, this according to a recent study by ACI Worldwide and Aite Group. The growth of e-commerce figures to continue as consumers look to simplicity and security from their transactions. For omnichannel retailing to work, the physical store must keep up.
The Race to Update
Fortunately there are some alternatives emerging for omnichannel retailers. For brick-and-mortar retailers, the shift to EMV payment technology promises to improve security and reduce fraud at in-store POS systems. EMV, or "chip and pin," technology incorporates embedded microprocessor chips on credit and debit cards, replacing the less secure magnetic-stripe cards. By October 2015, major global banks and payment providers, including Visa and MasterCard, will require retailers to support EMV technology (with in-store readers) or bear the risk of loss.
Tokenization is another layer that can add security to EMV. Expect that ApplePay will get a great promotional boost as it not only adds tokenization, but also fingerprint recognition and a cryptogram with the transaction.
Then again, if you're coming from the e-commerce world, it begs the question: Why do you need POS at all? I believe that the convergence of the digital and physical worlds will happen quicker than many believe and POS systems will be phased out in favor of mobile tablets or phones. In fact, I eventually see retailers simply relying on their customers own phones to initiate the notice of payment without handing over any of their personally identifiable information to in-store technologies.
Regardless of the advances, there will be a continuing arms race — retailers and payment providers developing ever-more secure methods, including end-to-end encryption. This will coincide with hackers deploying ever-more sophisticated tools to get around them. Of course, the simplest method for hackers is always having someone on the inside who knows the way around all the defenses.