Mobile payments have quickly become one of the hottest markets in tech. In the last month, we've seen Apple and a consortium of retailers vie for this growing market, and there are rumors that Facebook will soon offer a service for users to send money to each other.
Now the sometimes-secure messaging service Snapchat is throwing its hat into the ring with a feature called Snapcash, which allows users to send small payments to their friends.
Why all the fuss about these new services? The Economist reports that market researchers estimate peer-to-peer payment services will grow at 26 percent yearly and expect this to reach $17 billion by 2019. That's a lot of money.
On this blog, we've already looked at Apple Pay (see, "Will There Be Unforeseen Security Issues with Apple Pay?"), but let's examine what Snapchat will offer and explore what it suggests about the future of mobile / P2P payments and cyber liability.
How Will Snapcash Work (and Will It Be Secure)?
Snapchat doesn't exactly have a reputation for data security. After a data breach, a ruling from the FTC forbade the messaging service from advertising as "secure." Plus, Snapchat failed to combat third-party apps that endanger user security, which is why the company has become a whipping boy for data security.
And yet, it still has a loyal base of young users – in today's tech economy, that's a goldmine.
Younger users have fewer scruples about making online payments, so Snapchat may be trying to capitalize on it. They grew up with it. Furthermore, sharing cash is a common necessity among young people. You can imagine that Snapcash has already been used by college students to split the cost of a pizza.
How will Snapcash work? The Washington Post explains that Snapcash…
- Links to a user's debit card.
- Allows users to send small amounts of money to their friends by texting a "$" and the amount of money they wish to transfer.
The money disappears in 24 hours, so friends need to claim it, or the transaction will be refunded.
As an IT professional you may be thinking, Wait a sec. Snapchat has a terrible reputation for security. Can it actually make secure transactions? In a bright move, Snapchat decided it would trust its security to someone else. The messaging service has partnered with Square to handle these transactions.
Mobile Payments Security: What Is an IT Professional's Liability?
As with any third-party app or software, the IT professional who installs or recommends it for a client can be sued if it isn't secure. It's the same liability you have if you install enterprise software or a point-of-sale system for a client.
Say you work with retail clients who are looking to accept a new mobile payment service. If the service has a security flaw that exposes your client's customer records, you could be sued. The client could file a data breach lawsuit against your consulting firm, seeking money for their reputational damage, data breach costs, and other expenses.
But this is nothing new. Cyber liability is a part of any technology you work with. Even as mobile payments grow and become more secure, the IT consultant at the ground level will share some of the liability. To learn about covering your cyber liability, check out Professional Liability Insurance for IT professionals.