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Mobile Payments: Consumer Benefits & New Privacy Concerns

20 Pages Posted: 24 Apr 2012 Last revised: 11 Feb 2017

Chris Jay Hoofnagle

University of California, Berkeley - School of Information; University of California, Berkeley - School of Law

Jennifer M. Urban

University of California, Berkeley - School of Law

Su Li

University of California, Berkeley - School of Law

Date Written: April 24, 2012

Abstract

Payment systems that allow people to pay using their mobile phones are promised to reduce transaction fees, increase convenience, and enhance payment security. New mobile payment systems also are likely to make it easier for businesses to identify consumers, to collect more information about consumers, and to share more information about consumers’ purchases among more businesses. While many studies have reported security concerns as a barrier to adoption of mobile payment technologies, the privacy implications of these technologies have been under examined. To better understand Americans’ attitudes towards privacy in new transaction systems, we commissioned a nationwide, telephonic (wireline and wireless) survey of 1,200 households, focusing upon the ways that mobile payment systems are likely to share information about consumers’ purchases.

We found that Americans overwhelmingly oppose the revelation of contact information (phone number, email address, and home address) to merchants when making purchases with mobile payment systems. Furthermore, an even higher level of opposition exists to systems that track consumers’ movements through their mobile phones.

We explain some advantages of mobile payment systems, some challenges to their adoption in the United States, and then turn to our main finding: Americans overwhelming reject mobile payment systems that track their movements or share identification information with retailers. We then suggest a possible remedy for such information sharing: adapting provisions of California’s Song-Beverly Credit Card Act, which prohibits merchants from requesting personal information at the register when a consumer pays with a credit card, to mobile payments systems. Our survey results suggest that consumers would support limitations on information collection and transfer. Song-Beverly could be adopted to accommodate those who wish to share their transaction data.

Keywords: Mobile payments, m-payments, privacy, location, survey research, consumer protection, identification, tracking, digital wallet

JEL Classification: K23, K29, D18, D12

Suggested Citation

Hoofnagle, Chris Jay and Urban, Jennifer M. and Li, Su, Mobile Payments: Consumer Benefits & New Privacy Concerns (April 24, 2012). Available at SSRN: https://ssrn.com/abstract=2045580 or http://dx.doi.org/10.2139/ssrn.2045580

Chris Hoofnagle (Contact Author)

University of California, Berkeley - School of Information ( email )

212 South Hall
Berkeley, CA 94720-4600
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

University of California, Berkeley - School of Law ( email )

344 Boalt Hall
Berkeley, CA 94720-7200
United States
510-643-0213 (Phone)

HOME PAGE: http://hoofnagle.berkeley.edu

Jennifer Urban

University of California, Berkeley - School of Law ( email )

342 Boalt Hall, North Addition
Berkeley, CA 94720-7200
United States
(510) 642-7338 (Phone)

HOME PAGE: http://www.samuelsonclinic.org

Su Li

University of California, Berkeley - School of Law ( email )

Berkeley, CA 94720
United States
8476449763 (Phone)

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