I have written about the implications of having the secure element stored in the firmware of the phone in a previous post (Read here). In this post I have explored the implications of placing your payment credentials in the phone (rather than in a removable component like the SIM card). All payment devices that I know (ATM's, POS's etc.) do not have the payment credentials stored in the device, but always on a removable smartcard. So I postulated that it will be a step backward if we buck this trend.In this post I would like to explore the impact on end-user perception and understanding of how payments work and the risk associated with payments.
I believe that most people know that a credit card payment without the physical card is not as secure as one when the card is not present. Some of my friends go as far as to never use their card on the Internet because they feel exposed doing a card transaction without the card being present. I believe that this is the case because people know that their payment credentials are stored on their card.
The most important question to be asked (I think) is where the average consumer would want their payment credentials to be stored. Would they like to have their payments associated with their phone, with their SIM card (or something else, like for instance the sticker that they got from their bank that they stuck on their phone). I don't know the answer to this, but I think that it depends and that it will differ from market to market. It is my guess that customers in the US would be happy if it is on the phone (some may not even know that they have a SIM card in their phone), whereas in other markets (especially developing markets), my guess would be the SIM card.
It is important to consider this when rolling out phones with secure elements integrated into the phone.
