Business Law – The Regulation of Mobile Commerce and the use of Digital Wallets
BUSINESS LAW – THE REGULATION OF MOBILE COMMERCE
AND THE USE OF DIGITAL WALLETS
The surging use of Smart Phones and Tablets to shop online has caused retailers to encourage the use by internet shoppers of digital wallets.
Digital wallet is simply a term to cover a range of electronic payment services. A digital wallet allows an internet customer to store multiple card details online in a wallet so they can select which card they would like to use when making a purchase. Online transactions can be completed with participating retailers simply by entering a surname and a password or PIN.
Digital wallets also include the ability to use the wallet across a variety of devices such as a laptop, mobile, telephone or in-store as well as the storage of data including billing and shipping addresses to make the shopping experience easier and prevent customers having to fill out the same information every time a purchase is made.
Digital wallets are great news for retailers. They give retailers the ability to offer customers more choice in terms of payment options by offering flexibility of payment accounts within the wallet.
Customers also benefit because they have access to a speedier and more seamless shopping experience. The use of such wallets will only increase over time.
Digital wallets can also be used to integrate rewards and loyalty schemes. The wallet will also give customers the ability to track and use reward points electronically for future purchases. Perhaps less than desirably, digital wallets will also provide retailers with the ability to more closely monitor the spending habits of their customers and will be able to design offers around previous spending history and habits. This will enable retailers to target offers and promotions to individual customers to drive sales.
For retailers, a number of key questions arise. For instance, should the digital wallet be confined to use online or should it be extended to in-store purchases as well? Furthermore, what sort of security package should be provided? Security will always be a key consideration for internet shoppers. Authentication is another key issue. Can the wallet be locked down quickly if fraudulent use is suspected? What obligation should the retailer be under to notify the customer of such fraudulent use? Can a wallet be remotely wiped if fraudulent use is suspected? What would be the consequences of that action to the customer?
Privacy issues will also be an important consideration for retailers. The digital wallet will collect the personal and financial information of customers signed up to the service. This information must be carefully protected or the retailers will risk sanction and fines for breaching privacy legislation. Retailers will also need to provide important notices to customers about how their personal information will be used and how it will be protected. The processing of customers’ personal information will need to be consensual, informed, given freely, and given upon the basis of informed consent after full disclosure by the retailer is made.
On a technical level, retailers will also need to consider whether their stores have adequate internet connectivity to enable a secure and reliable Wi-Fi connection to complete consumer transactions. Recharging facilities may also need to be provided for customers ending up without access to their digital wallets due to a dead battery. Technical glitches and lost sales will also need to be avoided so that the retailers will need to have responsive IT services.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
For any further information concerning this article, please contact Michael Pickering, Managing Principal, De Marco Lawyers. His contact details are as follows: