Data Breaches Shine Light on Secure Contactless Technology

It seems as if every week another retailer has fallen victim to a data breach. Many retailers are wondering if they're next. Some companies are looking to implement technology to hopefully avoid an attack on their customers’ data. Near-field communication (NFC) technology is at the top of the list, bringing real-time engagement to customers with smartphones and other enabled devices within a short range. When used for payments, no personal information is "handed over" through the system, making NFC technology a very secure method of wireless communication.

NFC is also providing a new way for retailers to interact with customers in-store through interactive digital signage. Many retailers are able to expand the customer experience through NFC by connecting screens of any size to the technology, allowing retailers to collect important customer data as shoppers engage with the screens. Retailers then receive real-time marketing analytics from a cloud-based platform. Retailers are able to use this information to increase customer engagement and sales, all in a secure way.

The breaches that plagued The Home Depot and Target involved the data centers that each retailer uses to store customer transactions. These retailers store credit card information so that the customer doesn't need to present a credit card when returning an item at the store. It also makes it possible to return an item without a receipt. By presenting the card used to make a purchase, retailers can look up the purchase using the stored card data.

While this feature is convenient for the honest customer and a simple process for the retailer (and also protects against fraudulent returns), there's a risk of information being stolen if the data center isn't protected. NFC is used in lieu of sliding or inserting a credit card into a point-of-sale terminal, making it quicker and less concerning for customers worried about data breaches than using payment via Bluetooth.

The introduction of Apple Pay, the new contactless payment application on the iPhone 6 and iPhone 6 Plus that uses NFC technology to function, has pushed more retailers to implement the technology in stores. While many other smartphone providers (e.g., Samsung) offer consumers the ability to use NFC technology in previous models, Apple holds a large share of the smartphone market, which has in turn increased adoption of Apple Pay. This implementation has sparked a massive effect on technology and uptake in the United States.

Since the announcement, many consumers voiced concerns for the storage of credit card information in smartphones. The risk of a stolen phone, breaches, hacks, etc. — the outcries were endless. However, it's not the use of NFC technology that leads to breaches, it lies in whether Apple is protected enough. For Home Depot, its servers were hacked, leading to bank fraud, something that can happen with Apple and PayPal if the powers that be aren't picking the right technology and security measures.

A mobile strategy is extremely important for brick-and-mortar retailers, especially with the addition of NFC technology on the latest Apple devices. Smartphones have made it possible for consumers to shop at ease; with NFC technology, many are putting their minds, and bank statements, at ease as well.

Douglas Lusted is the CEO of LINKETT, a provider of hardware and software innovations for the digital marketing industry.