Use failure of 7pay as an opportunity to renew efforts to prevent fraud

The Yomiuri ShimbunThe latest decision to scrap a new cashless payment service only one month after its launch is unusual. In response to this, the industry as a whole should reacknowledge the importance of implementing safety measures.

It has been decided that the 7pay service — a system through which users are able to make payments for purchases at Seven-Eleven stores via their smartphones — will be shut down at the end of September.

Unauthorized use of the system began immediately after its start on July 1. As of the end of July, IDs and password information for 808 people were illegally used, with the amount of damage reaching about ¥38.6 million.

The 7pay service had not incorporated such mechanisms as a two-step verification system — in which users are sent a message to confirm their identity — with a view to preventing identity theft. The failure to follow a recommendation issued to adopt the authentication system under guidelines set by an industry association must be taken seriously.

Seven & i Holdings Co. has concluded that continuing the service would be difficult because of the time needed to reinforce security measures. At a press conference, the company acknowledged its lack of preparation, saying, “We didn’t do enough to assess [the system] even during its development stage.”

The company seems to have been impatient because of its delayed start of a smartphone-based payment service. It cannot escape criticism for its lax awareness of security.

The spread of smartphone payments and other forms of e-payment systems will save retail outlets the effort of holding cash; it would also enable retailers to reduce their workforce. It is expected to create new services through the utilization by corporations of big data, such as the purchase history of customers.

Reexamine risks

As part of its growth strategy, the government is supporting the spread of cashless payments because it expects economic benefits. There are concerns that the latest problem may adversely affect the trend.

Corporations such as internet companies, communication firms and banks operate smartphone payment services. This has led to the presence of too many such services, resulting in intense competition among operators.

It is of utmost importance for operators to secure the convenience of smartphone payments while also preventing unlawful access. This must not be forgotten.

Hacking methods have become sophisticated. It is important to collect the most up-to-date technical information and constantly update measures against unauthorized access.

There is expected to be an increase in the number of payment service providers that cooperate to connect different systems. Given this, it is also indispensable to strengthen safety measures from the standpoint of how to prevent illegal access using ID information supplied by other companies.

The start of a reward points system for cashless payments using smartphones and other electronic devices will coincide with the increase in the consumption tax rate in October. This bears significance, as the system could alleviate a decline in consumer spending. Efforts must be made to prevent confusion resulting from unlawful use of the scheme.

Business operators need to take the weight of their responsibility to heart and reexamine their risk management systems.

(From The Yomiuri Shimbun, Aug. 11, 2019)Speech


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