We all want security to be front and center in terms of decisions on new applications. We all follow the researchers who show time and again how mobile apps, or web apps, or pretty much anything, can and will be gamed. Yet all that doesn’t matter, as security cannot get in the way of business. Branden Williams did a great job digging into the economics of Starbucks’ stored value cards to make a pretty compelling case that this stuff will happen, whether security likes it or not.
Now, let’s say that I install the app on my phone, and set it to recharge $50 every time my balance gets low. I have now reduced their transaction volume with me to 10% of the original (26 times to recharge vs 260 transactions). This changes the fees to $23.27, or a 60% reduction in my cost burden to the company with the added benefit that they get to use my cash for anything they want while I work it off over a period of time.
You should read the post because it hits on a number of the economic drivers that make stored value cards a huge win for small-ticket shops like Starbucks. Of course providing access to micropayments from a mobile app introduces risk. But given the numbers Branden outlines, that won’t stop Starbucks from doing everything they can to get everyone using their stored value cards & accounts. The numbers don’t lie – this stuff is going to happen.
And these environments will be attacked because they represent a path of least resistance to get financial data. Which underscores the importance of working with the business people and app development team as early as possible to get ahead of the risks of these mobile-driven business processes.
Photo credit: “Starbucks Mobile Card iPhone App” originally uploaded by Joe McCarthy