Understanding Risk Management in Emerging Retail Payments

This article explores in several ways the structure and vocabulary of emerging payments system risks and their mitigation. We begin by recounting several incidents of fraud and losses associated with emerging payment methods. We then describe an economic framework for understanding risk control in retail payments. Next, we apply the framework to the risk experiences of three new payment types. These approaches—both deductive and inductive—are complementary ways to understand risk and its mitigation in emerging payment methods. Finally, we discuss some general observations derived from integrating the economic concepts and actual experiences, and offer conclusions.