TOKYO -- Mobile payment operators will be insured for compensation to victims of hacking under coverage to be offered by two major Japanese insurance companies.
Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, both under MS&AD Insurance Group Holdings, will begin selling policies in September. Operators could collect payouts in circumstances where they would likely need to pay damages, such as accounts being hacked and used for unauthorized purchases, or personal information being leaked.
While the convenience of going cash-free has led more users to embrace smartphone payment platforms, the services remain a target for hacking. Insurance policies will likely help users feel safer about using the services and encourage their spread.
A number of mobile pay operators appear to be considering policies from Mitsui Sumitomo or Aioi Nissay Dowa. For a service with 1 million users and any given user eligible for up to 300,000 yen ($2,800) in compensation, annual premiums would likely reach 30 million yen or more.
Operators taking out insurance on their platforms would have to stipulate the terms and scope of possible damages in their user agreements and would be urged to make thorough efforts to prevent unauthorized access. Similar policies exist for credit card companies, whose user agreements also generally provide for damages.
July saw widespread thefts from users of 7pay, the nascent platform of Seven-Eleven Japan parent Seven & i Holdings. The service's user agreement did not say it would pay reparations in such events, though the company decided to compensate victims.
7pay is now slated to shut down in September, and many such services still do not provide for compensation. But some did as of August, including Merpay, a payment platform linked to flea market app Mercari; SoftBank Corp.'s PayPay; and mobile provider NTT Docomo's D Barai.