There are several risks related to POS systems:

1. Setting up a fake store to collect card numbers, not selling anything or promising to ship and not shipping. While this is possible with Mobile POS it can be done at much larger scale online. So, while I know for a fact this is a problem (for the providers rather than the consumers, since the providers take the ultimate cost if the merchant bails), it’s similar for offline and online POS (and actually harder to pull off offline).
2. Rogue employee at a store or just a random person scanning cards: they would have to take hold of your card. Again, doable but really the same risk as the cashier double-swiping your card at the restaurant. Does make it a bit easier.
3. Skimming: altering the reader is some way to look normal but collect your details to a separate database, using a physical add-on on the reader. Pretty common with ATMs. I wouldn’t say this is unique to mobile POS.
4. Intercepting the communication at the reader, the device itself or the medium between the device and the service. Regular POS systems and ATMs can be attacked in the same manner. It’s arguably easier to get a mobile POS and reverse engineer it, but I really think it’s a small risk.

All in all I’d say mobile POSs are exposed to reverse engineering, can facilitate manual duplication of cards because they are easy to get, pose higher vendor risk to the provider of the POS and are arguably weak(er) when the reader is not encrypted. Most of these risks are shared with other POSs and, in my impression, do not render mobile POSs less safe for the consumer (barring common sense. Don’t hand your card to a suspicious guy at a street corner).

I don’t know how they do it, but here’s how I believe they are (or should).

• Community policing through flagging of bad reviews
• Batch rules running text scans for word lists and regexps looking for links, crossed with account parameters (time on site, email type, other provided details) and behavior parameters (frequency and size of posts, text quality, browsing pattern).
• Linking mechanism detecting account connection and repeated users to identify socks puppets, an attack on a store or a store boosting its own reputation
• Velocity mechanism to identify emerging trends (certain store getting bombarded, certain IP over represented etc)
• Possibly: crawler for posted links, evaluating the website after the jump for content
• Possibly: semantic analysis of the actual content, specifically focusing on semantic fields, grammar and punctuation analysis
• Possibly: statistical models pointing at possible suspected reviews

All of these leading to manual review by (most probably) off-shored staff making an actual decision. Extra points for real time rules and modes and actual real time decisions based on more than just posting velocity, but I’d be (really) pleasantly surprised to hear that those exist.

As an ex-Israeli now working with Americans, various Europeans and Israelis I can say the following:

Yes, we are hard to work with. More than other nations? Depends on how you look at it. I found that sometimes my values didn’t jibe well with immigrants from mainland China, for example. So to me this is more a question of incompatibility in communication styles than one nation being harder to work with.

Here are, though, a few reasons why working with Israelis can be difficult for the typical Valley geek or Corporate America type (or rather, how Israelis might be viewed by others):

• Almost complete lack of respect for authority. Israelis are by and large all Chiefs, not Braves. We “know” what needs to be done and most of the time it translates to “it’s my way or the highway”. There is a constant push to advance in rank in the Israeli society and a sense that staying some time at a certain place grants you rights even if you do not over-perform – probably a relic from Army or Socialist days.
• Aggressive demeanor. The Valley is by-and-large a highly passive-aggressive culture while Israeli culture is aggressive. There is a great lecture by an Israeli Psychologist who lives in California[1] showing the differences by looking at the production of the Israeli and American versions of http://www.hbo.com/in-treatment/index.html. In short: we are confrontational to a level that makes people in the Valley uneasy. A common way to express disagreement in Israel (at least where I lived/worked) would be to say “this is the stupidest thing I’ve ever heard”. Really. Compare to California’s “I don’t disagree, but let me offer a different point of view”. This even translates to differences in respect for personal space (read: we will get in your face).
• Cynicism. Israelis rarely make leaps of faith and cannot deal well with some of the craziness of daily corporate life. You’ll never hear an Israeli using an equivalent of “it is what it is”. We have a basic lack of belief in leaders and we tend to challenge them frequently. This is not to say Israelis are not capable of developing a cult of personality, it just manifests itself differently. We don’t tend to believe that people are basically good, are very suspicious usually, and lose faith in others rather quickly. This can lead to behavior that seems political and silo-ed, but has different motivations. We are also action-driven to a fault; maybe the title of this bullet should rather be “lack of patience”.
• Entitlement. As my down-voted friend demonstrates here, we are a nation in holocaust-driven post-trauma even at third generation. The holocaust (and to be honest, daily/weekly news of persecution of Jews around the globe) drives us to feel that the whole world is against us, and at the same time that we are entitled for special treatment because of it. It doesn’t help, either, that most of us arrive at the Valley via acquisition. It also doesn’t help that most of the Israelis you meet in the Valley came from top programs in the army and academia (you don’t meet the average Joe) and so come with a built in sense of entitlement.

Are Israelis hard to work with? Depends on who you ask. These behaviors above can be spun in a very positive way (see “Start-up Nation”[2]); we create small elite teams that solve ultra-hard problems for huge corporations, and you usually find Israelis at important decision points in various companies just because we have the guts to decide and lead. After having lived in various places I can easily argue each stance, and frankly, both are true.

[1]

[2]
FraudSciences, a company I helped grow and that was acquired by PayPal, appears in one of the first chapters. Knowing how the story really went I can tell you that, indeed, the book makes us look much less brash than we were.

This is a great question and I don’t have a good answer for it. I do, however, have a few uneducated guesses.

• Regulation: innovating in payments requires working with regulators and privacy concerns, and any new concept introduced requires a lot of convincing. This requires a lot of energy, taking focus away from innovation. By the time someone is done with their first payments company they are so done with the field that all of their valuable experience is never used.
• Features, not products: most of the attempts to innovate in payments have not been viable products but rather improvements to existing options, Stripe included. Innovating in payments requires deep industry understanding because most of what you do in payments is under the hood. As a result, companies start with some novel idea, and then meet the realities of the business and wither away quickly (related to the previous bullet).
• Stagnation in large players: once you’re big enough in payments, you’ve made so many compromises and adaptations to your system to work with regulators, acquirers, collection companies and other players in this fragmented market that you’re both worried about innovating since stuff break all the time, and unable to innovate because of your current solution’s limitations.
• High barriers to entry: finally, as I keep noting, the two huge barriers in setting up most payment services are access to capital and user adoption. Most companies fail these, way before they can bring any innovation to market.

That said, I think that Braintree (payments company) and Stripe (company) are making interesting, innovating moves in the gateway segment and Square, Inc. is reinventing UX for offline purchases (and, a plug, at Klarna we are doing something new in eCommerce payments). There are things to look for.