I find it perplexing, though not particularly surprising that Mobile Paypass is receiving a relatively loud fanfare in the press here in Canada – 27 articles as of the writing of this post on Sep 13. The headline “First Big Bank to Launch Mobile Payment” is somewhat misleading. The solution that BMO are offering is not remotely new, and it is not what I would consider a true mobile payment solution.
This solution is a sticker with an NFC tag that can be used to pay at NFC payment terminals at the POS in the same way that MasterCard Paypass Cards are currently used. Customers tap the Paypass Tag on the back of the mobile device on the payment terminal and the card details are passed to the terminal for payment.
The MasterCard Mobile Paypass can adhere to the back of a mobile device, but it can be just as easily stuck to your iPod, your leather wallet or your keychain if you so wish. Effectively one can also do the same thing today with a BMO MasterCard plastic card. It fits in the cover on the back of an iPhone, and nothing stops anyone from doing that and leveraging a ‘mobile payment solution’.
If MasterCard Mobile Paypass is considered a mobile payment solution, Esso Canada SpeedPass and Shell Canada’s EasyPay should be as well. These solutions are wireless key fobs connected to an account with a credit card number that effectively do the same thing, and have been on the market and available for consumers for many years. While not ‘offered’ by a big bank and only usable at a specific retailer, they have certainly been in the mainstream for many years.
All of the hype around mobile payments should be around a true mobile wallet versus using a sticker or a key chain to make credit card payments instead of a physical credit card. While these are wonderful stepping stones that I use and will continue to use, the exciting part is getting to that true mobile wallet.
The following are my criteria for a true mobile payment solution:
1. Integrated Communication to Payment Terminal – The NFC or whatever communication technology that communicates with the mobile payment device is physically ‘built in’ to the mobile device. As far as I am concerned, a true mobile wallet is not physically separate from the mobile device. That module could be part of a SIM card perhaps, but it should be integrated to the phone electronically in some way. NFC is preferred, as it does not require cellular or wi-fi data accessibility for payments to be processed.
2. Mobile Wallet Application Software on the Mobile Device – A mobile wallet requires a mobile application that can leverage the NFC or other communication technology as though it were a peripheral. It should be possible to see multiple cards from various banks and card issuers and their details at the very least. A more sophisticated version should also include loyalty cards, gift cards, transaction details, coupons and offers, tickets and even receipts for all purchases made with the card. While the solution could be browser based, it should have an offline function at the very least for times of no data connectivity.
3. Ability to pay with Multiple Cards – The wallet should support multiple payment cards that can be chosen on the screen with the same NFC interface to the payment terminal. Could be any credit card (Visa, Mastercard, Amex, etc) or any debit cards from any bank. Should also be able to work with retailer offered gift cards.
4. Card Additions, Removals and Changes – The wallet should have the capability to have cards added or removed in the wallet by the user or bank or card issuer. The cards would use the same NFC interface on the mobile device to connect to the payment device. The wallet should have a the capability to be ‘deactivated’ remotely by the user or card issuer.
5. User to User Funds Transfers – Ideally, it would be possible to pass funds from one user to another by tapping the phones together, based on the account of choice by the user. This could be a release 2.0 feature.
This sort of solution is very different from attaching a tag to a mobile device and calling it mobile payment. The keys to getting a solution of this kind in place have been covered many times in this blog, but the fundamentals in Canada are a widely available and popular NFC enabled mobile device, and an application backed by a company large enough and trustworthy enough that consumers will be comfortable enough to put their credit card numbers in their hands. Both are challenges. I won’t even mention encryption, security, EMV, or PCI. That it must work within those parameters is a given.
Google Wallet is closer to this reality than anyone else, though there are always rumours of Apple, RIM and Paypal as well. When the mobile wallet I describe above is offered, we will have arrived. Until that point, beware the inflammatory mobile payment headline.
Update 9/15/11 – I understand from another article that e-mail receipts are also available with this option. That is a slight change, but considering it is mainly for purchases under $50, the value of receipts for double-double at Tim’s. Still, it is a step forward to e-receipts and less paper that I am definitely in line with.
Another consideration is that if a purchase does happen to be over $50, I’m not sure what the process will be. With my current BMO Paypass card, there is a chip on it, so I insert the card into the pinpad and enter my PIN for more than $50. I don’t think there can be a chip on this card, so we might be back to signatures. I expect that they will have to put a signature space on the card so clerks can check it. Now one has to pass the clerk the mobile device so that they can check the signature (don’t like that), and get a paper receipt which negates the benefit. I don’t think retailers will love gathering receipt slips again now that EMV is in place. It’s a good stepping stone, and I’ll be very interested to see how it works out! I’ll get one if I can.