2013.34 | loop | shop this

loop walletLoop – A new payments solution called Loop is looking to make its way into the ever complex pile of payments options.  The solution leverages current infrastructure in place by accessing MSR readers in place and communicating with them over the air via a case on the mobile device.   Using current infrastructure is a smart move. Anyone with real world experience in retail technology knows that changing out thousands of stores with even a small piece of technology is a significant effort.

The even greater challenge is getting mindshare from the general public.  The world has been overwhelmed with payment options; swiping, dipping, PIN, no PIN, tapping, scanning a barcode, RFID dongles, gift cards, scanning from mobile screens, NFC on mobile – there are too many choices and they are confusing to a great part of the population.  As Square found out at Starbucks, even a slight change to the payments process can easily confuse store staff.  Another unfortunate challenge is that the crowd that is most willing to attempt to use a mobile device to make payments are also the population least willing to stick a chunky case with a cable on their phone to enable payments.

From a selfish consumer’s perspective, the best way to deal with this sort of payments challenge is to put the payments infrastructure online and let the payments happen there.  Consider Uber.  For those that are unfamiliar, this app virtually flags down a cab / limo / SUV near you so they can pick you up and take you to your destination.  Instead of holding cars up on the road while people pass cash back and forth or tap cards, customers put their credit card in the app and store it there.  They request a car and see an estimated price.  When they ride is over, the approve the payment within the app.  The driver can validate payment received and everyone parts happily.  No new infrastructure required and there is less inconvenience for the consumer.

Buying movie tickets with the Cineplex mobile app works the same way.  Unfortunately one has to enter their credit card for every transaction, but still no need to wait in line once you get to the theatre.  While there are risks from those who would use stolen cards, Cineplex found a way to deal with it, and I’m sure others will as well.  While it’s a pain to have to enter credit cards in all of these apps, it beats putting some crazy case on my phone that will only work at some places.

While these are definitely point solutions and not the universal wallet that solutions like Loop are trying to enable, there are more and more mobile or tablet point of sale solutions and passing a card or cash (or God forbid a cheque) seems like more of an anachronism every day.  It would be great to put it online, get away from readers of any sort and be done with it.  Payment systems that do not depend on tapping, swiping or scanning ANYTHING are the best path to the future.  If geo-fenced payments like pay with square or paypal here or even iBeacons could be used to enable geo-fenced payments so we could all quit with the crazy swiping, and signing that would be perfect.  Fundamental changes like this take time, but every step counts, and I appreciate solutions like Loop trying to move us all in the right direction.

If anyone is looking for a real nut to crack, let’s figure out a way to put ID cards like Health Insurance and Drivers Licenses on mobile.  Then we can really ditch the wallet.

Photo 10-22-2013, 10 30 59 PM

Mastercard Shop This – Wired magazine (tablet edition) subscribers can access Mastercard’s Shop This functionality in the November edition.  The concept is that with Shop This, consumers register their shipping details and their cards with Shop This and then they can buy items directly from the Wired magazine tablet edition without exiting the magazine app.  Removing the need to enter details every time you wish to purchase something removes the barriers to purchasing, and that’s what Shop This enables.  I found the initial version a bit disappointing as the Shop This logo doesn’t appear on all the items.  Expect more of these sorts of schemes to enable simple payment and shipment in the same vein as Amazon and iTunes.  In fact, iOS 7.0.3, released today, enables keychain capability to extend to iPhones to allow Safari to remember address and credit card details across devices and browsers.

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2011.04 | NFC Mobile Payments

Image Source - Cult of Mac

The previous blog post on Starbucks 2D Barcode Mobile Payments drew questions from readers and colleagues around Near Field Communication (NFC) payments, specifically, why would Starbucks have implemented a 2d Mobile Payment solution when NFC is just around the corner?

The Starbucks solution with 2D payments is a perfect fit for the unique Starbucks situation and does not preclude them from accepting mobile NFC payments.  However, the 2d barcode payment is not one I would recommend for any other retailer unless they were have the same characteristics as Starbucks and their solution outlined in the previous post, and there are few if any retailers or consumer facing organizations in that position.

In order to provide NFC mobile payments, it is necessary to have the following elements: NFC at Point of Service, NFC enabled mobile devices, and most difficult of all, Credit Card Company and Credit Processor cooperation.

Point of Service Interface – Retailers that wish to accept mobile NFC payments require NFC enabled pinpads that already work with NFC credit cards.  The most common units in place so far in Canada are the Verifone vx810 and Ingenico i3070c.  These pinpads would provide the interface in stores for NFC ready mobile devices, and are, in fact, already widely installed by many tier 1 Canadian retailers as part of recent EMV efforts.

NFC Mobile Devices – According to rumour, both RIM (Dakota) and Apple (iPhone 5, iPad 2) have NFC ready devices coming out in 2011.  If that is the case, then we may indeed finally be looking at the long awaited electronic wallet, as we now have an encrypted and relatively secure electronic interface from mobile device to point of service device.   Apple and RIM’s massive base and marketing power, as well as their ongoing competition, certainly has the potential to drive massive traffic.  So the mobile devices might be coming, but this has been the expected for at least 4 years.  We’ll call mobile NFC devices a strong maybe.

Credit Card Company / Processor Cooperation – My thoughts on contactless payments are well documented on the blog under NFC if you want to pick it from the tag cloud. The problem isn’t the technology, it’s how the payments get processed and who gets paid to do it. See my posts here and here, as well as a recent article published on StoreFront Backtalk.  The credit card companies, and the various payment processors already get their slice of the payments pie, while all of the mobile carriers have been trying to figure a way to get theirs for years now. Both Canada (Enstream) and US (Isis) mobile carriers have established collective organizations to deliver on mobile payments.  It isn’t that all of these organizations don’t want mobile payments, it’s just very difficult to sort out, and there is really no extra potential revenue in it for them unless consumers or retailers will pay more for some reason.  Some may point to startups like Square and Twitpay, and they may take a bite out of mobile payment in the future, but it doesn’t look like it will happen in the immediate future.  Getting these organizations on board, extending a very successful and secure closed network to the uncertain security of millions of devices is a long short in the near future.

NFC mobile wallets can and should happen (you can already stick an NFC tag on your phone if you like), but sorting out who gets paid how, and how funds will stream through a secure system will take some time.  Nobody knows when that will be.

Why did Starbucks implement a 2d Barcode Payment System instead of NFC?  Only they can answer that, and much of it may be marketing, but in the end, they can drive an ROI.  With a 2D system implemented TODAY, Starbucks potentially gets more consumer card usage, drive more ‘deposits’ on their stored value card, and a quick tender.  Consumers get the convenience of paying with their phone, and the kind of bleeding edge fun many Starbucks customers enjoy.

Starbucks avoids the complex mess of processors, EMV, PCI, and dealing with the processors and credit card companies altogether by taking no the risk themselves.  They have made a good gamble on the fact that they can attract early adopters with relatively very little investment, and by the time mobile payments are mainstream, their system will have already provided a good ROI.

2009.20 | What Mobile Wallet?

I’ve been looking at using NFC solutions for some time now, and the recent announcement that Subway is going to install a Visa PayWave contactless solution reminded me of that fact. It’s solid technology, it works well, and I personally use it a couple of times per week where I can with my MasterCard Paypass credit card.

In Canada, we have infrastructure in place with most large retailers owning or deploying contactless infrastructure in some fashion – Subway, Second Cup, Rabba, McDonald’s, Canadian Tire, Petro Canada, Tim Horton’s, Cineplex, Loblaw and more moving to contactless support every day. I love it and think it’s a tremendous solution on cards.

We’ve also had a couple of trials in Canada on using NFC as a mobile wallet, with the credit card companies, the mobile carriers the and payment terminal companies all explaining the benefits, but what’s happening to take it to the next level?

Two big things hold back NFC as the mobile wallet (in Canada at least):

1. Acceptance – For 20 years and more, Canadians have been used to three options. Cash – no problem. Debit – swipe card, use pin. Credit – swipe card, sign receipt. Now we’ve added Chip and Pin to credit and debit. That’s confusing to the uninitiated. We also have contactless NFC cards and now dual interface NFC and Chip and Pin on the same card. There is word of Visa Debit competing with Interac.

Now, customers aren’t sure if they swipe, dip, tap, sign or don’t sign, or if there is a charge to use a service. Most of them will default to what they know. They are being asked to think about too much. In this case, it seems that competition is actually a bit of a problem.

2. Device Availability– I spoke to someone from a bank today that works with new solutions and when I asked about contactless, she said she was getting a ‘4 year old phone’ to use for a contactless trial. She uses a Blackberry and I use an iPhone. We represent a large proportion of the market for a mobile wallet in early days, and we can’t get a mobile wallet for our phones. Without NFC or some other secure way to pass information, the mobile wallet is just a mockup, and the fact is that you just can’t get an NFC phone in Canada. I’ve witnessed 1 mobile transaction in Canada and I was with my very knowledgeable Vivotech contact when we did it.

Why can’t we get NFC enabled mobile devices? Unless there is something in it for the mobile carriers, why would they give us a new feature like NFC mobile wallets on our phones? They can’t make more profit from it, and I think that is the greater concern with the trials than the functionality. The system works – it just doesn’t make money for the carriers. Impact: the mobile device makers won’t put something on the phone that carriers don’t want (like: tethering, Slingbox Player, VOIP, programming long distance card numbers etc.) so consumers don’t get them without delay and strategizing by the carriers.

There has also been a problem with hitting on a standard for NFC on mobile. Nokia is done with making their own NFC phones, and they are releasing a SIM card based NFC phone. But when will that happen, and who can really drive it? It may take a third party application to drive mobile NFC, but without a large presence to lend such an enterprise the necessary consumer confidence, this will prove a challenge.

Until payments are simplified and there is a universal (or at least accepted) NFC standard or a viable alternative method of getting data from phones to consumer facing touchpoints like POS/ATM/Kiosks, I don’t see mobile wallets going anywhere.

It’s a wonderful opportunity for anyone that can crack the code.

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