Mobile payments 2015 – 10 things to watch

2014 was a year of “great action” in mobile payments and thanks to Apple and the Apple Pay launch, on two new models and in USA, we can look forward to even more action in 2015. This year we will see the banks (at last) and the global payment schemes do big moves and a lot of marketing in mobile payments. At the end of the year we could have seen the mobile payment tipping point..

Things to look out for in 2015:

– Contactless cards will drive mobile payment. The quick change to EMV in USA (major deadline is October 2015), mandates like from MasterCard and roll-out of contactless cards to new countries (even Sweden!), will pave the way for mobile payments solutions using global payment schemes and NFC.

– Large commercial roll-outs. Programs like CurrentC (USA), Zapp (UK) and Alibaba’s mobile payment? (China)  will launch.

– Extended roll-outs (but global?). Apple and Square are working on it and we will see regional/country schemes launch into more countries. Apple Pay next country will be UK.

– Paymentize existing apps. Mobile payment based on standard payment schemes will be added as feature to popular apps.

Faster payments. Direct account mobile payments schemes with real-time money transfer will gain traction. Example is Sweden’s very successful Swish and the coming UK service Zapp.

– Tokenization. After all security breaches and stolen card numbers, we will see the use of tokens instead of card numbers in many new payment programs. Tokens will also be used as keys in for example mobile access, gift cards, vouchers, etc.

– NFC. Will be the preferred pairing method at POS. BLE will also be used, but mainly for marketing by merchants and we will see first large BLE commercial roll-outs (BLE is today mainly used in pilot’s).

– Finger id. We will see more mobile models with Apple’s Touch ID alike solutions, from both the Android and the Windows families.

– Swipe fee change. Like in prepaid where the consumer pays more and merchant less, same “fee shift” will be seen/tried in new mobile payment, mobile money transfer and mobile bank products.

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Let’s go all-in for NFC for mobile payment in shop

In a research from Strategy Analytics by 2020, 254 million mobile users will pay with their NFC-enabled 5 times per month and at average transaction value of $9.

Read more here

Comment. After summer last year I didn’t beleive I should say this, but thanks to the global payment schemes (and for their emerging standards for tokenization, HCE, cloud based payments, etc.) and players like Apple (with their Apple Pay) embracement of NFC based payments…I’ve changed my mind and are ready to go all-in for it!

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2/3 of all banks to focus on mobile payments from 2015

According to new reserach data from Ovum, 2 thirds of all banks in the world will focus on and give top priority to the modernisation of their payments systems in 2015. This to meet disruptive mobile and immediate initiatives.

Read more here

Comment. I really believe that most of these changes/updates will be based on global payment schemes and on technologies as cloud based payments, tokenization, host card emulation (HCE) and NFC. This driven by the EMV fast roll-out in the US, statements on POS-terminals “must update” by MasterCard and maybe the launch hype of Apple Pay.

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High value contactless payment using NFC phones arrive in UK – only on certified mobiles?

Article on a way (or two) on how to perform high value payment (eg. value more then £20/€20/$20) transaction using mobile keyboard as PIN pad.

Comment: Interesting move.
As I understand, using the mobile keyboard as pin pad needs certification by the large payment schemes (eg. EMV) for evry mobile model..

Using a contactless card alike approach for high value transaction I think would lower end user “hurdle” and avoid the certification need.

– Touch mobile at POS-terminal
– Enter card PIN at POS pin pad
– Done

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MasterCard tests swipe card with fingerprint sensor

MasterCard is enjoying the Apple, Google and others that want to ease payment while having a security level that is acceptable. The company has in partnership with Zwipe, a company that focuses on biometric tech, built a charge plate with a built-in fingerprint sensor and NFC, for trial purposes. The Zwipe MasterCard is said to be extremely secure, as example all data is stored directly on the card, rather than on an outside database.

Comment: I really believe that we will see more contactless cards and in more regions. Purpose is a simpler and faster payment for lower amounts (today amounts up to £20/€20$20). Security is that higher amounts need a PIN (or chip and PIN) and that every fifth purchase independant af value need to be with chip and PIN. I think this is ok, but wonder if the Zwipe MasterCard will ever be in production. Yet another card with higher cost and that need another update on merchant side including new certification.

I still believe that we will have chip and PIN cards, contactless cards and of course mobile virtual cards that will follow already existing standard payment schemes and without the need for new hw/sw and business agreements at merchant side.

 

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Apple Pay in summary

Below is a summary of the launch yesterday.

Apple Pay mobile payment   

User

  • iTunes account with Visa or MasterCard or Amex card on file and issued by issuing banks with an agreement with Apple; American Express, Bank of America, Capital One Bank, Chase, Citi and Wells Fargo at availability with additional banks coming quickly thereafter including Barclaycard, Navy Federal Credit Union, PNC Bank, USAA and U.S. Bank.
  • iPhone with NFC, embedded Secure Element, Touch ID (eg. iPhone 6, 6+ and Watch)

Merchant

  • POS enabled for contactless payment (eg. Mastercard PayPass, Visa payWave, Amex ExpressPay)
  • No new agreement
  • Fee is normal swipe card fee
  • No liability change (Issuer liability)

Issuing bank

Integration of cards to Apple’s system

Fees

  • No charge for users, merchants or developers for transactions
  • Agreement with each individual bank and cut of transaction to Apple

Where and when

  • From October via a free upgrade of iOS 8 to iPhone 6 and 6+
  • USA
  • 220 000 locations with contactless payments enabled
  • Other countries will come

How it works

Instead of using the PAN (card number), a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction.

  • In-shop, chose card in the passbook wallet, press Tounch ID and tap mobile at the NFC enabled payment terminal.
  • Online shopping in apps with iPhone with the touch of a finger. At checkout chose Apple Pay, authenticate and signing of transaction via Touch ID.
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26 ways to access mobile payment

Article from Business News Daily on 26 payment options with mobile solutions.

Read it here

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