How do you purchase items? With cash? By card? Online? With your cell phone? The truth is, it’s a complex world out there. Where we once bartered over goats or clung to bags of gold coins, now there are many more options available to us to make payments. Barclaycard created a fun mockumentary on the history of payments last year, but also useful to understand some of the issues that new payment methods create.
Firstly, it affects consumer habits and how people are used to making purchases. It takes time to change habits and persuade consumers of the benefits (and security) on offer with new technologies. People are, quite rightly, wary of technologies that make it easier for them to part with their cash.
Secondly, it highlights a lack of infrastructure and integration between players in the value chain. From card merchants, to retailers, to banks, without the technology and support in place, new payment technologies can remain a far-off dream instead of a reality when the investment in infrastructure falters. Luckily, this is now beginning to change. One good example of this is iZettle, a device that allows small traders to take credit card payments. As reported by Rory Cellan-Jones at the BBC, it has already been successful in various countries and is now launching more widely. It negates the need for potentially expensive infrastructure and is similar to Square in many ways, except that it is for the EMV card world. It is encouraging that data is fully encrypted by the device with a secure point-to-point connection, but it appears to rely on the vendor taking the cash having connectivity. Other than that, however, it appears to enable easier purchases at any time – without cash, contactless or bartering with pigs or dinosaur milk.
Of course, we cannot discuss payments without touching on the possibilities that the mobile device offers day-to-day. Not only are we working with major mobile operators such as Vodafone and T-Mobile to make NFC services more widely available, but we are excited to be setting the Gemalto Contactless Challenge to see just how far you can get with your mobile device in and around London in 2012.
In the meantime, Sparksight has compiled a very useful infographic to explain exactly what the mobile wallet entails. It outlines the key players in the mobile wallet space, the technology being used, and which devices are supported and on which carriers. We also know, for example, that Isis plans to bring new banks on board to expand the service available.
A key factor in all of this is the security aspect. While Passbook has no payment features, Google Wallet ensures one payment card (a prepaid MasterCard) is on a secure element in the device. Everything else is encrypted in secure servers in a secure location as stated. From our perspective, NFC payments are the safest, as they require certification from Visa and MasterCard. Also, as endorsed by the GSMA, using a Trusted Service Manager (TSM) can help service providers securely distribute and manage contactless services for their customers using the networks of mobile operators.
It’s a complex world out there when it comes to payments, but thanks to an array of promising options, things could be about to get a whole lot simpler.