Will HCE revive NFC mobile payments? No.

18 03 2014

As of late there has been a lot of press coverage regarding HCE (Host Card Emulation), which in a nutshell allows devices to make NFC based mobile payments without needing the mobile operators secure element on the device. Both VISA and MasterCard are backing this new approach, in the hope that finally, they can kick start mobile payment offering with NFC, effectively locking merchants back into the card schemes for mobile. Google is also heavily behind HCE, because they need a way of getting their Wallet distributed on actual devices and networks. Google has already had a rocky time with NFC, supporting it, then ditching it, only to now attempt to bring it back to their offering through HCE.

There are many companies pinning their hopes to HCE, touting their solutions and the promise of mobile payments. But is HCE really the saviour of NFC based mobile payments, or is it simply the same old issues dressed up in a new party frock?

 

Secure NFC in the cloud

Effectively HCE allows secure details to be stored in the cloud. This makes a lot of sense if you want to bypass the mobile operators and effectively quash their mobile payment offerings (ISIS in the USA and WEAVE here in the UK). But does it actually add any value for the consumer or for the merchant? Is there actually any real difference? The answer is pretty much no.

If you are using the solution in its pure form, then your phone (no matter how it gets details, from the cloud or a secure element on the device) will broadcast card scheme data to the merchant’s terminal. No matter what that data is, it is being broadcast and is data that is used to complete the payment. This is actually very powerful if you are looking for mass distribution, potentially. I say potentially because though there are businesses accepting NFC contactless payments, they are still small in their numbers. In addition, the merchant still has to opt into accepting contactless payments – and it is worth noting that contactless payments in pure card form are not the same as contactless payments using your mobile phone. In many cases the “handshake” is different requiring businesses to invest yet again in contactless for mobile phone. Do we really think SME owners will continue to invest in technology for zero benefit to their business?

So does HCE make any difference here? No…

 

Availability

HCE and NFC are only available on Android based devices (and not all of them). Though Windows Phone 8 supports NFC, it is locked very much into the Secure Elements, so no HCE support there. If we then look at the most successful mobile smartphone out there (iPhone), we should note no NFC or HCE support (and it doesn’t look like there ever will be). So with this in mind, you are only available to customers on 1 of the top 3 mobile platforms. Though many will say that Android has the lion share in the mobile world, it’s worth noting that they are a distant third in their share regarding mobile web being used. This indicates that the majority of Android users are not embracing all the features on their smartphone, and as such, these probably are the same users that will not look to be early adopters of any form of mobile payment.

Essentially, the consumer base that could potentially look to HCE and NFC payments is quite limited.

 

The customer experience

Many articles will talk about adding value into the mobile phone payment option, but when we do this, any distribution advantages you may have due to card schemes and contactless being accepted vanishes. You may ask why, but the fact is that the acquiring banks (the people who actually operate those contactless card devices) will not be accepting data regarding a discount, or loyalty scheme. To be blunt, they simply can’t accept that data as it’s meaningless to VISA, MasterCard, the Acquiring bank and the customers bank. So in order to accept that data, the mobile payment provider needs to sign the merchant up to their particular version of mobile payments, in order for them to enjoy any added value. Therefore the argument for NFC as an open loop environment using card scheme rails doesn’t fly.

So what does HCE bring my customers in terms of experience over what they have currently with a card. The answer is nothing, unless I buy into a particular vision of HCE by a particular company, and if I am going to do that, I may as well look at alternative payment solutions, that save my business money.

 

Payment processing costs

Do these decrease with HCE? Nope, the poor old merchant is still paying full wack for their card processing, and maybe in some situations more. They will be paying for more expensive NFC based infrastructure on a monthly basis too, so mobile is now costing businesses more to accept. That’s simply not good news for any business owner.

 

HCE a game changer? Nope…

To make mobile attractive to businesses it must be cheaper for businesses to run, maintain and it must bring some added value to their business. It also needs to be available to the vast majority of my customers, so that means available to the top 3 mobile operating systems (Android, iOS, Windows Phone). HCE simply doesn’t stack up on any of these basic business needs. It’s more expensive and provides no added value.

Mobile will no doubt be a game changer in the payments world, but it will not be changed by solutions that look to the same old rails dressed up in a pretty new mobile dress. It will be companies that offer real added value through mobile services, and companies that deliver savings back to businesses with large reductions in payment processing fees.

So if you are a small business, look to see what alternative payment solutions out there provide you with the added value and services you want to move your company forward, helping you increase sales and increase your profitability? It’s an exciting time, and a chance for businesses to break away from the old and embrace the new more productive world.





Zapp mobile payments, great concept or dead idea?

17 01 2014

Zapp has been getting a lot of press coverage these past few days, no doubt to help bolster their fund raising efforts. (Read an article here at Finextra and have a look through the comments made too, very insightful) The company that hopes to deliver mobile payments for UK banks is trying to raise £100m on-top of the £16m funding it has already received to date. But what is Zapp? What will it deliver?

Zapp, great concept or dead end idea?

Zapp, great concept or dead end idea?

We must start with the cold fact that Zapp has not got an actual solution for mobile payments. Zapp has to date delivered nothing in terms or architecture and physical code. With that in mind, everything we read from Zapp is vision based, it’s fluffy and isn’t backed by something tangible like an actual real live working environment. So we must take their comments on what they can deliver with a little pinch of salt, as no one as yet has tried to deliver what they are claiming.

 

The proposition

So let’s now look at the proposition in the wake of Zapp announcing a number of major banks signing up to their solution. When you first read articles or headlines regarding Zapp, you may believe that Zapp has access to your bank account, and that means they can complete payments directly from your bank account for you. The fact is, this is wrong. Zapp does not have direct access to any consumer’s bank account, not ever consumers of those banks that have signed up to the Zapp vision. In addition, Zapp doesn’t have access to faster payments either, again something that many believe they do have. So what do they have that warrants the headlines coming from Zapp….

Well, what they have is an understanding with the signed up banks to be able to send information from their Zapp wallet app to the banks mobile banking app. This information is pretty basic, essentially it’s a reference, an amount and a destination bank account. So in the world of Zapp, you use your Zapp wallet to get a transaction under way, however, in order to actually pay, you are then pushed from your Zapp mobile app into your banks mobile banking application. There you input your PIN for your banks mobile app and then confirm the faster payments transaction that Zapp has set up for you. Complete it in your banks mobile banking app, and then back to the Zapp app you go. It’s also this integration that lets Zapp show you your bank balances in the Zapp app (no direct access to your bank account at all, rather a copy of functionality from Microsoft’s Wallet and Apples Passbook, reading data from other apps).

 

Great concept or dead end idea?

So, is this a winning mobile solution? Should companies like PayPal, Visa, MasterCard, CloudZync be worried. Well the short answer is no. Zapp isn’t offering anything that hasn’t been shown before. Zapp isn’t providing me as a consumer with any incentive to use the app, nor are they providing any incentive to a business to accept Zapp mobile payments. The experience isn’t even one that sounds “cool” for a consumer. Moving between two apps to manually authorise a bank payment is not exactly smooth. But, you can see why the banks they have on board are interested, these are all banks that have no form of P2P transaction apps, nor any foot in the door of the mobile payments industry. Of course they are going to sign up to Zapp, after all the promise is Zapp delivers mobile payments through their own current banking apps. The real proof that Zapp offers nothing new or an experience that consumers will opt for can be seen by looking at Barclays position. Barclays have NOT signed up to Zapp, and you can see why. Why would they, when Zapp is simply a very clunky vision of Barclays own Pingit/buyit app, of which isn’t pie in the sky, is an actual app already out there in the wild with millions of downloads and one that works a lot smoother than the Zapp proposition.

Mobile payments will not take off if we view them as simply an evolution of card payments onto mobile, and this is where Zapp is standing. There is no point for consumers or businesses to invest time and money in an evolution that delivers no improvement for either party. Mobile payments will only succeed when there is incentive and added value to a transaction, and that is why companies like CloudZync and their Zwallet mobile app are light years ahead of the competition. Wrapping other peoples technology to try and make something a little smoother (such as inputting payment information for a faster payments transaction) isn’t visionary and its hardly innovative. When we look at mobile and digital wallets, they need to be innovative, they need to provide real tangible and easily measurable incentives to businesses and consumers to make a conscious effort to use mobile phone as opposed to cards and cash. That’s exactly what Zwallet delivers…

Zapp future

I have no idea what’s ahead for Zapp. I am sure they can deliver the technology to wrap a banks mobile app, it’s hardly rocket science and they aren’t attempting to solve anything that hasn’t been solved already. The question really regarding Zapp is why do they need that size of investment? Do they have anything else planned or is it all marketing, marketing and more marketing money? Who knows.

What I do know is that Zapp is already behind the competition, and has a lot of thinking outside of the box to do if it wants to deliver experiences that get close to its competitors…





Payment Security. Has it been forgotten?

8 11 2013

People may think I’m not being serious with this post title, but I really am. These past few weeks yet more examples of security not being taken seriously in the payments market have emerged. It started with an article I read on Finextra regarding Google bypassing the secure element on an Android phone for NFC based transactions. It’s the launch of HCE (Host Card Emulation).

 

HCE and NFC

I’m not going to go into too many details and technicalities about it, but my own take on the whole situation with HCE, NFC and Google is that Google and the card schemes are changing the rules in which payments are supposed to be made. They are doing this to better fit with their own solutions, and to potentially lock out ventures like ISIS in the US and WEAVE here in the UK and at the risk of security.

There are strict reasons behind PCI compliance and the use of EMV (secured chip and pin to most of us) and it seems that these are now causing issues for Google and others, so instead of looking for real solutions they change the rules. A great take on this can be found on finextra here

 

QR/Barcodes in transactions

These are the choice of many payment solutions out there, including my own companies CloudZync with Zwallet. However, QR and Barcodes are easy to create, especially static ones, so using these for passing payment information has to be taken into consideration, and I would never allow an authorisation of a payment to be made just because a valid code has been scanned. Yet I have witnessed many solutions out there now that do this…

With Zwallet we always make sure the consumer is involved in the authorisation process fully, so we keep intelligence in the process at the cost of 1 second in the transaction process. For me, 1 extra second making a payment is well worth it to aid in security. (I would like to point out that Zwallet transactions are still dramatically quicker than typical card based transactions, even with the added 1 second for security).

 

Security underlying cause for concern?

So what is the underlying cause of security concerns with payments? What really causes so much effort to go into technology a trying to patch security issues or catch fraud post a transaction? The answer is the actual card scheme itself and the infrastructure behind it.

Let’s be real. Cards are amazing. For the last 40 years they have steadily dominated the way in which most of us pay for goods and services. But, has security increased much in that time? A little is the answer. There is a lot more technology backed behind it, but fraud is back on the rise again, so we must ask ourselves why. And the answer is simple, cards were never designed for the digital economy. Everything that we do to utilise the card infrastructure is a cludge, a patch/hack in tech terms. All this technology and security to try and secure something that is very insecure, 16 digits on a card, mixed with two dates and 3 digits on the back.  If we lose control of those details then a fraudster can do whatever they want with our cards, and that’s why so much is invested in fraud detection post a transaction and so much is invested in risk management.

My fear is, while card based transactions using Chip and Pin remain ok, the way we use cards digitally isn’t so secure. Throw into the mix mobile payments and companies actively trying to utilise card details in their solutions to make payments, and holes start to appear. In essence, trying to use technology to secure something that by its nature is not secure causes all sorts of issues. And though great lengths to make things much more secure are possible, the costs behind these rack up.

No matter how you try to secure card details, or to what lengths you go, the fact remains that the infrastructure for cards requires those simple card details, and fraudsters are becoming increasingly intelligent, innovative and capable of getting their hands on those details and using them.

 

The security solution

The only real secure option is to start with a blank sheet of paper for payments and wake up and realise that the digital economy requires payments to be carried out on an infrastructure that is designed for digital transactions from the ground up. It also MUST include more human elements in the process and not just require everything to be automated.

Real intelligence still remains with the consumer and the business. By removing them from the process more and more, we may make the payment process a little quicker, but we increasingly make it less secure. After all, the process of me having to know my PIN to make a payment is far more secure if I have lost my card, compared to just waving my card in front of a reader and making a payment.

These are the reasons behind the security approaches we have at CloudZync, the reasons why we make sure the consumer has to actively be involved in the purchase process and actively have to authorise each and every payment. If we remove them too much, then there are more gaps for fraudsters to exploit.

I’m not saying everything can be 100% secure, it simply can’t, and intelligent innovative fraudsters will always find a way to exploit processes and technology, but we must actively make it as hard as possible, and currently, in the race to stamp authority on possibly the payments method of the future, security seems to be being overlooked…That is a great concern of mine, and should be a great concern for each and every consumer out there and business owner…





PayPal trails ‘pay with face’ tech in London

9 08 2013

You may have read similar articles on this these past few days, however, as ever I am going to look at this from a different stand point, and not just re-iterate the PayPal marketing….

PayPal, paying with your face and not using a PIN? hmmm

PayPal, paying with your face and not using a PIN? hmmm

 

First things first, the title and “pay with face tech” really conjures up images and thoughts of something really futuristic. When I first heard of PayPal paying with your face tech (a few months ago now) I instantly had visions of walking into a store, and just like in the Minority Report (film), being recognised by the store. When it came to paying, I just needed to have my goods scanned, added to the shopping cart then simply walk out. The reality though is nothing like this at all.

What’s really going on?

So what is really going on with PayPal and their “pay with face tech” claim? Well, if you are a PayPal customer, and you’ve attached your profile picture to your account, and you have an app on your mobile phone, and you walk into a store that supports “pay with face”, and you then remember to “check-in” from your PayPal app into that store, then you are ready to try it out. Phew….

When you get to that magic moment when you are asked to pay, the poor sales agent then scrolls through pictures of people who have opted to use the PayPal service. They spot you based on your profile picture, and then charge you by clicking a “charge” button next to your face. The customer then gets an alert to confirm they have paid and the amount.

So what do you think? Is that really paying with your face?

 

My picture = paying with my face?

I personally don’t see any “tech” on show at all with this solution. The face picture is basically there so the sales agent can spot you quickly(ish) from their app. So I would never say you are paying with your face at all, rather you are being identified by your face, by a user, no revolutionary technology there.

The process does sound quite coolish, and I am sure the promo videos will look great.  Even seeing a real live demo will look pretty good, but if there is any form of mass adoption of this, it will be a nightmare for the store and more importantly for the sales agent. Let’s think, if there were 50 customers checked into the store, how long would it take the sales agent to find you in their app based on your face. I have a vision of sales agents swiping up and down frantically trying to find you, and that’s if you still look like your profile pic. What about if you are just like my sister-in-law and change your hair colour every other week? That will be pretty tricky to find her in a heap of pictures….

 

Using your face though is nice…

I will say one positive thing here, and that is authenticating that the person standing in front of you is indeed the account holder, based on their profile picture is very useful. It provides a very accurate way of adding security to any process. After all, as a business, why would you carry on with a payment if the account holder picture isn’t matching the person in-front of you?

Because of this, I really like providing merchants with a facial picture for them to confirm before completing a payment. It adds a manual and highly accurate security check, that after all doesn’t take long to implement and can only add confidence in the payment system.

This is exactly what we do with Zync Wallet (http://www.cloudzync.me). When the consumer is checking out, the merchant gets to authenticate them based on some basic information and a profile picture. It also helps the consumer secure their account and transactions. So, it’s a win win…The difference here is that there is no need to “check in” when you walk into the store as a consumer, and the poor old merchant doesn’t have to search for the customers profile picture, rather it is sent to them at the point of checkout.

 

Final thoughts…

PayPal appears to have a number of mobile / payment options they are pushing. We have options that are dongle based allowing merchants to process card payments on their mobile device (think they have two options here), they launched a payment solution using a barcode and now this particular option. Unfortunately I feel like PayPal are trying lots of different options and seeing what seems to grab some form of traction (or at worse, they keep releasing different products so that their name is constantly in the media regarding mobile payments). PayPal aren’t the only company that seem to just be trying things, as opposed to really sitting down and thinking about the needs and requirements of businesses and consumers, equally….





Payments do not make a wallet

31 07 2013

There are many “wallet” offerings becoming available each month, only in the past few days, we’ve seen announcements from MasterCard, ISIS (USA only), VISA, Zapp and a few others. But how many of them can actually claim to be a real wallet?

Mobile Wallets need to do everything our wallet does, and more...

Mobile Wallets need to do everything our wallet does, and more…

 

The fact is that mobile wallets almost all focus purely on making a payment, and that payment is made against either a consumers debit or credit card. While they all get a lot of press it seems, I still don’t understand why no one has looked at how these product offerings can be classed as digital wallets.

 

I choose what I have in my wallet

My first issue with almost all digital wallets is that they force me to spend my hard earned money using a particular debit / credit card. That on its own is quite frustrating, but it can get a lot worse in the world of mobile payments. In some cases I am forced to have a particular card and card scheme to be able to use the wallet, that isn’t that flexible at all. Does MasterCard for example really expect me to ditch my banks VISA card in favour of their card scheme just so I can complete a transaction on my phone? Hold on though, things can get worse than this still. Not only could I be forced to use a particular card scheme, with a particular card with a particular wallet, I may also be forced to have a particular SIM from my mobile network and the final nail in the coffin is have to have a particular device (which rules out the iPhone by the way).

Not sure I like all these things dictating me what my wallet is, the fact it holds nothing else but a payment card and how I can spend using my wallet. I personally like having the choice to put easily any number of different payment cards in my own wallet, including loyalty cards which double up as payment cards in certain stores (ala Starbucks).

 

My wallet holds more than payments

When looking at not just my wallet, almost anyone’s wallet the first thing I notice is that actually, debit / credit cards take up very little space. Do this right now, and see if you get a similar result. As I type this, I’m opening up my wallet to count no less than 9 card locations. That’s quite a lot. But how many of these actually hold a debit or credit card….The answer, 3 in my case.

I have my own personal debit card used for my day to day spending, my company Credit Card, and a joint Credit Card I have with my wife for weekly spending on shopping for example. Don’t miss understand me, the remaining card slots are all filled. I’ve an Oyster card (used for transport around London if you aren’t familiar with this), and the other slots are all made up with membership cards, oh and 2 loyalty cards being forced to share a slot.

I would also like to point out, that just like Sheldon Cooper in the Big Bang Theory (if you ever watch that TV show) I’ve had to abandon many a loyalty scheme or membership card from my wallet, simply due to the lack of space.

But let’s continue, what else makes up the contents of my wallet. Well, cash makes up a little part of it, numerous deals and vouchers (a lot from Sainsbury it seems), travel tickets, VAT receipts for petrol and a number of other receipts. I also have a key code dongle thing for entry to the office and a few bits of paper with notes on particular deliveries I am expecting.

So with my wallet content in mind, why do digital wallet companies claim to deliver a wallet when they essentially force me just to carry a single payment method and nothing else??? I’m sorry, but that is never going to replace my real wallet.

 

Intelligence

While I’m moaning about my wallet contents not being made available, I should also have a moan at the fact that these mobile wallets also don’t add any real intelligence. At most it seems I can check my balance, that’s not that intelligent is it. Why can I not see my receipts, my spending habits, my loyalty points, how long I have to go to be able to redeem loyalty points, when a particular voucher expires etc… I expect a smartphone to be smart, and any wallet on my smartphone to also be smarter than my actual physical wallet, and yet the vast majority of wallet offerings simply aren’t smart.

All in all, when I look at the mobile payments landscape I am not surprised that no one method rules the world or that any have really gained traction (with the exception of the Starbucks loyalty app).

 

Zync Wallet?

Those of you who read my blog or know me will already know that obviously I have an interested in mobile payments and digital wallets, after all my own company has designed and built the Zync wallet app. But my issues and comments in this post are spot on. They are also in many ways the issues that have driven Zync Wallet in the direction it has taken.

We firmly believe that if a mobile wallet is to really work, then it needs to replace everything that I can carry in my wallet today (with the exception of those items that really do need to be physically on you….I’m sure you can think of a few). Our Zync Wallet is all about flexibility, security and intelligence.

Zync Wallet is flexible enough for you to top it up using any bank account, we even provide you with the option to hook in access to your bank account directly into the wallet. We also won’t limit you to one payment method, rather we have many others coming online in the wallet very soon. We also won’t limit you to what you can store in the wallet, we provide support for membership cards, discount schemes, loyalty cards and schemes, deals, vouchers and a lot more.

But I would say our biggest thing is intelligence and relationships. Our wallet is about making the wallet intelligent, so it can help serve you better. That means it lets you know easily how many loyalty points you have, what deals you have, where you can find the best deals, how many points you need to gain before you can redeem them. It even helps you build relationships with your favourite stores while helping them provide you with better customer service.

 

Conclusion, if there is one…

Is that payments alone do not, and will not ever deliver a great digital wallet. Mobile can deliver so much more, and yet the majority of offerings to date all seem to scrabble over market share of card payments, rather than focus on real consumer and business needs, and what can be achieved with mobile…As the title says, payments do not make a wallet…





The cost of taking our money

29 07 2013

As consumers we don’t really think about the costs involved with doing business, all we care about are the products or services we are looking for, and getting them at the lowest possible price. Oh, and to be fair, there is nothing wrong with that. All consumers know there are costs involved in running a business, but some costs, like a business paying to take our money, we often forget about…

This is something that even the EU is now trying to look into, proposing a cap on the “interchange fee” charged by your bank back to the merchant for taking your money from your debit / credit card. The problem here though, is that those fees will probably move elsewhere, meaning it will be pushed onto the consumer – more than likely in the form of us having to pay annually for the privilege of having a debit / credit card (something many EU banks already do).

So in this post I want to quickly look at costs businesses have to pay in order to take our money…

Someone has to pay, every time we use these

Someone has to pay, every time we use these

 

The average costs

When a business accepts debit / credit cards, they pay for being able to provide that option to us, the consumer. Now you may think that it’s a cost based purely on the transaction process itself, but you would be wrong. Typically, in order to take card payments, a business has to register for merchant services (SMEs and independents usually go through high street banks – though the actual merchant service is usually sub-contracted out). The business pays a monthly fee for this, and the cost of that will depend on the business, amount of transactions they process and their value. But many small businesses, start-ups etc pay around £30 per month per terminal. On top of that, there is a standard flat fee per transaction that goes through the machine, again this will vary in price. For debit cards though, a start-up maybe looking at loosing 20p per transaction, while credit cards may also have a fixed fee associated with them, but will include a fee based on a percentage value of the transaction value. To give you an idea here, this fee could be anything from 1% right up to 4% of the value of the transaction, again depends on your business, your provider etc etc.

Now these fees may seem small, but remember these fees per terminal are per month, and that every single transaction is subject to these fees. When you look at tight operating costs and small profit margins, you all of a sudden see why providing card facilities isn’t always an option for a business.

Here are some facts and figures. The average cost of a credit card transaction (remember average) to a business is 36.2p. This cost drops to 9.6p for debit cards, while handling cash is 1.5p. If you were to calculate your shop sold 100 items in a day – that would mean you have spent £36.20 in handling those transactions (if credit card). Now multiple that by 300 working days (just for simple maths) and you see you have £10,860 lost in credit card charges (not including the monthly fees). Now, for many SMEs, independents, start-ups, actually any business, this is a large chunk of money lost.  Obviously these are just some figures to illustrate my point, and that point is that actually, processing cards is not cheap.

So with these sorts of costs, is it any wonder that businesses want a cheaper alternative, and are actively looking for alternatives.

 

Will Mobile drive down costs?

Mobile payments are the most obvious alternative to typical card transactions. But there are 3 different form factors of mobile payments at the moment:

  1. Typical card processing, but using a mobile phone as a card terminal
  2. Using NFC technology for contactless payments
  3. Use real mobile payments, originating from mobile devices and no need for cards at all

 

So, option 1: Companies like Square, iZettle, Sumup etc provide a dongle that allows any business to turn their smart phone device into a device that allows them to process card transactions. This proposition brings down the monthly cost to the independent and SME business – they no longer need to pay for their merchant accounts with high street banks etc. But these solutions are still expensive for the merchant. Typical fees are at least 3.75% per transaction! That’s very high and ultimately expensive for the merchant. You must remember that these are still card transactions, so in our example earlier, the £30 per month fee may have been removed (saving the company £360 over the year), but their fees have gone up, so still looking at £10,000+ in card charges.

Option 2: Use contactless technology…Well you still need merchant accounts here, so you are still paying your £30 per month (if not more if your bank charges etc for NFC enabled technology). However, your card processing fees will drop a little – and this is because at the moment the interchange fees on an NFC transaction are lower than those associated with Chip and Pin transactions, signatures, and card not present. But this is making only a small dent in the overall fees paid, and again the merchant in our example is shelling out £10,000+

 

Option 3: Real mobile transactions offer real options to merchants. Since they aren’t dependent on card schemes such as VISA, MasterCard, there are less companies involved in the transaction handling process. This means savings can be made in every step of the process, and these savings are passed onto the merchant. Companies like CloudZync and their Zync Wallet product provide drastic savings to businesses. Take our merchant example, with CloudZync the merchant pays no monthly fees, and since they are processing 100 transactions per day, are simply charged 1p per transaction. That means their daily processing fee has dropped from £36.20, down to £1. So the business annual handling fee drops from in excess of £10,000, down to just £300 for the year.

 

Cost of business, and cost of not adding value

What we must remember with mobile though, is the potential here to add value to the merchant – consumer experience and relationship. While cards, cheque and cash provide payment methods, mobile has a lot more to give (just as it does with our emails, social connections, organisers etc). Mobile transactions can be the gateway to greater consumer merchant engagement, better shopping experiences and ultimately, provide a potential tool to ensure business growth.

So while this post really is focussed on the cost of doing business, and potentially doing business with mobile devices, we should also remember the cost of potentially not doing business with mobile devices….Can a business afford to not make processing savings and not increase customer engagement and retention? I don’t know any that can afford to miss out on both…





NFC Payments, Dead, Dead, Dead…

15 05 2013

NFC (the technology behind contactless payments) has yet to really take off, and with two of the biggest names in retail dismissing the technology for payments, it looks like that NFC for payments is a dead technology…

In a recent article published on “thegrocer.co.uk”, Tesco dismissed NFC payments as passed their sell by date. Tesco’s enterprise consultant architect, Lyndon Lee, told the Mobile Payments and Value Added Services conference that NFC offered no proprietary value for retailers and that it wasn’t “cool” enough for the next generation of shoppers.  This echoes statements made by Walmart not too long ago.

When you look at the experience of using contactless payments, you would have to agree with Lyndon Lee’s statements. What does NFC payments give a retailer like Tesco over standard Chip and Pin transactions? The answer, the time it takes for the user to tap in their 4 digit PIN. That’s it. Nothing else is gained. So there is no real benefit to the retailer, not even the benefit of offering something your competitors don’t offer. Consumers in a store that have NFC, still need their cards, still need to use those cards and essentially have the same experience as in a store that doesn’t have NFC. With that in mind, why would you invest in NFC contactless payments across your thousands of checkouts when there is no benefit?

Is the technology cool enough for the next generation of shoppers? Well that’s a little harder to judge, as when used in-side a mobile phone it may well be seen to be “cool” to shoppers. But inside a mobile phone offers other challenges and barriers to entry for the consumer (those for sure aren’t cool). An additional issue is also one of perception, what feels “safe” to tech savy shoppers. Simply waving a phone over a reader doesn’t inspire security confidence, knowing your card details are being transmitted by their phone.

 

Cards are the issue

The problem though for NFC payments, is that it is essentially a technology that was never designed for payments, rather sharing small chunks of data / communications very quickly. I can think of many examples of where NFC is definitely not past it’s sell by date, and is a very “cool”. Take for example wireless charging on a stand, that using NFC then triggers your phone to launch a particular app, like your calendar, mail, tasks, or music. That’s pretty cool, and works great with a Nokia Lumia 900 for example. That’s what the technology was designed for, it was never designed to initiate payments, and because of that along with the nature of the “Card” infrastructure, it’s never going to offer merchants anything proprietary or that different in terms of experience (or security). Not even when you tie it to Mobile Smartphones.

When thinking of NFC in payments, if you are familiar with Sony’s Minidisc, you might start drawing comparisons. Initially, the Minidisc was a great idea, it provided all the flexibility of a cassette with the sound quality of a CD but in a tiny format that was mobile. The problem was that window where this was a great technology was so small, just on the horizon was the MP3 player, which at first was not that flexible or intuitive to use, but very soon would provide us with the first iPod, delivering thousands of tracks to a small mobile device that was made really flexible in terms of adding music, thanks to iTunes. Essentially, the iPod killed the minidisc. The same could be said for NFC in payments, with the rapid development in mobile technology, Wi-Fi and the Cloud, NFC is a technology that had a small window of opportunity within the Payments arena, but is surely to be replaced by cloud based payment gateways in conjunction with mobile smartphones.

 

Added value

Added value to merchants is essential, and basically NFC offers only a slightly different experience when making a payment, so there is no added value. Merchants are looking for ways to engage with customers via mobile devices, and payments provides a cornerstone to be able to do that effectively across a wider net of customers. So whatever a merchant looks at for their payments, it needs to tie in with their vision of adding value to the customers shopping experience with them. Again, technologies like smartphones, Wi-Fi and the Cloud provide the platform in order to be able to deliver added value. With this in mind, do we really need a “card”? Something that was created pre the digital revolution, pre smart phones and pre the cloud? Probably not…

So could the mobile phone, digital wallets effectively kill off all cards? We think so…





Web Developers and Mobile Payments

24 04 2013

Now at first you may think “What? What’s web developers got to do with mobile payments?” and for the majority of mobile payment solutions out there I would agree. However, we are living in a digital age, and making a payment on your mobile phone shouldn’t be restricted to just paying in store. Actually, in many ways mobile payments are the technology of the future, but walking into a bricks and mortar store is very traditional – an old fashioned way of shopping some might say. So mobile payments should include making purchases over the internet or within a mobile app. With this in mind, there is most definitely a role for web developers to play, in offering mobile payment services to their web customers.

 

Mobile Payments online

As a consumer I want the security of using my personal mobile phone to complete a financial transaction, and online I want that security more and more. Let’s face it, fraud online is a growing concern and for many consumers out there, it is the fear of online fraud or identity theft that deters them from spending money with certain stores. Before someone actually spends money online they really need to feel secure and trust the business. This is one of the reasons (along with ease of use) that people do trust the PayPal brand when they see it on a website.

Mobile payments can provide the answer to online security issues while reducing PCI compliance issues (if your website processes cards). Mobile payments will also help online businesses maximise their profits, and that is done simply by drastically reducing the fees businesses have to pay for payment processing.

 

CloudZync

CloudZync: Delivering a new cloud commerce platform

 

How do they work?

CloudZync provide a mobile payment solution (Zync Wallet) that is an app that a consumer installs on their mobile device. This enables them to make mobile payments to any store or website that accepts payments in this way. From the web, all a web developer needs to do is ensure their customer (the business) is signed up to CloudZync and has been authorised as a CloudZync merchant. The website needs a few lines of code (either J-Query or an iFrame) added that enables it to communicate with CloudZync. And that’s it, well in a basic form. The development integration effort is minimal really, especially if you are a web developer who has experience of delivering eCommerce solutions with technologies like ASP.NET and PHP.

The experience for the consumer is a really seamless, safe and a secure one. On the businesses website, all they need to do is opt to pay using their mobile phone and provide their mobile phone number. The website (via the code added) then pushes the transaction to the consumer’s mobile phone, ready for authorisation. The consumer simply then authorises the payment within their Zync Wallet app and that’s it, job done.

There is no distinction between an “in-store” transaction and a “website” based transaction, because all transactions are authorised on the consumers own mobile device. This means there are no “card not present” horribly expensive fees associated with the transaction.

 

Fees

Merchants that accept mobile payments via Zync Wallet need only pay for the transactions that are completed, and they pay a simple flat rate fixed fee per transaction. This fee is dependent on the amount of transactions the merchant completes, but ranges from less than 1p up to a maximum of just 15p per transaction.

 

No brainer

For businesses, accepting mobile payments like this really is a no brainer. There are simply no fees to pay if a consumer doesn’t make a mobile payment, and when they opt to complete a payment using their mobile phone, the business pays a small fee (saving them money on any other form of payment). In addition, the website is far more secure regarding its transactions, and equally importantly, delivers a personalised and seamless customer experience.

Also, remember that with Zync Wallet you aren’t limited to just payments via your website. You can provide the same user experience to your customers while taking over the phone transactions, and face to face, either in-store or out and about via a merchant app installed on your business mobile phone.

There are also many other benefits of using Zync Wallet payments, including access to CloudZync business services which allow businesses to interact further in a personalised fashion. For more information visit http://www.cloudzync.me/business or if you are a web developer looking to register your services with CloudZync, then visit http://www.cloudzync.me/developer





Zync Terminal, A business app for mobile payments

23 04 2013

There are a few neat ways of allowing businesses to use their mobile phones to generate and process payments out there, Square is one that really springs to mind.  But the problem here is you aren’t really dealing with mobile payments, rather you are using your mobile phone to process card payments. For those of you who aren’t familiar with Square, Square provides a dongle that can plug into an iPhone, when used with the Square app, a credit / debit card can be swiped and charged (user has to sign the screen). This application makes taking payments for businesses a little more flexible – especially if you are a mobile business, think hair dresser or burger van (think my stomach may be leading my thinking there).

Zync Terminal, enabling any mobile phone to process mobile payments

Zync Terminal, enabling any mobile phone to process mobile payments

Square has lead the way in innovation with this particular type of payment processing, and there are now quite a few “copy cats” shall we say. Some are exact replicas, some, like PayPal and Intuit mobile offerings are little, well odd. These solutions require the merchant to have not just a mobile phone with an app installed on it, but also separate card processing hardware. The mobile phone is used to enter the amount for the transaction, while the separate hardware is basically used to take authorisation of a card payment via chip and pin. This additional hardware is paired to the mobile device via bluetooth, with the mobile then using 3G or WiFi to connect and have the actual transaction processed…Again not exactly mobile, and the check out process, not exactly smooth or rewarding for either party.

The big problem though for these types of solutions are the fees that merchants have to pay. As a business I am loosing typically over 2.5% per transaction, and that really does add up. There are also issues with trust and security, and here in Europe the idea of signing a phone to authorise a payment isn’t confidence inspiring – especially as we have got used to Chip and Pin. You have to sign with Square, while PayPal’s additional hardware solution does enable Chip and Pin. (Though pairing via Bluetooth again, doesn’t inspire security confidence).

So what other options do businesses have in order to process non-cash payments quickly and easily?

 

Zync Terminal

Processing non-cash payments quickly, easily and importantly cheaply is key to businesses. Zync Terminal is a free mobile app that enables merchants and businesses to generate and process true mobile payment transactions. These payments have to be made by customers using the Zync Wallet app installed on their mobile device, so there is a limitation there, but in terms of fees and security, Zync Terminal really is a no brainer for any business.

The app is free to install for a merchant, there are zero administration fees, no limits on the number of devices you install the app on and zero monthly payments. The fee structure is simple, the merchant just pays a fixed fee for each transaction they process successfully. Quite a refreshing approach that drastically improves the consumers experience and the merchants, while helping the merchant with their profitability (saving money on every single transaction). Transaction fees are not only cheaper than costs associated with cards, but also with costs associated with handling cash.

The big reason behind the fees structure is that Zync Terminal and Zync Wallet don’t accept VISA / MasterCard schemes. These schemes are designed and implemented for cards, and as such, the nature of a card with un-encrypted information will always have a limitiation in the digital world and security threats. In-stead, Zync is a scheme in its own right, a scheme designed and engineered for the digital world and mobile world we live in. Because of this, transactions are far more secure, personal details are far more secure, and financial information, yes you guessed it, is far more secure.

 

The process

So what’s the process for the merchant and consumer? It’s very simple, and can be carried out currently on a Windows Phone or Apple iOS device (support for Android and Blackberry is coming soon). Using Zync Terminal the merchant simply enters the transaction amount, and then scans the consumers Zync Wallet payment screen. The merchant is then alerted to some basic customer details, enabling them to verify the consumer further if they wish. The user then must authorise the transaction on their own mobile device within their Zync Wallet application (they have to provide a PIN). Once accepted and authorised by the consumer, both the merchant and consumer receive a notification that shows the authorisation code for that transaction. That’s it, all done. The whole process can be over in a matter of a few seconds.

In terms of security, each transaction is checked in real time for fraudulent activity. In addition, both the merchant and consumer is authorised by CloudZync and both the merchant and the consumer can verify each other’s details. Oh, and remember the merchant has had to sign in and register their app and device, and the user provide a PIN. For the consumer, they too have had to register the device, login and authorise each transaction with their PIN.

 

Available now

Businesses can sign up to Zync Terminal free of charge. See the CloudZync website for fees and additional benefits, such as access to CloudZync Business Services to help grow your business through other mobile focussed services.

You can sign up for free on the CloudZync website business registration page.

The apps will be made available very soon and CloudZync will send out priority notifications to those users who register early.

So lets look forward to a new era of digital, secure, mobile payments…





New iPhone? Apple Innovation? Be realistic!

15 04 2013

It seems that we have yet again got a new round of Apple rumours regarding another iPhone being released. iPhone 6 in Q2 of this year (2013), Apple innovation? I don’t think so!

People cannot expect innovation with each release of the iPhone

People cannot expect innovation with each release of the iPhone

 

It’s amazing that basically we get the same rumours from tech bloggers every year, and I am starting to think that it’s nothing to do with Apple, rather its bloggers not really looking for tech to talk about, rather relying on their stable diet of Apple blogs – with fab boys and haters all reading them, commenting away, driving traffic back to their website without actually writing anything with real substance or research.

I think though this trend has been born out of the innovation that was the iPhone and the massive influx of readers of tech blogs because of it. That single massive leap forward in mobile experience seems to still be the fuel of most tech bloggers (especially when we talk about mobile). So is it no wonder that they keep going back to the iPhone, even if we have a new one coming out or not?

 

Reality Check

We know that Apple release a major new phone every 2 years tops, which is usually just preceded by an iOS major update. So towards the back end of last year (September) we got iOS 6 followed closely by the iPhone 5. So if you think we are going to get some major updates within 12 months of that then you are being silly. I have no doubt that an iPhone 5S may well be on the cards, but it’s not going to happen Q2 in 2013, at best it will be Q3 probably Q4 to at least align with some of the Apple faithful coming out of contracts from 4S devices.

The rumours regarding innovation of the next iPhone are also typically very farfetched and people’s expectations are also becoming highly un-realistic. A great example of rumours that cannot be true is the good old NFC support claim. It seems since the 4 we have had rumours of NFC capabilities in the device, and yet no one stops to think that would require an iOS update to support the technology too. So why when iOS 6 was released (with no hint of support for NFC) did we get the same rumours again about NFC in our iPhones? I would also like to add, is adding NFC to a mobile phone really that innovative? Nokia had NFC in pre-smart phone devices a long long time ago…

 

Innovation

It seems that bloggers are claiming Apple must get innovating again. This is usually shown up in the comments of a blog post too, lots of commentators claiming Apple is stagnant, that nothing has happened since Steve Jobs passed away etc etc. To all these people, I would love to ask what do you expect?

Innovation isn’t something that happens each year, you can’t keep innovating, innovating and then innovating some more. What happens is there is a break through from R&D (not necessarily even from that company), they then release their product which we all see as a leap forward, a great example of innovation and then, what happens is that innovating is built upon, expanded, developed through iterations, evolved until at some point in the future, something even more innovative comes along and replaces it. The mobile phone world shows this perfectly.

Let’s think about innovation in the mobile world. During the 80s we had the mobile phone, sure it was a real brick, but essentially that was the massive innovation. Nothing happened innovation wise in the mobile world really, until 3G networks and devices. All that had happened to that point was devices got smaller and a few features added to them, I don’t call that innovation, I call that evolution. With 3G, we then got innovative devices, mobiles that were also other devices, like our MP3 players, Digi cameras and provided us with software. Devices like the N95. We may have been spoilt because it wasn’t too long until we got a massive bit of innovation from Apple, the iPhone. That innovation wasn’t so much a “phone”, rather it was the touch screen experience, the OS and the ability to install our apps in a seamless fashion. That was the real innovation.

Since then, we have had a period of evolution again. So don’t expect mass innovation, and anyone saying people are innovating, like Samsung with Android, then to those people, I say you don’t know what innovation is. That’s evolution of someone else’s innovation.

If anyone is innovating at the moment, then it’s Microsoft. But they aren’t really innovating in terms of a mobile phone, rather their innovation is software lead, delivering a single experience and UI across any device. This innovation from Microsoft is not a massive leap forward like the iPhone experience delivered, rather a step forward that may at some point down the line lead to a bigger innovative jump…

 

Quick Summary

Innovation doesn’t come round year on year, it doesn’t even come round every other year. Innovation comes round when it comes, at the moment we aren’t in a position to expect something brand new and highly innovative. Rather we should expect to keep improving our mobile devices, so when Apple deliver a new iPhone and its better under the hood, that it’s screen is improved, that performance is slicker, there really shouldn’t be people complaining that Apple aren’t innovating. Just because the company brought us the iPhone, doesn’t mean they can innovate whenever they wish. Innovation comes around when it comes around, until then, just watch and be impressed with how our devices continue to evolve, to improve and move forward.








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