Will HCE revive NFC mobile payments? No.

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?

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?

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?

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

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

 

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

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…

 

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

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

 

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…

Android fragmentation, development frustrations

As a developer we want to be able to produce nice maintainable code, ideally a single code base and deploy that on as many platforms as possible. While on the desktop this is pretty simple, come to the world of mobile and well, things get more complicated, with Android I would say a mess really.

Androids fragmentation makes it hard to support all devices, hell, there isn’t even a business case to do so

Things to consider

I don’t want to talk about cross platform development etc. rather there are a few blogs I’ve written on this subject already (see Cross Platform Mobile Development – CloudZync blog, and one of my recent blog posts, Cross Platform mobile app) , so for the point of this post, we will presume that you are going to build a native app with a technology like Xamarin (Monotouch). So what challenges are there then to build an app that works on multiple platforms?

Well first off what platforms are supported? At the moment, that’s limited to iOS, Windows Phone and Android devices (no Blackberry in there at all – though I hope this changes if Blackberry 10 starts getting some form of traction in the consumer market). For each of these operating systems we still need to take into consideration the actual platform style, there is no point in trying to deliver a Windows Phone type app to an iOS device as it simply won’t work (they don’t share the same controls and the look and feel would be a very jarring experience). You may be thinking that that means you still need to maintain separate code bases, even with our cross platform technology, but you would be wrong.

The beauty of C# and the whole Microsoft development environment is the way you can structure applications. If you are familiar with MVVM then you will understand my point. MVVM (Model View ViewModel) allows a developer to separate concerns within the application, to be very basic, it means we can separate out the UI elements from the actual working code. (Have a read here if you want to undertand MVVM) So we can maintain a single code base in essence for the app across the multiple platforms even if we change and modify the UI.

Fragmentation

This is the point of this article, while we have to do different things for different operating systems, we have to do different things still for the same operating systems even, well in the case of Android quite a lot different.

With Windows Phone and iOS, life is pretty easy, the only real issues relate to image sizes, so you have to package up a couple of different size options for icon images (which can be a pain). With iOS you do have to consider if you are deploying to an iPhone 5 as opposed to an earlier device, due to the screen sizes. For example, in the CloudZync Zync Terminal app (an app that allows merchants to raise and process mobile transactions), on an iPhone 4, we had to place a “done” button into the keyboard in order to hide it and show the rest of the screen, in the iPhone 5 this wasn’t needed as the screen was longer and we didn’t need to hide the keyboard (something that only really got spotted in testing).

So while doing these few extra things can be a pain, they are all pretty small. Then we look at Android, and this is when things get a little harder and a pain to be honest.

Android not only has a fair few flavours on the market, it also has a number of issues with the types of devices it can be found on. So while we are packaging up 2 versions of an image for iOS, on Android we find we could be packaging as many as 10! That’s a real pain to say the least, but not a real head scratcher.

The real problems arise when we look at the different flavours of Android and how they act. When testing apps across different Android flavours we notice we get different experiences. What is really frustrating is how different those experiences can be and what that means in terms of coding and testing. But things get worse still. For example we looked at developing our Zync Terminal App for Android and looked at a few different Samsung Galaxy devices. All consistent you would think, but nope, they aren’t. On top of that we noticed we had to use different API calls on different phones to access different parts of the device, such as the camera. That becomes so frustrating, not to mention time consuming in terms of development, but also in terms of testing, and time consumption means expensive.

Let me give you a little interesting point about our development, it seems that the cost of building and testing our app on iOS and Windows Phone together was about the same as the cost associated with just building for the major Android devices (so that’s us cutting corners and not supporting a lot of Android devices officially). To me, that can’t be right and is not a good place for Android. I can build an app for two very distinctly different operating systems with completely different experiences for the same price I can build an app for a single platform, Android…

Technically I’m not being fair, as this article suggests I’m looking at Fragmentation, so I’m actually developing for 3 versions of Android and umpteen Android based devices – as opposed to two operating systems in iOS and Windows Phone.

Conclusion

I want to maintain as much code with a common base, and we use Xamarin to deliver our apps on Android. The sad fact is that it doesn’t make much business sense to support all of the Android flavours or devices. The fragmentation issue just makes it too expensive to really develop for all Android variations (especially when we look at the demographics of a number of Android users).

While Android holds a very healthy market share (across all flavours) it makes sense to build for Android, but I do find myself hoping that iOS, Windows Phone and Blackberry start taking large chunks of market share away from Android. As an OS to for businesses to build for, businesses that want to maintain code across multiple operating systems, who want to deploy apps with great consistent robust experiences, Android is miles behind Apples iOS and Microsoft Windows Phone.

Is there such a thing as a bad Smartphone?

If you go online and you look for articles on Smartphone’s you will no doubt find loads of reviews of particular phones, operating systems, features etc. and unfortunately you then more often than not get a biased warped view based on the authors preferred device, brand or ecosystem. Unfortunately actual facts and relative information back down to an average user is just lost or not present. Opinion in mobile is, well everywhere, and yet when we think about it, can we really purchase a bad Smartphone these days?

 

Dumb to Smart

It all depends on what you want from your phone, but many more of us now want our phones to be a useful device, be that just for searching the web, consuming some content or actually trying to carry out some small amount of work on them. This is illustrated by the amount of market share Smartphone’s now command across the globe. But if you are moving from a dumb phone to a Smartphone do we really need to know every feature of that device or ecosystem? Probably not…

 

Purchasing

My brother-in-law works for a mobile phone network provider here in the UK, and I always like to get his insight into the kind of people who come in and purchase Smartphone’s. The truth is that the majority of us just want a Smartphone, and because we have heard of the iPhone or Samsung Galaxy, that’s what we go in and ask for. We have no idea why we want those phones over another brand or device, just that these are the phones that people are aware of, and that’s great testament to both companies marketing capabilities. It also shows that many of us purchase mobile phones still very much based on brands we have heard of and what our friends have purchased. We don’t purchase a phone like we would a PC, spending time looking at the specification, the pro’s and cons of a particular bundle from the store etc etc. We still see phones as a short term thing which will get renewed in 12-18 months (if on a contract).

Obviously I’m generalising here. There are lots of people who pick their phone based on the quality of the device, the camera, the durability, performance and of course the operating system. But these types of people are the minority (though if you read blog posts or technology articles you would think everyone was a phone expert. We must remember that the majority of phone users do not go near a mobile phone blog or technology magazine).

As a mobile phone manufacturer or operating system, this all means that marketing and relationships with the network are the only way to shift mobile phones. The main audience therefore has to be those moving into Smartphone’s for the first time, mainly because anyone who has had a Smartphone for 24 months is probably attached to that operating system, and therefore more likely to stay with that particular device or brand. (Especially if they have purchased a large number of apps) For the likes of Nokia, RIM and HTC this means all is not too late, since Smartphone users make up just over 50% of the mobile phone market, that leaves another 50% of untapped customers. The battle lines therefore are still being drawn.

 

Consumer education

The problem for all mobile phone manufacturers, with the exception of Samsung and Apple, is that the 50% of potential new Smartphone customers are not that into the real benefits of a Smartphone device. Rather they are getting one because they can send the odd email, surf the web and perhaps use Facebook. Let’s be honest, any Smartphone therefore is a great purchase, and no doubt these customers will just request the phones they have heard of, so the iPhone and Samsung Galaxy.  That’s a problem…Though customers will be happy, they could have been a lot happier potentially with a different device or a different operating system, especially if they were shown or told about all the options.

An example is my own mother. She wanted a new phone, but was told to get an Android Samsung Galaxy, mainly because that’s what the sales guy had. He didn’t take into consideration any of her needs, requirements, what she was looking for neither in a phone nor from the OS. My mum actually wanted an OS that played nicely with her office work, an OS that potentially would tie up with her tablet that she is looking to purchase and something that was really easy to use, real easy. For me, that meant really only looking at the iPhone or a Windows Phone, of which the sales agent didn’t have much in-depth knowledge of. He could talk about the iPhone, but as for Windows phone devices or Blackberry, nothing to say at all….In the end I got my mum to pick based on the UI, what felt easiest for her to just pick up and use, and she went with a Nokia Windows Phone 610, an entry level Smartphone that does everything she wants and more.

The point here is that my Mum would have ended up with a phone that she would have thought was good, but not one that was great for her. I think that’s a problem manufacturers have to overcome with network providers and sales staff somehow.

 

Any Bad Smartphone’s?

Essentially, there are no bad Smartphone’s these days, technically. However, there are bad Smartphone matches for users. The problem is that sales staff don’t marry up what a consumer wants to any given device, rather they let the consumer just real off a phone they have heard of, or sell the device they have themselves. This means that a good Smartphone will feel like a bad Smartphone for a particular user because it simply didn’t fit their criteria, or they have since seen another device that better suited their needs….If sales agents and consumers treated phones like a very expensive purchase, one that needed to match to a consumers requirements, then we would see a very different mobile phone landscape of that I am sure, and there truly wouldn’t be a bad Smartphone….Until then though, status quo…

iPhone 5: What Apple got right

September 12^th was the big day and Apple finally showed us their new iPhone 5. However there wasn’t anything there that many of us didn’t know about already, such was the extent of leaks leading up to this event.  So far the reaction to the event is one of underwhelming acceptance…It seems that Apple hasn’t been an innovative company for some time now, rather everything they do is playing catch-up with other people’s ideas and innovations while attempting to maximise and squeeze yet more revenue from their current customers. This, Apple does exceptionally well at…

iPhone 5, it got no NFC right at least: Picture from engadget

Catch up on the iPhone 5 launch event here at engadget

So while there are many blogs, articles, reviews out there that show what’s wrong with the iPhone 5, and there is quite a list, I am going to focus on something they did get right, and that flies in the face of all the technology journalists, who on this subject often show they know nothing about technology and or business combined…Apple got it right when they opted NOT to include NFC in their device.

 

No NFC for the iPhone

While many reviewers are saying this is dangerous omission I have to say it’s highly sensible. If you believe what tech journalists are saying, then we should all be making NFC enabled mobile payments pretty much now, and they have based this belief not on fact, rather on marketing gumph from a few companies out there, VISA, Google and a bunch of phone networks. What they all fail to take into account is that customer experience is being put ahead of practicality, security and cost. In the real world, this means most businesses will not be using it.

The payments industry is pretty much in a mess, there is nothing wrong with the customer experience of using cash or cards, yet there is a common belief amongst businesses and customers that they should be able to make payments with their mobile device. This has lead to endless different approaches to mobile payments, almost all of which centre around NFC capabilities. However, let’s just think for a moment. Cards are not secure things; we know this by how easy it is to make fraudulent transactions, especially in a digital age. NFC is not a secure form of communication, VISA even state this in their own Patent applications. So put the two together and you get…A great demonstration of how we can use mobiles to make contactless payments, but ultimately a nightmare for merchants with endless costs and charge backs, essentially fraudsters saying “don’t mind if I do”. No wonder most merchants say “no thank you”….

Other phone manufacturers may have embraced NFC in their devices, but even then, each manufacturer and device OS uses it in different ways. Just because your device supports NFC doesn’t mean it supports contactless payments. We see this mess with Googles own Wallet only being able to support the one bank card, its own pre-paid card having to be pulled and you not being able to use your Google Wallet at a typical contactless payment point. Throw in the fact that the phone carriers want a bit of the NFC action and you can quickly see how messy this environment is. Sure it’s competitive, but it’s competitive because no one is doing the same thing and everyone is arguing over who owns what part of an NFC based transaction. Even Microsoft’s Windows 8 phones support NFC based transactions, but you need to get yourself a secured NFC SIM with your card details on it. Not exactly lending itself to you simply adding all your payment cards to the device. But this is because the phone carriers want some of the payment transaction action, and it’s a way to stay friends (at the detriment of practicality, customer experience and security).

I haven’t even spoke about costs of supporting NFC for the merchant, which essentially means new hardware, firmware, support and maintenance for that hardware and perhaps updates to their POS if they want to distinguish between a chip and pin card transaction, signature, card not present, or contactless payment, even mobile contactless payment.

So while so many seem to be singing the praises of NFC and perhaps mentioning concerns that the iPhone 5 doesn’t have NFC, I would say no NFC for Apple is a wise move. Apple usually only embrace a technology once it really has proved itself, so not to deter from the customer experience of using their devices. NFC is no different….As a reviewer of the iPhone 5 there are many areas of concern, lack of NFC is for sure not one of them…

Life after RIM in the enterprise?

There has been a lot of talk about RIM today, caused mainly because the company has stated it is giving up on the consumer market and heading back to its roots, the enterprise. Couple this with the $120m loss the company has made and the hints at “sale”, and you do see why lots of people have been talking about RIM. (If you don’t know RIM – Research in Motion make the BlackBerry devices).

One of the big conversations I have been involved in today (on Twitter with @BPMredux @puleen @souvikbonnerjee and @AlbertoManuel) is just what do we think will happen in the enterprise regarding the use of mobile devices, and vendor offerings for mobile based solutions. @BPMredux asked in his blog two simple questions

“How many BPM vendors have a mobile BPM solution based on Apple, Android or Windows Mobile”

and

“Now how many of you are still stuck with RIM and Blackberry in your own corporate environment?”

You can join in his debate at http://bpmredux.wordpress.com/2012/03/16/mobility-inside-the-bpm-scene/

So in this blog post I have want to have explore at some of the main points and give some thoughts based on conversations and relationships I have with a number of IT professionals that work within the enterprise supporting their systems…

Are we seeing the BlackBerry swansong?

RIM is still a big player

For sure RIM is still a big player in the enterprise. Most people I know and speak too (within large corporations) have BlackBerry devices handed out to them as their corporate phones. There are lots of reasons why the enterprise opts for BlackBerry – security being one, durability another. Many people I speak to who have to support mobile devices within their business prefer BlackBerry, and that’s because they have better control over them, they are easier to administer, the battery life is second to none and the devices are durable (they do seem to get dropped a lot). These things mean less time is spent with the end user trying to address issues, and after all, time is money…

Apple is making in-roads in the enterprise

This all being said, the iPhone is making in-roads in the enterprise, especially within the “exec” levels of business. While the phone is undeniably a great phone, it does cause headaches for business, especially if you are already standardized on RIM. Throw into the mix that not much else in the enterprise is Apple based and the fact that you do pay over the odds for their devices, and you can see why, even with a great offering like the iPhone, Apple still isn’t king of mobile for business.

BYOD (Bring Your Own Device)

This is something I hear a lot about and read about. However, in reality, this really hasn’t shown any traction with the enterprise, and I very much doubt it ever will. Predominantly BYOD is a media thing based on what some SMEs maybe doing – it simply isn’t a great option for the enterprise, and here is why…

The enterprise needs to support its workforce and their devices, mobile, desktop, tablet, laptop whatever. This means they have resource dedicated to help ensure IT runs smoothly. That IT needs to administer these devices, ensure business applications run as expected, ensure everything is secure as possible and support end users. (They do other things also, but no need to list out everything). If the IT department has control over its devices, it knows what they are, it can secure them better, ensure the software works as expected, manage roll outs, upgrades etc etc and help users with their devices (without having to train IT staff / mobile support staff on every handset available to a consumer). In addition, standardization allows the enterprise to strike good deals with their suppliers and all big business has preferred suppliers – that’s just life. So imagine you take all that control away from IT. What are you left with? Yeap, a mess. You simply can’t have users connecting random devices to your network. You can’t expect vendors to support all mobile platforms under the sun for bespoke software for that business. You can’t expect in house IT to help users with their particular phones OS or hardware issues, and you can’t expect everything you need to work on the device to work on every single device (have I said that one already?). All in all, BYOD is a great concept, lovely for startups and SMEs, but for the enterprise, this isn’t an option…

Software vendors and their mobile offerings

The BYOD issue does illustrate that software vendors do not support all mobile devices. Sure there are comments that solutions should be mobile web enabled, that they should run using HTML 5, but that user experience is going to be pretty poor. The reason we love our native apps is that we can do more with an app, and the experience is a lot better than anything we see on our mobile web browser. This means vendors have to support native apps, and do they really need to support so many different platforms? Ideally they want to support one, but realistically know they may need to support a few. The problem for a vendor at the moment is which to support? RIM is a must, or is it…It used to be. Apple devices, well they are a must aren’t they…well yes and no…Android? No. Symbian…erm No….Windows Phone…Well potentially……

So what do you do as a vendor? I personally would wait until the end of the year to make a decision…

Windows 8 in the enterprise

Let’s be clear, Windows 8 may not be rolled out across the enterprise as soon as it’s released, but business will be reviewing it, and scheduling in a Windows upgrade path. Some upgrade paths will be quicker than others, and some may do their normal, and wait for the version after – so upgrade when Windows 9 is available as they haven’t long been on Windows 7. The point is Windows 8/9 will be the standard OS on the enterprise desktop and on majority of their servers. With this comes the normal office based software and legacy applications that every enterprise has running on a Windows environment. However, Windows 8 is a little more than just a desktop OS. All of a sudden the enterprise can have the same OS across all devices, including mobile and tablets. Think what a nice thought that is for IT within the enterprise and vendors alike. A single OS to administer across all devices,  a single user experience to support and the ability to seamlessly tie in lots of services they already use back into the devices of choice. Office, Outlook, Lync, Office 365, Sharepoint, cloud backups, device synchronization etc. That makes life a lot easier for IT doesn’t it…

As a vendor then, supporting Windows 8 is a must. But hold on, if you support Windows 8 metro what do you support all of a sudden? Yes, tablets (including ARM based tablets), desktops, laptops, netbooks and with a few tweeks, mobiles. All of a sudden supporting Windows Phone seems an obvious choice –  a necessity. So perhaps it’s back to the usual suspects, support Windows first, then perhaps Apple…Or vice versa depending on where you are with your mobile policies and vendor software.

Let’s think about suppliers to the enterprise. Most enterprises have a strict supply chain policy, and with Windows 8, this means the enterprise can choose who supplies their hardware, including desktop and phones. Remember Fujitsu, Acer, Dell, Nokia, Samsung, HTC and others deliver Windows 8 mobile devices. These same companies will deliver Windows 8 tablets, and most of them will deliver desktops, servers, laptops and netbooks. The enterprise therefore has the flexibility it desires regarding suppliers, but the security, administrative advantages of being tied into a single ecosystem, which runs all their legacy software. Essentially, for the enterprise, Windows 8/9 is a no brainer across all devices….

Where does this all leave RIM?

Well, to be blunt, I believe in a very deep, dark hole.

Essentially if it becomes a no brainer to support Windows Phone in the enterprise and Windows 8 tablet devices, then Apple will continue to struggle in the Enterprise, but that’s not a great loss to them. RIM on the other hand, if they struggle in the enterprise then I believe we will be saying goodbye to RIM and thanks for the BlackBerry memories. Without a consumer market, Windows 8 could well be the last nail in the BlackBerry coffin. I for one am already starting to think that by mid 2013, I could be writing a blog along the lines of “bye bye RIM, thanks for the BlackBerry memories…”