The CMA 2014 Winners were very, very, happy!

This newsfeed is going out on Tuesday this week to miss the UK May Day bank holiday - just in case you were wondering. So, what has been happening last week? Well, if you could indulge me one more time, let me just say a word or two about our thoroughly successful CI Spring Conference and the Contactless & Mobile Awards which took place last Tuesday. A very big 'Thank You' to our sponsors, speakers and exhibitors and, of course, all who attended despite a tube strike that could have, in theory, totally shut us down. Luckily our attendees are made of sterner stuff and braved London above ground to join us.

And what a conference it was. Many thanks to Mike Tuckett from Transport for London, who, in his keynote, gave us a state of play on contactless and mobile payments as they related to London's public transport – as well as acting as an impromptu TfL information office on running and non-running tubes around the capital.

Mark Austin from Visa Europe also quietly announced that, without fanfare, 490 Tesco stores the previous day had switched on contactless yesterday. The largest contactless adoption since McDonald. He also expanded on the 'bump' in user awareness and adoption that normally accompanied such an event. It will be interesting to see the next batch of figures.

Many thanks to Owen Geddes from Appflare who took us through the worlds of NFC and Beacons and to Weve CEO David Sear. David made a statement at the beginning of his speech concerning customer attachment to their phones. Using a little audience interaction he asked everyone to take out their phones and hold them in the air. The audience happily did so. They were less accommodating when he asked everyone to swap their phone with a complete stranger. Point made. "Consumers don't care about payments unless they have to", he said. "They care about convenience and security."

The buzzing atmosphere of the day continued into the evening with the Contactless & Mobile Awards. It quickly became another night of fanfare, mayhem, tears (not really!) and, of course, many selfless as the 2014 Contactless Intelligence Contactless & Mobile Awards honored achievements across a wide range of sectors and countries throughout Europe and further a field. In its seventh year, the Awards attracted a record turnout of nominees , making it an important fixture in the contactless calendar. We’ve seen entry numbers grow year-on-year, which I like to think highlights the dynamism of this burgeoning industry. New for 2014 were two categories; ‘Contactless Payment Collaboration’ and ‘Retail’. We were happy to create these two new categories because we felt that these are two intrinsic areas that showcase what it takes to bring contactless and NFC technology to the general public. 

This year’s CMA winners were:

• Contactless Payment Collaboration – Bank Polski (Poland)
• Retail – Heidi.com (Switzerland)
• Transportation and Ticketing – Transport for London (United Kingdom)
• Mobile Payment – BBVA (Spain)
• Innovation – Selinko (Belgium)
• Customer Experience – UBS Switzerland (Switzerland)
• Loyalty – Escher Interactive (Ireland)
• Public Domain – Vix Technology (Australia)
• Marketing Campaign – Thinaire (USA)
• Infrastructure – ATM / Smarting (Spain)
• Eco-System (sponsored by Samsung Semiconductor Europe) – Bell ID (Netherlands)

For the second time, there was an award open to all finalists – the Industry Choice Award. Voting was open to anyone who was willing to cast a vote. After a frenetic ten days voting, the emerging winner was individual entrant Ibrahim Serhat BULUT (Turkey).

“Visa is delighted to be sponsoring the Contactless and Mobile Awards again in 2014 and we are excited by the increase in the quantity and variety of nominations this year and in the level of innovation in mobile payments. During the past year we have witnessed a major transformation in the world of payments. Visa contactless payments are now available in twice as many European countries as this time last year and consumers have become increasingly comfortable using the technology, making over 340 million transactions in the past 12 months. We should not think the work is finished though and the next two to three years will be critical to the success of both contactless and mobile contactless. We all need to continue enhancing consumer awareness and extending availability to achieve the vision of a ubiquitous contactless solution,” said Mark Austin, Director of Contactless at Visa Europe (Sponsors of the CMAs).”

Visa Europe presented its Visa payWave award for Best Contactless Awareness and Education Campaign to Transport for London (UK) -picked up by Mike Tuckett and Terri Lynham, while Mark Ritzmann & Christian Wirtz from Vodafone took joint ownership of the Visa payWave Business Leader of the Year prize.

The number of firms that now want to talk about what they are doing with contactless globally is encouraging for the industry, but it makes the judges’ job tougher every year. We’re grateful for the time everyone spent analyzing the input in some very tough categories. There were some particularly strong entries in certain categories, such as Retail and Marketing Campaign which meant some of the results were incredibly close.

If our readers were at either event, I would recommend looking at the Contactless Intelligence website this week as we will have the impressions video online (perhaps you can spot yourself?) and the flickr photo stream of the event - including the winner selfies taken on stage (something that appears to be all the range at award shows these days!). Finally, we must be doing something right because we actually trended on Twitter last week, which means a lot of people were talking about the event and that MUST be a good thing!

Normal editorial content will resume next week.

Steve Atkins
Contactless Intelligence

Are companies amalgamating apps for a more holistic user experience?

During the Contactless Intelligence Conference a few weeks ago we ran a session that looked at how NFC, BLE and inclusion into the mobile would work. It was very interesting stuff and I have to thank both Owen Geddes from Appflare and David Sear from Weve for their participation. Bottom line is that all of these technologies can live together if amalgamated in the correct way, with both strengths and weaknesses for all the technologies out there. Perhaps 'application amalgamation' should be the key phrase for the next few years in our industry.

After a great session from both Owen and David, I read with great interest that Tesco and Waitrose have become the first supermarkets in the UK to trial Apple's iBeacon technology. Tesco began its trial in its Chelmsford store last month, while Waitrose started testing the technology in Swindon on the 2nd May this year. Waitrose included a smartphone app that uses iBeacon to alert shoppers to price promotions when in the relevant section of the store. It also allows them to scan barcodes and read customer reviews of products, add items to a virtual shopping basket and eventually to pay for their shop via a mobile wallet. Waitrose say they are still exploring how exactly payments might work, and is considering partners such as PayPal. A trial of the scheme with customers is still forthcoming.

Tesco (who turned on contactless in 490 of their stores a few weeks ago) have so far used the iBeacon to remind customers to pick up pre-ordered items, but said it is holding off sending promotions at the moment over concerns it may scare customers off.

The use of promotional material appearing on users mobile handsets through the phones mobile wallet is starting to make a little bit of an impact with companies keen to experiment on the idea in their campaigns. One organisation that has started this trend in the US is the TV company Showtime. Showtime has amalgamated Apple’s mobile wallet, as well as Google Wallet on Android phones, in the marketing for its new horror series Penny Dreadful. Showtime’s Penny Dreadful fan pass doesn’t come with a bar code or a loyalty code, and you won’t be able to get any rebates with it, but it automatically lets you know when new content for the show is available online. “It’s kind of like a mini app,” explained Ken Todd, Showtime’s VP of digital content syndication and mobile development. 

The network is now thinking about taking the passbook experience even further by adding geofencing elements to it. Find yourself too close to one of the giant billboards that are promoting the TV show in Los Angeles and New York, and an alert for it would automatically pop up on your phone’s lock screen. Apple executives were allegedly very surprised when this application was demonstrated to them, according to Showtime sources… 

And it's not just mobile wallets that appear to be amalgamating either. Wii U will begin supporting transport e-money cards compatible with Suica, a contactless smart card used for train fare in Japan, as a way of making monetary payments, Nintendo confirmed last week during their financial review presentation. The company previously only supported credit cards and pre-paid cards to make digital payments before experimenting with the Wii U console's near-field communication function to make payments using  e-money cards. This function will be tested out in Japan first before being introduced elsewhere.

"I understand that approximately 250,000 shops where there are more than 450,000 machines that accept Suica at the moment, and I believe that the additional impact of more than one million units of a game console with an e-money payment system suddenly becoming available among families would not be so insignificant," said Nintendo president Satoru Iwata. "We think that this NFC payment function will help provide more convenience to consumers," Iwata continued. "And at the same time, I think that this will be an opportunity for both Nintendo and our business partners to come up with new ways to do business on Wii U."

New ways, new business. Based on application amalgamation? Perhaps...

Steve Atkins
Contactless Intelligence

UPCOMING EVENT: Mobile Payments: Innovation, Opportunity & Risk (4-5 June 2014, Berlin)

Join an exceptional group of payments leaders to analyse the emerging business strategies for mobile payments and the opportunities, innovations and market structure that will get us there

This is a one day seminar unlike any other;  featuring C-level participants from Orange, Vodafone, payleven, Ensygnia, Sixdots, iZettle and more alongside key market shapers from the European Commission and the GSMA Association. Led by key industry influencers, and set against a backdrop of substantial regulatory movement in 2014, this highly acclaimed seminar meets again to inform, debate, predict and shape critical developments such as: 

• Developing open standards: pro’s, con’s, likelihood and impacts 
• Security and authentication: challenges, technology, resilience and opportunities 
• Regulatory progress and emerging compliance responsibilities as crucial new policy initiatives such as the new PSD, Regulation on Interchange Fees and Privacy and Data Protection regulation among others, emerge from the EU political adoption process; Where are we now and where will we be by the end of 2014? 
• Managing risk to enable and not stifle innovation 

Find out more and register at http://www.mobilepayments-rri.com

Is increased mPOS usage the catalyst for greater mobile payment adoption?

Good news all around last week as a slew of companies released figures and reports pointing to a contactless payment industry that has expanded both in size and customer acceptance over the last twelve months and showing no signs of slowing down anytime soon. In fact, such was the 'upbeat nature' of the news last week, even the negative news from mPOS provider Square turning its back on its mobile wallet was treated as a strategic re-alignment as the company decided to concentrate more on 'creating conversations' between consumers and merchants. Even Isis had something positive to say last week in terms of increased activation rates.

Oh, and Apple is now 'almost certainly' going to include NFC in its new iPhone after signing a huge deal with China Union Pay. I am not going to say any more on this matter but, for what's it worth – i really think they will do it this time. News site Brightwire had the following to say on the matter; "Apple is likely to incorporate a Near Field Communication (NFC) payment function in the next generation iPhone and has reached an agreement with China UnionPay on a mobile payment service, according to a source close to the matter. In addition to NFC payment, the two companies will also work together on another mobile payment solution that can be used for purchases in Apple Stores, added the source.” Under the deal with China UnionPay, users would be able to download the bank card organization’s app to Passbook in their iPhones and make mobile payments on over three million China UnionPay ‘QuickPass’ POS machines in China. Currently China UnionPay is developing a system that follows its PBOC QuickPass standard which is compatible with Apple’s iOS. Major Chinese banks have been invited to participate in the project.” Is NFC adoption therefore a foregone conclusion? Let's leave it there for the moment so as not to encourage idle speculation…

Anyhow - back to contactless. Last week, the Smart Payment Association released figures during their stint at Cartes America that pointed to contactless technologies being present in on over one-third (37 percent) of all smart payment cards shipped in 2013. By far the greatest increase was experienced in the Asia Pacific region, where contactless shipments grew by a staggering 193 percent compared to 2012. Other regions around the globe experienced strong growth rates, ranging from 45 percent in the Americas to 64 percent in Western Europe. Whether in the form of a ‘tap-and-go’ credit or debit card or contactless payments via a smartphone, growing consumer and retailer hunger for the convenience and opportunities presented by contactless payment accounts for this rapid growth. In 2013 more than 450 million contactless cards were delivered by SPA members in over 30 countries worldwide, demonstrating that the full potential for consumers, providers and retailers is now being realized. Shipments of dual interface cards, incorporating both chip and PIN and contactless technologies, grew by an impressive 115 percent in 2013, largely driven by growth in Asia and Europe. As a result, dual interface cards now represent 94 percent of all contactless shipments. The data, collated by the SPA – whose six members represent more than 85 percent of the total available market – reveals the migration to contactless payment is a reality in more than 30 countries worldwide. The deployment of contact payment infrastructures, which includes terminals and POS, is paving the way for mobile payments and accelerating the introduction of NFC to mass markets. You can read more of the release on the CI website here. Bottom line? The SPA say that such figures prove that payment migration is now a reality. Good to hear.

Visa Europe also came out with numbers last week referring to mPOS adoption and the importance they play in card acceptance. The use of mobile point-of-sale solutions by small businesses in Europe will take off dramatically in 2014, according to a survey of 2,000 SMEs commissioned by Visa Europe. The number of merchants in five European nations signing up for chip and PIN-based mPOS increased by more than 60% in the last quarter of 2013. “Small businesses have been traditionally reluctant to embrace card payments but across Europe that is changing,” says Caroline Drolet, head of mobile point-of-sale at Visa Europe. “mPOS is the catalyst for that.” The research, which questioned 2,000 small businesses in the UK, France, Germany, Italy and Poland, confirms that many small businesses are changing their attitudes toward card acceptance. An understanding of the potential of mPOS for small firms is a key reason for this. Those who were initially reluctant to take on mPOS, believing their business to be too small and that card acceptance solutions were too expensive and complex, soon changed their views once they had seen a demonstration and understood the usability and benefits of the technology.

ABI Research also backed up the general findings from the Visa Europe research. ABI Research found that the installed base of mPOS devices is set to increase fivefold over a five-year forecast period, reaching the 51 million mark in 2019, or 46% of the overall POS. The increase in uptake is not just being driven by micro-merchant adoption, as mPOS vendors are increasingly focused on mPOS penetration higher up the value chain. Other mid-sized merchants and even large retailers are looking towards mPOS to provide new acceptance capabilities, enablement or extension of added value services, while improving in-store mobility levels. However, questions remain around the business viability of mPOS and if it can be a profitable and sustainable business, states ABI research in their analysis ‘mPOS Market Overview and Outlook, Q2 2014‘. Which vendor type most capable of making a success out of mPOS is still up for debate? Will it be mPOS specialists such as Square or Intuit, acquirers expanding payment capabilities and services, financial institutions, or new entrants such as MNO’s or e-commerce specialists? Either way, it bodes well (in my opinion) for encouraging new payment methods, which is good news for contactless cards and the mobile wallet.

Which brings me nicely to my final point, which is to point your attention to the Mobile Payment conference that will be taking place in Berlin (CI's German base of operations) on the 4-5th June. Further details can be found below. 

Until next week.

Steve Atkins
Contactless Intelligence

UPCOMING EVENT: Mobile Payments: Innovation, Opportunity & Risk (4-5 June 2014, Berlin)

Join an exceptional group of payments leaders to analyse the emerging business strategies for mobile payments and the opportunities, innovations and market structure that will get us there

This is a one day seminar unlike any other;  featuring C-level participants from Orange, Vodafone, payleven, Ensygnia, Sixdots, iZettle and more alongside key market shapers from the European Commission and the GSMA Association. Led by key industry influencers, and set against a backdrop of substantial regulatory movement in 2014, this highly acclaimed seminar meets again to inform, debate, predict and shape critical developments such as: 

• Developing open standards: pro’s, con’s, likelihood and impacts 
• Security and authentication: challenges, technology, resilience and opportunities 
• Regulatory progress and emerging compliance responsibilities as crucial new policy initiatives such as the new PSD, Regulation on Interchange Fees and Privacy and Data Protection regulation among others, emerge from the EU political adoption process; Where are we now and where will we be by the end of 2014? 
• Managing risk to enable and not stifle innovation 

Find out more and register at http://www.mobilepayments-rri.com

Analysts look to Apple for next mobile payment milestone

My apologies that this topic has dominated the editorial twice in a row now but once again social media has been inundated with more rumours, half whispers and innuendos concerning that consumer hardware powerhouse that is Apple. "The iPhone 6," they whisper, "Definitely going to have NFC and a complete iWallet onboard. This time - for sure. No, really. Really. REALLY!" We get this every year around this time. So far all the rumours have led to a massive disappointment and a feeling of emptiness (please say that it's not just me). This time though, it isn't fanboys who are driving the rumour mill. No, its more 'grown-up' sources who are throwing their hats into the ring. And that, despite any hard evidence, has made Apple owners believe again.

It's also pushed up a lot of forecasted figures. Mainly due to credible sources such as Morgan Stanley. The investment firm believes that Apple will finally embrace NFC technology through a platform called iWallet. As most of our readers are aware, so far Apple has relied upon a combination of wireless and BLE (around the iBeacon specifications). Apple have piloted the technology in a number of its own stores. Morgan Stanley believes that this time though, Apple will actually go one step further and integrate an NFC chip into the new iPhone, making it, as Analyst Craig Hettenbach is reported to have said, "A core part of its mobile payment strategy".

Bottom line is that after many years of ignoring the technology for a variety of reason, Apple may really go for it this time. A few weeks ago it was reported that Apple had reached an agreement with China UnionPay, a Chinese interbank network. The two companies were said to be working together on NFC payments, suggesting the technology might come to a future iPhone. If Apple does in fact adopt NFC technology, Hettenbach expects the company will go with a standalone NFC controller for its future iPhones.

Other sources have pointed to NXP and their NFC offering as the likely source of the chip. NXP already supplied Apple with the M7 motion-sensing chip found in the iPhone 5s would likely provide Apple all the necessary wireless hardware. “NXP is well positioned to participate in Apple’s mobile payments ecosystem. The company signed a licensing agreement with a customer in Q4 ’13, who we believe is Apple, related to its emerging ID business. A recent patent filing by Apple revealed potential use of NFC and secure element, which we think could be embedded. NXP has also accelerated R&D spend to support a new program related to the IP deal, with revenue expected in 2H, lining up well with the launch of iPhone 6. We see this potentially adding $250M in sales and EPS of $0.25 in 2015,” Morgan Stanley said in their report.

As always, when talking about the mobile wallet, there are arguments out there concerning security; either an embedded secure element on the phone keeping confidential data within the hardware or the recently announced HCE. This cloud-based method would allow Apple to circumvent carriers, who in the past have (reportedly) blocked mobile payment features such as Google Wallet. The website, Apple Insider, reported further on this particular issue by adding; "Given Apple's focus on security, Morgan Stanley's Craig Hettenbach suspects Apple will go with the embedded route, relying on a stacked NFC radio and embedded secure element solution. And given its large user bace and clout with carriers due to iPhone sales, he believes Apple might be able to bypass the carrier 'logjam' and gain approval for its mobile payments system". The question of security has become one of the prime factors in mobile wallet adoption with the market reacting very unfavourably to any mobile wallet development company who doesn't take it seriously enough. LifeLock pulled its Wallet from mobile application marketplaces a few weeks ago because the company found certain aspects may not be fully compliant with Payment Card Industry security standards. (LifeLock had introduced the Wallet service when it acquired Lemon in December). Although Apple may be a different animal - it should take heed of the market it may finds itself in.

News such as this is also being picked up on by research companies as evidence that the mobile wallet is going to take off very soon. A new report from Juniper Research has found that 1 in 5 mobile handsets will have mobile wallet functionality by 2018, against less than 1 in 10 at the end of last year. The report says that wallet launches across North America and Western Europe are increasingly expected to feature contactless payment functionality. The sector is forecast to receive a boost both from the anticipated launch of an Apple iWallet later this year and through HCE (Host Card Emulation)-based NFC (Near Field Communications) services. According to the report, more than 1 in 3 mobile wallets – and over 50% of wallets in developed markets – will featuring contactless payment by 2018.

Morgan Stanley is not the first to report their view that Apple was is to incorporate NFC this iPhone iteration. If you remember, KGI Securities analyst Ming-Chi Kuo also said in his predictions that Apple will be building NFC chips for the iPhone 6. Perhaps the time has come for Apple to take the plunge. Apple CEO Tim Cook certainly thinks so. Earlier this year he was reported having said during an earnings conference call, "The mobile payments area in general is one that we’ve been intrigued with. That was one of the thoughts behind Touch ID, but we’re not limiting ourselves just to that. So I don’t have anything specific to announce today. But you can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity on the platform." As we know, Apple has almost laser focus when it come to ideas (a quote attributed to Steve Jobs goes, "Focus is saying 'no' to 1000 good ideas") and applications - engineers working departments concerning themselves with NFC, iWallets and mobile payments just may have found that Apple's gaze is now directly focused upon them.*

And finally, to lighten the already heady mood. One of my favourite reads last week by Daniel Wolff writing for Payments Source was a piece titled 'The shame of being an early mobile wallet user'. Moral of the story: always have your app unlocked before you pay, otherwise, as Daniel points out, "To the cashier, it looked like I was some jerk holding up the line by playing Candy Crush on my phone when I should have been swiping my card".

Until next week.

* Caveat: Just to reiterate - there is absolutely no hard evidence of Apple's intended move on the iWallet or NFC-based payments. Just so we both understand each other… Everyone will have to wait until June 2nd at the Apple WWDC to really find out more.

Steve Atkins
Contactless Intelligence

UPCOMING EVENT: Mobile Payments: Innovation, Opportunity & Risk (4-5 June 2014, Berlin)

Join an exceptional group of payments leaders to analyse the emerging business strategies for mobile payments and the opportunities, innovations and market structure that will get us there

This is a one day seminar unlike any other;  featuring C-level participants from Orange, Vodafone, payleven, Ensygnia, Sixdots, iZettle and more alongside key market shapers from the European Commission and the GSMA Association. Led by key industry influencers, and set against a backdrop of substantial regulatory movement in 2014, this highly acclaimed seminar meets again to inform, debate, predict and shape critical developments such as: 

• Developing open standards: pro’s, con’s, likelihood and impacts 
• Security and authentication: challenges, technology, resilience and opportunities 
• Regulatory progress and emerging compliance responsibilities as crucial new policy initiatives such as the new PSD, Regulation on Interchange Fees and Privacy and Data Protection regulation among others, emerge from the EU political adoption process; Where are we now and where will we be by the end of 2014? 
• Managing risk to enable and not stifle innovation 

Find out more and register at http://www.mobilepayments-rri.com

A beacon ‘up North, a beacon ‘down South

“No NFC iPhone for you!” would appear to be the message given out at last weeks Apple WWDC. However, there is evidence that the actual hardware may be upon us in September - especially if the updates and additions to the iOS 8 software are taken into consideration. 

Location-based apps that automatically appear on the lock screen - thanks to geo-positioning as standard in the newly announced SDK (it was only discovered by developers after the WWDC had ended - Apple never even emphasised this important addition) as well as more emphasis on Beacon technology and iTouch security updates, point that Apple may indeed be ready to leap into the wild world of mobile wallet usage (payment, loyalty, couponing etc). So remain patient, all of you Apple fanboys (and girls) out there, something tells me the time of Apple payments may be upon us soon.

The age of the beacon (iBeacon?) certainly appears to be upon us - from the South to the North of England, merchants really do appear to be gearing up to use the technology. Sheffield’s Meadowhall is piloting a scheme using the technology for special shopping nights. The shopping complex had already announced that they were looking to increase their technology usage to help customers engagement with their in-house merchants. Working with technology start-up TagPoints, Meadowhall’s marketing team has developed the Meadowhall app, which, once downloaded, allows users to receive real-time discount offers directly to their phones via BLE beacon technology.

Not to be outdone by a shopping mall ‘up North’*, London’s Regent Street (run by The Crown Estate) have pulled out all the stops and announced that they, too, are calling on the street’s merchants to use beacon technology to engage better with visitors to the iconic shopping street. As well as the use of beacon technology there will also be a special Regent Street app that promises to deliver exclusive, personalised content to shoppers about what’s on offer during their visit to the stores on the famous street.

The app communicates with beacons in each store so that, as shoppers walk past, they receive alerts via Bluetooth about a range of things, from information about new products and upcoming events to exclusive offers only available to those shopping on the street that day. Using beacons is a new innovation which has only previously been trialled by a handful of retailers and by using Bluetooth this comes at no cost to the user.

The introduction of the app forms part of the £1bn Regent Street regeneration programme, which has already seen an array of internationally renowned brands like Burberry, J Crew and Cos open global flagship stores on the street. The app, which is free to download, will include information from the majority of Regent Street’s world leading retail line-up. “This is a fantastic example of how Regent Street is continuing to evolve as the world’s most successful shopping destination, bringing together online, physical and now mobile retailing to provide an experience which delivers across all of the platforms that appeal to 21st century shoppers, said David Shaw, Head of he Regent Street portfolio.

I can certainly understand why the idea of beacon technology is so seductive for mobile users. They basically don’t have to do anything (they don’t even have to touch a tag - QR or NFC) – ‘stuff’ comes to them. Perhaps this is the real allure of a mobile wallet. Less of the payment aspect and more of the other elements associated with a wallet. As Steffan Aquarone, CEO and founder of UK-based Droplet cheekily told the audience at last week’s ‘Mobile payments; Innovations, Opportunity and Risk’, held in Berlin, “There is no money in mobile payments. There IS money in loyalty, coupling and overall customer engagement.”

Until next week.

Steve Atkins
Contactless Intelligence

* To be clear - I am in no way suggesting that there is a special rivalry between Meadowhall and Regent Street - that would be silly. After all, Regent Street doesn’t even have an Asian style food-court!

Unattended: the password for mobile payments

It’s this time of year that Contactless intelligence starts to look at the industry as a whole and makes some forward looking hypothesis on what will be the real driver for contactless and mobile developments over the next twelve months. Primarily so that we have a general idea of the shape and format for next year’s Contactless intelligence Conference in London.

Discussions have taken place between the team but the general consensus is that, despite observers pointing out that mobile payment is a solution looking for an answer, the ‘real observation’ should be in consumer purchasing behaviour. Namely, that to use a mobile wallet instead of a card at an attended purchase point doesn’t really make sense. However, use a mobile wallet at an unattended POS (parking, vending, transport, ticketing) and suddenly it makes a lot more sense. 

After all, vending and parking are usually cash driven and with low value purchases and most importantly, there is normally no wait between purchase and fulfilment (unlike, say, paying at a coffee bar and then waiting for the barista to make the coffee). When it comes to transportation and ticketing, I would say that in well over 75% of purchases today the fulfilment can be loaded straight into the mobile wallet itself (e.g. similar to Apple’s Passbook). Even with the fulfilment loaded (let’s take tickets as an example), the utilisation can once again normally be carried out in a standalone environment. 

Just last week (and just in time for World Cup visitors), the new terminal at Viracopos-Campinas International Airport, near São Paulo, Brazil was equipped with 53 self-check-in kiosks from IER, a French subsidiary of Bolloré Group, and included a massive 212 desk check-in printers and 82 barcode readers with NFC reading capabilities for boarding. The self check-in kiosks are selling premium seating, can read electronic passports and print baggage-tags. "We wanted to get state-of-the-art equipment, with two screens on the self-check-in kiosks and RFID/NFC capabilities," Marcelo Mota, Viracopos Airport’s COO, said in a statement. Self check-in and purchases of a seat upgrade - all via your mobile.

Other kinds of tickets - such as concert tickets purchased and stored on the mobile  - is not new, but last week Ticketmaster updated their Apple Ticketmanster app to include not just the ability to purchase a ticket online but also to sell and transfer tickets. The app includes features that are entertainment industry firsts, including: Sell/Transfer to send or sell tickets directly to friends and other fans; an anti-fraud animated watermark so venues know what mobile tickets are authentic; Swipe to Buy, swipe left to quickly buy tickets; and access to both primary and resale tickets providing the most comprehensive selection of available tickets for live events. “This app offers fans the best selection of event tickets available as it provides, for the first time on mobile, all of their available, verified ticket options,” said Mike Lane, vice president of mobile products for Ticketmaster. “Not only does our app provide the biggest selection of event tickets, it also offers fans the richest feature set in the industry, all re-engineered to help fans easily find, buy, transfer and sell their tickets. And on the day of the event, the app allows fans’ iPhones to become the ticket.” Again, nothing new in the basic premise but by pulling the consumer deeper into the experience (without external personnel), users are gaining more intuitive experience of purchase/transfer/secure end-product usage experience from their phone and recognising the benefits of doing so.

This fundamental approach is one being adopted by a number of wallet-interested parties. Only last week, the OSPT Alliance released Version 2 revision 2 of its free to download CIPURSE™ open standard, which offers an advanced foundation for developing interoperable fare collection systems. A number of administration updates have been made to the standard to remove ambiguity in its language, reduce complexity, and improve interoperability. The introduction of the first cross-market multiple proximity system environment, however, is the most significant advancement. The mechanisms which have been defined within the revised standard can be used across multiple domains to offer transparency as markets converge their services onto a single device, such as a smartphone. “When multiple applications reside on a single platform, it takes time for a reader in the terminal to identify and connect with the required application to authorize access,” said Laurent Cremer, Executive Director of OSPT Alliance. “By establishing a universal proximity environment that uses defined application identifiers, this process can be streamlined. This ultimately decreases the identification time at the turnstile and shortens queues to access a public transit network or an event.”

Mark my words, the less of an interaction with attended POS personnel - the greater the chance of mobile wallet adoption. Only a slight segue into contactless cards was this tweet I read on Twitter last month (yes, I save tweets I like) from James Martin @Pundamentalism;

“Contactless payment on your card?”

“Yes”

“Press it against the screen”

“Not really contactless, is it?”

“...”

“...”

“Just press it”

And finally, Isis, the mobile wallet app from AT&T, T-Mobile and Verizon have always been cagey about releasing actual user figures but last week toy merchant Toys R’ Us revealed it has seen 23,000 individual transactions conducted using Isis in the three months since it began accepting NFC-based  payments. The company is “very happy” with the service, Gregory Todd, the merchant’s senior analyst for credit card programs, told attendees at the 2014 NFC Solutions Summit. Michael Abbott, CEO, Isis on the Isis blog has announced that Isis is experiencing growth with over 20,000 new Isis wallets activated per day. All well and good but one can’t help but feel that there are some concerned marketers in the Isis camp who are looking with dismay at current news reports with the term Isis in the headlines. Not news on the wallet app but rather the terrorist network ‘The Islamic State of Iraq and Syria’ (Isis), now threatening Baghdad. I know that the two have nothing in common (apart from being well funded - apparently) but none-the-less it’s a bit of a marketing communications headache. Anyone tells you different - trust me, they’re trying to wallpaper over the cracks.

Until next week.

Steve Atkins
Contactless Intelligence

Beacons, Bpay bands & the Beech Road experiment

Some things take on a life of their own. Either that or they’re flavour of the month. Like the ‘Beacon’. For the past two weeks, all I seem to read about is one beacon-related story after the other. From retailers putting them up in shops and malls, to museums incorporating them into their guides to new specs and standards covering  the installation of beacons into airports. Beacons appear to have captured everyone’s imagination and may well be the way to encourage deeper customer interaction.

Even QR code-based companies such as LevelUp are integrating support for beacon technology after testing showed that pushing in-store offers through the technology significantly increased sales. Last month, LevelUp added support for the technology to its platform and sent devices to a few of its merchant customers so that shoppers could be alerted to upcoming loyalty rewards. Participating businesses experienced a 22% average increase in customer spend through the LevelUp app or the business' custom app. Meanwhile the rate of transactions from previously "lapsed" LevelUp users increased by 63%. Seth Priebatsch, chief ninja (seriously), LevelUp, said, "Building iBeacon support into apps built on the LevelUp platform will help customers stay apprised of their upcoming rewards and help businesses earn more through their loyalty programs. Mobile payments have enabled local businesses to track customer spend and deliver unique offers to individual customers like never before. Now with iBeacon functionality, businesses using LevelUp can also communicate with customers during their crucial decision-making process.”

This would appear to be a sentiment that other organisations are also embracing. Recently, SITA (the world's leading specialist in air transport communications and information technology) created an initiative called the ‘Beacon Registry’ – a registry of common use iBeacons for the Air Transport Industry (ATI). The registry is a SITA initiative and allows beacon owners (airlines, airports or 3rd parties) to manage their beacon infrastructure and track where they are placed in an airport. It also enables airports to monitor beacon deployment to prevent radio interference with existing Wi-Fi access points, provides beacons owners with a simple mechanism to set the 'meta-data' associated with beacons and provides an API for app developers who want to use these beacons for developing travel and other related apps. The aims of the registry are to promote the use of beacons in the Air Transport Industry and reduce the cost and complexity of deployment. The registry was launched in a private beta release in April, with a general launch scheduled for the SITA IT Summit this June. expect to see beacons at an airport near you soon. 

Other companies such as Estimote are keen to explain that for beacons to really become successful they really need to be ‘smart beacons’, in that they can create a form of context for the user. Something that many companies involved in this area are more than aware of. You can watch their video explaining what they mean by this by following the link. Event companies are also embracing beacons for their events in order to allow attendees to interact with each other. Eventbase Technology Inc.for the first time used iBeacons so that attendees could connect with each other at the Cannes Lions® 2014 festival, last week, using the iBeacon-powered ‘Around Me’ feature within the official iPhone app to detect nearby attendees and connect with them. Eventbase co-founder Jeff Sinclair said the Cannes Lions app combined the power of iBeacon technology with tight LinkedIn integration to allow attendees to see who is around them, read their profile and immediately reach out to them through the app. "We're excited to be pioneering the use of iBeacon technology for attendee-to-attendee networking," said Sinclair. "The ability to find out more about the people around you and instantly connect has the potential to transform the event experience entirely." 

Speaking of events and new technology, the London Pride week started on Sunday. More importantly (to us), it was the first time many attendees got to use their Bpay bands and attend the event while leaving their cash at home. I have been following Twitter chatter concerning the bands and to be honest - they seem to be a huge hit. The amount of people tweeting selfies of their bands was impressive. It’s a great move by Barclays, allowing the bands’ owners to load their ticket and top-up the credit on their band. From there, the users can access fast-track entry to the festival, make payments up to the normal £20 limit, and access to special extras like Facebook integration. All in all a total contactless experience. This could be the future. With the Samsung Gear already out and a possible iWatch on the way, perhaps instead of wearing your heart on your sleeve, you may end up wearing your wallet on your wrist!

And finally - the Beech Road Experiment. This Saturday saw shops, restaurants and cafes in a street in Chorlton (near Manchester) take payments on plastic or mobile – no cash allowed. Mary Paul, of the Beech Road traders' association, said: "Businesses can see the way things are going with more money being taken on cards across the board, so this is a very interesting glimpse into the future for all of us." This month the British Retail Consortium (BRC) revealed cash use has fallen by 14% in the last five years and that card use is increasing rapidly, with debit cards currently being used for 32% of transactions compared to 30% last year. Helen Dickinson, director general of the BRC, said: "Customers are taking advantage of new ways to shop and pay. The availability of contactless cards, handy express stores and self-service tills, as well as online sales, has increased the use of debit cards for smaller payments in place of cash." The experiment was the idea of card payment provider Handepay. Mark Latham, product and innovation director at Handepay said, “The introduction of contactless technology has only accelerated this (cashless) process as transactions are now as fast as the pace of our lives”.

Isn’t that the truth!

Until next week.

Steve Atkins
Contactless Intelligence

Is NFC no longer wearable?

Last week saw the Google I/O event showcase the latest that Google has to offer the Android community. Lots of new bits and pieces and many of them based around showing what you can do in an everyday scenario using just a mobile running Android OS. 

The Google Wallet has not gone out of fashion, I am pleased to see. Not that I would be so cynical to think that Google would lose interest in a product just because it hasn’t gone gangbusters by now. Perish the thought! No, instead, Google has brought out new features for payment and e-commerce providers, including a ‘save-to-wallet’ feature on their app to enable customers to store offers in their Google Wallet account. The inclusion of geofencing means that customers will be prompted to one of their digital cards when in specific stores and a split tender option lets users pay for part of a purchase with their Google Wallet balance and the rest by credit or debit card. “‘Save card to Google’ allows you to store loyalty cards, but not only loyalty cards, also coupons and discounts and bonuses,” explained Magnus Hyttsten, a Developer Advocate at Google, “If we tie that together with context and location, for example, if I’m walking into a store, then that store can offer me things based on what my loyalty program is, my status is and, also, it can utilise the coupons that I’ve collected.”

However, the really interesting elements were based on the smartwatch-type objects, called ‘Wearables’. Similar to the ‘Expendables’, but the average age is 20-something rather than 70-something. Now known as ‘Android Wear’, the apps can leverage the computing power and connectivity of the user’s Android phone so that, for example, a Google search request made to a smartwatch will actually be performed by the user’s phone. The results are then returned to the smartwatch. Voice input is also now supported, enabling users to say “OK Google” and then speak their instruction. PayPal also has revealed that it has an Android Wear app in beta testing that allows device owners to check in to pay at local stores, redeem offers and receive payment notifications while on the go. PayPal did not explain how this would work, but the company already has a Bluetooth-based payment system called Beacon, which could communicate with either the user's smartwatch or the phone that the watch is paired with.

I shall reserve judgement on this but you can imagine how insufferable it will be if everyone walks around saying “OK Google” all the time. You can watch the Google keynote on YouTube here.

The really interesting thing concerning ‘Wearables’ was pointed out by Daniel Wolfe, Editor-in-Chief of PaymentsSource, who said in his article, ‘Has NFC become unfashionable with Wearables?’, “Here's my ideal mobile payments scenario: I go up to the counter with an NFC smartwatch or an NFC Ring, wave my hand or wrist Jedi-style over the contactless card reader, and the payment goes through. Maybe a digital receipt will show up on my phone's screen, but I'd never have to take the phone out of my pocket. Sadly, this process is looking more like science fiction than science fact, now that the specs for Google's inaugural line of Android Wear smartwatches are out – and NFC is conspicuously absent from the features of the LG G watch and the Samsung Gear Live watch. The devices rely on Bluetooth, which can certainly be used for mobile payments, but the absence of NFC is surprising. If these devices have NFC, neither manufacturer considered it important enough to merit a mention.”

Having said that though, it's certainly possible that future generations of Android smartwatches will have NFC technology; Google indicated that many more smartwatches are already being developed on the Android Wear platform and adding NFC capabilities to these products is not as hard as it used to be so perhaps it better to wait and see if consumers are really going to buy and wear these ‘wearable smart watches’.

Google also pointed out that the new BLE Peripheral Mode support in Android L, version 5.0 of the operating system, means that “Android devices can now function in Bluetooth Low Energy peripheral mode and apps can use this capability to broadcast their presence to nearby devices — for example, you can now build apps that let a device function as a pedometer or health monitor and transmit data to another BLE device.” Currently, Android devices can only consume Bluetooth LE data but the addition of peripheral mode support means they will be able to ‘advertise’ too, opening the way for these devices to act as Bluetooth beacons. 

Which may or may not come in useful if you want to check-in to a hotel and be greeted like a long lost friend. In a piece titled, ‘A place where everyone knows your name’, we cover a company called Mahana who are extolling the virtues of Beacons for just such an occasion. Mahana utilises Apple iBeacon technology to enable travel and hospitality companies to enhance their consumer mobile applications, manage their beacon network and make guest information immediately and easily available to the staff. As a hotel or casino manager, imagine being able to notify the staff when your best guests arrive. The guest’s photo, name, notes and preferences are displayed based on their proximity. Using Mahana technology, those details can be shared on the bellhop’s smartwatch, concierge’s tablet, and front desk computers before the guest even walks in the door. You can watch the video on their site here.

While the theory sounds great, I can’t help that the more cynical amongst us (cough, cough) would see this as a pretty slippery way to bond and get better tips from the hotel clients. It would be pretty funny seeing couples trying to do an anonymous check-in though! What do you think - do you want everyone to know your name?

Until next week.

Steve Atkins
Contactless Intelligence

Talking Transport Cards & NFC Digital Tattoos

Just like the ‘regular’ press, we trade press folks also have the onslaught of the ‘silly season’ to deal with. This is the time of year when news is scarce as people take much deserved breaks and commit to their family and friends for a few weeks in the sun. In turn, items of news that may not normally get much of a mention can find themselves headline worthy or at the very least a quick mention.

That’s why this week, two pieces caught our eye that we think sum up the silly season rather well. First off, the new South Wale’s attempt to get their much maligned contactless transport card - Opal - into the public arena in a positive light. If you have been following the saga of the Opal transport card then you will know that it may have had its ups and downs but generally it is now well appreciated. All transport cards have had to go through that all important ‘teething’ session, so what Opal went through could be described as par for the course. So why on earth New South Wales Transport thought that the way to enhance this more positive approach to their product from public transport users was to show someone literally falling in love (and having kids with) their Opal card beggars belief! Except - well, we just can’t stop watching it. Weird, bizarre, watch it here…

If you are a Moto X phone owner (actually, I don’t know anyone who is), you may be excited upon hearing that there is new technology to accessorise your phone with. You may be less excited when you find out that it is a digital tattoo. Albeit an NFC-based digital tattoo. These days, it’s considered prudent to ensure that your phone is locked when not in use. It makes sense and keeps your data secure from unwanted prying eyes. However, the downside is that you may have to enter a PIN number to unlock your phone – which, for some people, is beyond tedious. Pity them. However, if you are the owner of a Moto X phone then things could be looking up for you. In fact, if you have a Moto X phone, hate the time it takes to unlock your phone AND have always wanted to have a tattoo – your world is going to get rocked. Introducing the worlds first wearable NFC-based digital tattoo that will unlock your phone. The nickel-sized stickers comes from VivaLnk, part of Motorola’s ATAP lab, which was fully absorbed into Google. Sync the tattoo to your phone, tap the sticker and the phone unlocks. So just to make it all clear – that’s one tap instead of four. I am sure that there are people out there who will add up the time saved by not tapping three times and make something meaningful out of it, but I guess most people will just use the saved time by demonstrating their ‘tattoo’ to peers, friends and family so that saved time may not materialise.

Don’t get me wrong - I’m not knocking the technology, just the application. That’s because I have spent long enough in the semiconductor industry to understand how hard it is to create thin, flexible electronics that are adhesive, inexpensive, and disposable, and can communicate with smartphones and tablets. I just think that there could be better applications than as a tattoo that can unlock your phone (and looks like a minor burn). Perhaps some of the other NFC tag companies out there can create a far better application scenario. Come on people - you know who you are!

Following on from my editorial last week concerning wearables, I was given a heads up that Caixabank was releasing a payment band last week. They do have previous form in this area. Back in early 2014 CaixaBank launched its first financial services for new wearable devices, including the world’s first application for smartwatch devices and an application to help Google Watch users locate branches and convert currencies. The contactless payment band unites these two trends, providing users with wearable financial services and all the benefits that these entail, particularly in terms of convenience, security and speed when making payments.

This summer, CaixaBank plans to distribute about 15,000 of these contactless payment bands to those customers who have made the most use of their contactless cards. The launch, says the bank, will be the largest program in Europe to use wearable devices as a payment method with Visa. The payment band will be made available via the bank’s entire branch network in the second half of the year, with customers able to make their own designs (that’s interesting!) and get hold of their bands through all the usual banking channels. The payment band also represents an additional card to the user’s existing contactless card, meaning all purchases are charged in exactly the same way as with their normal card.

CaixaBank are also keen to let everyone know that the payment bands are water-proof and damp-proof, making it ideal for British summer months – but may be overkill for a Spanish summer.

And finally - just in time for summer - there is more NFC ticketing about to be released. Air France, Orange, SITA, Toulouse-Blagnac Airport and RESA have joined forces to provide the first seamless boarding experience in Europe with NFC technology. Over the next six months, the Touch&Pass app will allow a panel of passengers traveling on Air France flights from Toulouse-Blagnac to Paris-Orly to use their Orange NFC-based smartphones to conveniently move through the airport—from the airport entrance until they board their plane.

The technology will enable passengers to automatically receive their NFC boarding pass on their smartphones using their usual check-in method. By tapping their mobile on dedicated readers in the airport, they will then be able to quickly and easily pass through the different steps of their journey, including priority lanes for security control, lounge access and boarding. The boarding pass will be read automatically, even if the phone is locked, or the battery is dead. Renaud Willard, Sales & Marketing Director, RESA, said, “Making passenger facilitation its top priority, RESA has seamlessly integrated NFC technology into the daily operations of Toulouse-Blagnac Airport. NFC brings speed, easiness and a paperless experience to the airport environment. Passengers don’t have to think any longer about their boarding pass, the battery life of their smartphone or the rotation of their screen. They just walk through the airport, simply tapping their phone on the RESA readers.” 

Brilliant. Now if only the air traffic controllers don’t go on their yearly strike at the same time…

Until next week.

Steve Atkins
Contactless Intelligence

Australian Judges & Hungarian Monopolies

Last week I spoke about the yearly summertime ‘silly season’ in the press and the coverage that fairly minor stories get during this period. For another example, you have to look no further than the Australian judge who branded the MasterCard PayPass “too easy to use unlawfully”.

Berthe magistrate Michael Wheeler made comments while sentencing a fraudster last week. Perth Magistrates Court was told the plaintiff had obtained someone else’s PayPass debit card and had used it to buy groceries. “That pay wave system is troublesome, when someone loses their card,” Mr Wheeler said. “It’s so easy. You just swipe your card and away you go.” He said fraudsters could even get away with using a card bearing the name of someone of a different gender because they were not checked. He also deciced to make his views of bank known when he noted banks were liable for such losses but added “they make enough — they can sort it out for themselves”.

And, after West Australian Police appealed to the public on social media for information about another fraudster who bought almost $1500 worth of items using a debit card stolen from a shopper's handbag, people vented their frustration with PayPass online. MasterCard were quick to downplay the comments from Mr. Wheeler and the frustrations that he incited from other users on Twitter by commenting that the vast majority of lost, stolen or ‘never arrived' cards used by fraudsters did not involve contactless transactions. "Lost or stolen cards can be used online or for telephone transactions as the fraudsters have access to the CVV2 code on the back of the card,” said a MasterCard spokesperson, pointing out that fraud using contactless means accounted for less than two per cent of all total card fraud. "This is in the context of massive growth in the contactless category," she said. "Contactless transactions have grown by 350 per cent year-on-year from calendar 2012 to calendar 2013." However, staying in Australia, Victoria’s Police Chief Commissioner Ken Lay was also stated saying that said tap-and-go credit cards were one of the main factors behind a five per cent surge in the state's crime rates. 

And what exactly did our fraudster buy with the stolen PayPass card? The shopping list included cigarettes, gift cards, McDonald’s, fruit salad and… fresh oysters! I guess that’s the Australian criminal for you. Very different to our own home-grown, garden variety of petty criminal.

Talking of home-grown, it would appear that Seamless is coming to the UK. For the uninitiated, Seamless are a mobile payments complaints specialising in their SEQR (Secure QR code) version of payment and loyalty for individual retailers, fast food chains, pharmacies, parking companies, value store card companies and petrol stations. They have been pretty active around the Nordic regions and are now planning to work together with Optimal Payments, as its online payment solutions expert, and to help integrate and launch SEQR as method of payment for consumers and merchants in the United Kingdom. “The United Kingdom is one of our target markets and we are very excited to work with leading online payment expert Optimal Payments to launch our services to merchants and consumers there,” said Peter Fredell, CEO, Seamless. “The UK will be the initial market in which we launch our integrated general purpose, reloadable, prepaid SEQR account within our mobile payment app. We are delighted to be offering it to UK-consumers first.”

Looking further towards Central Europe, there was also exciting news from Hungary last week as the results on a one year mobile payment pilot were made public. Based on the results of the pilot and the research conducted in 3 phases during the test period, the Hungarian Mobile Wallet Association estimates that around 350,000 - 400,000 people would be open for the use of the service in the first round. The Association says that the test proved that there is a growing demand for mobile NFC-based contactless payments and loyalty programs with the spread of NFC capable smartphones. The active MobilTárca testers made 41,000 payment and more than 4,000 loyalty point transactions during the 12 months of the project. Users spent more than 120 million HUF within more than 20 countries. “The Hungarian acceptance network is also growing dynamically, one third of the POS terminals are already contactless,” said Gábor Pukler, President of the Hungarian Mobile Wallet Association.

All very good news for Hungary and mobile payments in general, however, there is a small blip on the horizon. The European Commission has extended infringement proceedings against Hungary for setting up a national mobile payments provider. The EC said it asked Hungary to respect EU rules on the freedom of establishment and free provision of services. Pursuant to the Act of 2011 on national mobile payment organisation, the state-owned company National Mobile Payment Ltd was given the exclusive right to operate the national mobile payment system, a platform that service providers will be obliged to use when providing mobile payment intermediation services in connection with some public services (e.g. parking). 

“This new exclusive right unnecessarily and significantly restricts access to a market that was previously fully open to competition, thereby harming existing investors and dissuading future investors with no appropriate justification,” said an EC spokesperson. The Commission started the second stage of the infringement proceedings by sending a reasoned opinion to ask Hungary to take action to fully comply with EU rules. If the Hungarian authorities do not reply satisfactorily within two months, the Commission may refer the matter to the EU Court of Justice. Whatever effect that will have is anyones guess.

And now for a couple of updates on previous editorial opinions. Last week easyJet announced that they are the first airline to trial iBeacon technology across Europe to help passengers navigate their way through the airport. The notifications are automatically activated as passengers approach bag drop and security – prompting them to open their boarding pass at the right time so it is ready to be scanned and advising when passports need to be presented. The strategically placed beacons, which are being trialled at London Luton, London Gatwick and Paris Charles de Gaulle Airports, trigger helpful notifications to passenger’s mobiles during critical points of the airport journey. Peter Duffy, Commercial Director for easyJet said, “We are trialling the use of iBeacons at three of our busiest airports and if they prove popular we will roll them out across Europe. Customers travelling through London Luton, London Gatwick or Paris Charles de Gaulle with an Apple iPhone and easyJet app can benefit from the technology from this week, enhancing the in-airport experience when interacting with our beacons in the trial this summer.” The airline has worked with the three test airports to strategically position the beacons in the correct locations, which will ensure messages are sent when it is most relevant to the customer.

I expect to see more and more beacons around very soon. The figures apparently back me up. Last week ABI Research’s latest report “BLE Tags and the Location of Things”, outlined the larger opportunities for BLE Beacons in Commercial/Enterprise, Connected Home and Personal Asset Tracking. Retail aside, there are many other markets that will generate even bigger volumes of BLE beacon shipments over the next 5 years, creating a 60 million unit market in 2019. Senior analyst Patrick Connolly comments, “It may surprise many to see that retail is the smallest market covered in the report. In building terms, many stores are relatively small in comparison to a corporate office or hospital, while the items being tracked i.e. consumers, are already BLE-enabled through their smartphones, further limiting the number of beacons required.” Clearly connected home and personal asset tracking have huge potential for BLE beacons and will feed into a much larger Internet of Everything. We will see silos of beacon networks emerging over the next 5 years, and larger companies like Apple and Google must consider how to aggregate this into a cohesive system, creating new revenue opportunities.

And finally… the Isis mobile wallet. What can we say here? A few weeks ago in our news feed editorial, I briefly wrote about the marketing branding headache that is the name Isis. That fact that a name can be used by two very, very distinct organizations that have nothing to do with each other is par for the course in this every shrinking world. However, that the brand name of a fledgling mobile wallet venture is the exact same as the short-form name of an Islamic terrorist organization is just bad luck. Especially when a) you had the name first and b) the terrorists are grabbing all the headlines. So it should come as no surprise that a re-brand on behalf of the mobile wallet venture Isis (a joint venture from AT&T, T-Mobile and Verizon) is now on the cards. This is a pity as only a few weeks ago, Michael Abbott, CEO, Isis announced that Isis is experiencing growth with over 20,000 new Isis wallets activated per day. Abbott has placed a personal message on the Isis blog explaining this decision and you can read it in our post on the subject. We look forward to seeing what the new brand will look like. Techcrunch did point out in their report that, "Ironically, the re-branding decision from the mobile operators comes after ISIS (the militant group) re-branded itself from its earlier name, also known as the “Islamic State of Iraq and al-Sham,” to just 'Islamic State'."

Ironic or just unlucky?

Until next week.

Steve Atkins
Contactless Intelligence

Mobile, trackable or watchable? The new payment dilemma…

A report came out last week that looked at the amount of time and effort consumers put into their mobiles in order to arrive at a purchasing decision. The findings come as part of the 2nd Annual UK Mobile Path-to-Purchase Study released by xAd and Telmetrics. Predominantly, nearly half (46%) of UK consumers now use mobile devices as their primary tool for purchase decision-making, while one in four use mobile devices as their exclusive shopping research tool, according to the research.

Results of the 2014 study were compiled by Nielsen from more than 2,000 UK smartphone and tablet users, focused on the Retail, Insurance and Telecom categories. "Our study confirms that mobile is a powerful part of today's consumer purchase process and underlines the growing opportunity for advertisers to reach this ready to buy audience," said Bill Dinan, president of Telmetrics. "Advertisers that capture mobile metrics can improve their understanding of how shoppers interact with mobile devices throughout the buying cycle and empower their ad programmes to reach consumers when they are most open to influence." This is all well and good. In fact, Visa Europe even brought out their own report looking at consumer purchasing behaviour using mobile.

Commissioned by marketing firm G/O Digital, the study recorded the shopping preferences of 13,000 adult smartphone and tablet users and found that smartphone owners increasingly use their devices to hunt for coupons, and more often than not, these mobile-coupon-hunters choose to buy their discounted products instore — not online. Consequently, the report concluded this new purchasing behaviour posed no threat to brick and mortar businesses. 

Even the actual security around the payment process is being enhanced. Earlier this year it came to light that Visa is interested in the area of secure biometrics for payment (and I expect that they are not the only financial technology company looking into this area). After all, it could well be the future; Apple's iPhone 5S has a fingerprint scanner, and Samsung has  a print-reading Galaxy S5. So it is not surprising that Visa would also be interested - although Jon White, Visa's Head of Marketing, Mobile Strategic Alliances, is on record as saying, “Smartphones equipped with fingerprint scanners are definitely useful. There are all kinds of technologies that we are seeing, and a lot of innovation in this space. We're working with these technologies, and they are all very interesting.” But, “Do users really want one password [in this respect an eye-scan or fingerprint - ed.] to access all of their services? One password for everything can sound quite romantic, but we all have our own eccentricities when it comes to authenticating passwords, and we need to recognise that.” For now though, the focus at Visa remains on contactless, NFC payments.

"OK", I hear you say. "So the future is very much mobile. We know that, and we know that mobile will become more and more pervasive in our everyday life from ticketing to transport, from loyalty to purchasing and so on. So what?" Well, I would point to the new UK data laws and the realisation of the growing amount of data that is mobile-generated on a person today, from communications, to purchasing habits, to travel. Privacy campaigners and lawyers have warned that the government's emergency Drip data law will provides "sweeping" new powers that will affect everyone in the UK, despite assurances from British Prime Minister David Cameron that the bill is intended only to maintain previous laws and practices.

The Data Retention and Investigation Powers Bill (Drip) was proposed as an "emergency" measure a few weeks ago after the European Court of Justice ruled in April that the UK's previous legislation on data retention had gone too far. The Bill requires that all internet service providers and mobile network operators store customers' metadata for twelve months in case they are requested by law enforcement officers. And that is a lot of up-to-date data on an individuals profile - especially mobile. Critics of Drip argue that some of its clauses will serve to extend the powers of police and the secret services to intercept phone calls, emails and text messages with changes to a set of laws known as the Regulation of Investigatory Powers Act (Ripa).

This awareness of the data that is now being generated through mobiles and even contactless cards is something that I predict will cause a certain amount of unease in the near future. Take Australia for example. Last week it was revealed that New South Wales and federal law enforcement agencies have been given the power to access the travel history and home addresses of hundreds of thousands of commuters using the new Opal card. Without a warrant, agencies including the police, Centrelink, the Taxation Office and even local councils have the ability to request access to personal information kept on databases linked to the card when investigating crimes like murders, welfare fraud, tax evasion or even littering(!).

The New South Wales Police Association has moved to reassure commuters using the state government’s Opal Card that the police won’t access personal and journey data from the smart cards for people who are not under investigation.The public stand by the police union comes after NSW Council for Civil Liberties secretary, Stephen Blanks, was reported as saying that police could pull information on people who were “not even subject to investigation” without a warrant, but Police Association NSW President Scott Weber strongly denies this. As the debate over how state and federal agencies collect, retain and disclose personal information generated by new technologies intensifies, the advocacy group that represents the police has weighed-in to challenge the perception that it might seek to trawl through transit data without sufficient justification. “No way would we do that,” Mr Weber said.

Already in Queensland and Victoria, authorities have asked transport departments for access to records kept on smartcard systems for their investigations. Since 2006, Queensland Go Card smart cards have been accessed 10,966 times. The majority of requests were made by police with most approved. And with many, many cities around the world now looking to contactless travel through card or through mobile (including London), could we all agree that this is a whole new area of data that could fall under the reach of the new ‘Drip’ Bill?

It’s something to think about.

Actually, speaking of tracking and mobile, JAL (Japan Airlines) are about to issue smart watches to their ground staff in a pilot (excuse the pun) so that the airline can pinpoint the location of JAL’s boarding gate staff with airport installed BLE/beacon devices. The information of each staff’s location and the whole assignment can be simultaneously mastered by controller desk in back office. JAL management wants to give passengers an immediate response service and to be able to efficiently assign staff in the front line by using the advanced technology. When does an idea to promote efficiency become just a little too ‘Big Brother’?

Other news last week involved Giesecke & Devrient saying publicly that they ‘guaranteed’ the secure payment function of BASE digital wallet. I think it may be more a problem with their English transcription rather than a boast. Visa are set to release V.me into another eight countries around Europe and the Nordic region,  Apple may be testing the iWallet technology in Japan (perhaps, but I doubt it somehow, as just before this editorial was filed it was reported that the same system is being introduced into the US Apple stores from this week) and Taiwan’s big five telecom giants are promoting an NFC platform for payments.

Well, it IS the middle of July so big news is fairly scare at the moment. Please forgive me.

We are taking a break next week but will be back on Monday, 4th August. 

Until then.

Steve Atkins
Contactless Intelligence

Apple and NFC? The world holds its breath…

A touch of sarcasm in a headline never hurt anyone. At least that’s what I keep telling myself. And to be honest, it’s what the technology trade press would have you believe. Especially, if you have been following the latest rumours and ‘leaks’ that continue to swirl in time for the latest Apple announcements, covering the iWatch (if that is to be its name), the NFC addition to the iPhone hardware and even the nature of security surrounding user financial account details (HCE vs SE).

Let’s start with the Apple ‘wearable': Sources have told VentureBeat that Apple has been working with at least one partner, Swatch, to release a line of smartwatches in a variety of branded styles and price points. “While most Apple-watchers and media have been laser-focused on one or two iWatches from Apple itself, the electronics and media giant may actually be working a number of partners in the watch business. Apple and its partners will offer a family of smartwatches to suit all tastes “from geek to chic,” their source says. Digitimes has also reported that Universal Scientific Industrial (USI), an affiliated company of Advanced Semiconductor Engineering (ASE), reportedly has landed SiP module orders from Apple for its iWatch wearable devices, according to industry sources. USI is the sole SiP supplier for iWatch devices, which are expected to come in three versions: one style for men, one for women, and another low-cost version due for release in 2015, the sources indicated.

The SiP modules will incorporate Apple’s CPUs with other chips, including NFC, Bluetooth, analog, MEMS and flash parts, from NXP, AMS, Texas Instruments, Broadcom, Analog Devices (ADI), InvenSense, Skyworks, SanDisk and Toshiba, the sources noted. The cost of each SiP module is estimated at about US$60, or 20% of the iWatch’s estimated retail price of US$300, said the sources. More specifically, the iWatch devices will come with a wireless charging chip from TI, NFC solution jointly developed by NXP and AMS, sensor solution from ADI and gyroscope from InvenSense.

Meanwhile, the web is buzzing with unconfirmed rumours that Apple’s new iPhone 6 will be released on September 19. In a recent leak in Amazon Japan, a source stated that the smartphone will be available for purchase on September 30. iPhone owners may also finally start using the iPhone 6 for payment via NFC,  if you believe the rumors and reports claiming that iPhone 6 features will include mobile payments and recent reports tipped that Apple is currently in talks with Visa and other credit card companies.

NFC rumours get another boost with a set of leaked photographs of the iPhone 6 motherboard being posted on the French technology site Nowherelse.fr, from a ‘reliable and knowledgeable source’ supposedly showing a 802.11ac WiFi card, which ‘allegedly’ includes support for NFC. No one has verified anything at the moment but Cult of Mac puts forward an argument for Apple including NFC in this latest reiteration of the iPhone;  their conversion to NFC may have something to do with the deal cut with China UnionPay recently, and the access to their 3 million QuickPass machines…

Earlier last month, and without any media releases, Apple launched a service, first in Japan then in the US, enabling iPhone and iPod touch users to add funds to their Apple account without the use of a physical card. Called the iTunes Pass, it sits inside the Apple Passbook. Users can obtain credit for their account from Apple stores and then use them within the apple infrastructure online. There has always been the possibility to buy and send Apple credit gift tokens but this scheme allows an apple employee to scan the customers iTunes Pass directly to add the value to the account once the transaction at the point-of-sale is complete.

Bringing a mobile wallet onto the iPhone will inevitably raise security issues to Apple. However, Apple has reportedly told its partners that it will have a security feature, where sensitive and confidential financial information will be stored. It is still unknown whether this piece of hardware will be a secure element in the SIM card or elsewhere, but observers are speculating that it is unlikely that Apple will follow the Android route of using the cloud-based HCE solution to storage and access of secure user data. This means, in my mind at least, that Apple will go down the Secure Element route. During a second quarter earnings call with analysts, Rick Clemmer, CEO of NXP Semiconductor was unusually bullish about the company’s ability in the area of the secure element and using NXP technology to secure any kind of transaction (data or otherwise). 

“We feel very comfortable with the strength of the secure element. We think that the real killer app will have the radio plus the secure element, which provides the security to really be able to protect the individual’s wallet. We think that if somebody is using the radio then there is a weakness; they are trying to use software as the security and clearly that exposes it to additional hacking issues. So we think the secure element plays a very key part of a total mobile transaction solution, providing the security that we all want to have for our individual wallets,” he was reported as saying by NFC World. There were no details on the company’s rumoured deal with Apple to supply the NFC chips for the next iPhone. However, we all love to put two and two together and get four, or five – perhaps even six…

Continuing on the subject of Apple and the mobile wallet, there have been a couple of good articles out last week from the industry itself. We know both companies and their authors but that should not take away anything from what they have to say. Martin Cox, Global Head of Sales at Bell ID penned a post asking “Apple’s iPhone 6 with NFC. Is it a game changer?” In the post, Cox talks about how Apple may bypass the banks and the MNO’s by using the embedded secure element (eSE) along with the user’s payment instrument that is already linked to iTunes. “If this is true, then Apple has a unique solution that does not require them to partner with either issuers or MNOs. That would mean no bank wallet, no relationship with issuers and no tie up with the telcos. Surprise, surprise Apple is apparently going to launch a solution that is focused purely on Apple,” says Cox.

Rupert Englander, Founder and Managing Director of Wooshping, puts out a more sobering point of view in his company’s blog in a post titled, “Apple's last chance saloon?” In the post Englander speaks of how Apple has become ‘innovatingly complacent’ (his words - not mine), by focusing upon product and market positioning, rather than technology innovation. If this is the case - does it even matter if Apple includes NFC technology or a mobile wallet in the latest iteration of their handset? Is it, in fact too late to stop what Englander and other have noticed may be Apple’s long term decline?

Unless we hear anything more concrete on the subject of the Apple iPhone, I think this is going to be the last piece on the topic for a while. After all, if rumours are to be believed, we only have another seven weeks to wait and find out for sure.

Until next week,

Steve Atkins
Contactless Intelligence

iWallet, NFC, Beacons, HCE & predictions for the next 6 months…

August. The time of year when the industry - and all the hard-working people in it - resembles one of those marathon runners after reaching the finishing line after a long race. You know what I mean... The out-of-breath, wide-eyed stare into the distance. The unwillingness to move again after what they have just been through. We see it every year about this mid point. Time spent away from work is more important than anything else; consequently, the industry dies a very quick death for about three to four weeks before it is urged back into life.

We too are about to shut down for a couple of weeks on a brief summer hiatus. But before we do so, here are some of my predictions of what will have an impact upon the industry and the dissemination and interaction with its technology. To aid me, I have asked a couple of well known players in the industry to give me their opinions on the matter and so help dilute the MY-editorial/MY-view vibe I may be giving out. So here goes…

1. Apple will indeed launch its own iWallet (perhaps even NFC-enabled but it won’t really matter) and together will work with Visa on the Apple iWallet in one form or another. After all, with the internet ablaze with Apple/NFC rumours (again) perhaps Apple has come to realise that they may be a little late to the payment party. Bur as I said - an iWallet being dependent on NFC is not the real thing here – it’s that Apple could make a lot of waves in the mobile payment market. 

This is what Neil Garner, CEO and Founder of Proxama had this to say on the subject, “As rumours intensify about whether Apple will adopt NFC, the future looks exciting for the technology. Personally, I'd be surprised if Apple didn't take advantage of the payment capabilities of iTunes, as it has millions of users' card details stored in its accounts. Even if it doesn’t include NFC in its iPhone 6, recent figures from Visa Europe that state consumers made 19.7 million contactless transactions in May 2014, demonstrate the growing confidence in the technology. But NFC shouldn’t just be limited to payments. It can be used to deliver in-store customer loyalty programmes, vouchers and competitions and this market”.

Rupert Englander, Founder & Managing Director of Wooshping agrees; ”The big trigger over the next 6 months is if Apple decide to opt for NFC. If they do, we could see a sea change in attitude towards the capability. If not, NFC will continue to labour along, beset by lack of consistency in approach from those who support it. Apple may not resolve that particular issue, but to be able to say that Apple supports NFC will see that shift change in acceptance, regardless of other factors, simply because Apple holds that much weight still.”

2. Mobile payments will find their core acceptance in unattended POS elements including parking, ticketing purchasing and the more recognisable of all, vending machines. I believe that what WILL spur on mobile payment adoption is usage. Or rather HOW and WHERE one uses their mobile for any form of payment. The human interaction with someone behind a checkout is no longer required as long as the process is simple and intuitive; any complications at all will mean non-interaction from the user. Simply usage and interaction works well in a transportation/ticketing environment. Fundamentally, any form of purchase activity that does not involve human interaction, case in point; paying when you get on a bus. 

It’s working well so far, for Transport for London in the case on contactless payments. Rupert Englander agrees with me (i think…) “The next 6 months will see the continued roll-out and adoption of contactless payments. Moves by the likes of TfL to do away with oyster and move to a transparent contactless payment system will move adoption on another significant step.However, the current status quo in mobile (i.e. no participation by Apple) could see the continued stagnation of payment by mobile which is still beset by complexity and consumer scepticism that will dictate that small scale roll-outs and trials will continue to evolve.”

Englander goes on to say, “I still don’t see any evidence that the “mobile industry” has nailed it from an ease of activation and seamless experience. For example I recently tried to sign up for EE Cash on Tap service. I downloaded the app and clicked to activate but I was informed there was a problem, that I couldn’t be activated and to call customer services. Could I be bothered? No. And I have an indirect vested interest to see this succeed – but seriously, this just has to work, without needing me to go out of my way to get it fixed. How many other examples of these poor experiences will continue to be rolled out whilst someone just comes along, nails it, and delivers on the promise of mobile payments in 1 swoop. It might happen in the next 6 months – but I believe (despite my commentary on Apple being in the last chance saloon) that they are the only ones who can realistically pull it off. Whether the consumer cares is another matter.”

3. Beacons will find their place in public places that can facilitate the dissemination of useful information rather than mere marketing ‘noise’ from brands and retailers. Disseminating such ‘noise’ could be detrimental to the technology's acceptance. “The uptake of the (beacon) technology is increasing all the time, but marketers need to make sure they are using it in the right way. Combining beacons with NFC will enable retailers and marketers to; provide incentives, personalise offers, reward loyalty, analyse results, and transform the overall consumer experience. The industry also needs to ensure that it is not spamming people. Contacting consumers with constant and irrelevant offers and news will result in many deleting applications from their mobile devices, or worse still, turning the Bluetooth functionality off altogether, having a detrimental effect on the technology,” says Garner. “Beacons are great for pushing information, but users need the right app on their phone keyed into the beacon network that they are engaging with, so Beacons only really work for repeating interactions with organisation that have been able to work with or deploy a network of beacons in a nearby location”. I thought Neil agreed with me, right up until the very last sentence…

“It wasn’t long ago that businesses and brands utilised Bluetooth marketing techniques to effectively spam phones that dared to come within the proximity of a marketing unit. I recall there wasn’t a day when I couldn’t pass through waterloo station without getting hit. I turned Bluetooth off and in time brands got the message that this approach wasn’t acceptable to the public,” comments Englander. “The use of Beacons in retail could have a similar impact if they are abused by the retailer or brands. Over notification of offers or information about products that are of no interest to you could very quickly become annoying. Shoppers are fairly difficult audiences to get across the line, so the idea that in a multi-branded environment someone is going to take the time and effort to profile themselves to ensure they only get alerted about products or offers that are of interest is highly dubious. Beacons could work in a single brand environment, but even then the challenges of profiling against product interest still exist, unless of course the brand believes that anyone interested in a particular product of their must be interested in everything else that company makes. A dangerous assumption!”

Fundamentally, I believe it’s about making sure that the ‘right’ kind of information is being disseminated by beacon technology and translated into useable information by the accompanying apps. We’ve seen airports being very quick to adopt beacon technology recently and even last week there was a Techcrunch report out that London-based digital design studio ustwo is working on a project with the Royal London Society for Blind People (RLSB) to determine whether iBeacons/Bluetooth Low Energy beacon technology can be used to help visually impaired individuals navigate public transport by mapping their location dynamically and providing audio cues to direct them through stations and onto trains via an app. This, to me, is the immediate future of beacon technology - relevant information for practical implementations. 

Although proximity marketing is far from a tired market when it comes to NFC and QR over BLE. Neil Garner confirmed this. “We are seeing good traction for organisation wanting a combination of proximity technologies: NFC & QR for Pull and Beacon & Geofence for Push. Pull technologies are great to first use or infrequent use with need for an App and can be used to easily trigger download of an app. Once an app is installed and a user has opted in then they can then receive information by push. However push is very dangerous as if it is mis-used and bluetooth or push messaging is turned off than that App will be forever silent! All that said, we've always believed that mobile proximity technologies will play a significant role to drive engagement and to increase footfall and ultimately retail spend for anyone that owns physical world assets… locations such as cultural venues, transport hubs, shopping centres, city centres and retail stores are all places that can be enabled, but in order to gain critical mass we need to focus on specific geographies where consumers know they have the technology on their devices, know how it works and can use it frequently on a daily basis.”

4. Expect to see renewed debate over hardware versus software in the mobile wallet wars. Specifically HCE versus the Embedded Secure Element. Where is your data really safe? In the cloud or in your phone? Google would have you believe that software can cure all security ills but there are still many out there who are not so sure. NXP certainly doesn’t see their embedded Secure Element business disappearing anytime soon. Rick Clemmer, CEO of NXP Semiconductor was reported as saying, “We feel very comfortable with the strength of the secure element. We think that the real killer app will have the radio plus the secure element, which provides the security to really be able to protect the individual’s wallet. We think that if somebody is using the radio then there is a weakness; they are trying to use software as the security and clearly that exposes it to additional hacking issues. So we think the secure element plays a very key part of a total mobile transaction solution, providing the security that we all want to have for our individual wallets.”  That said, it’s true that the release of HCE is been beneficial for mobile payments. Proxama’s Neil Garner agrees but, with one eye on Apple, has the following to say, “HCE has given NFC a real shot in the arm for the payments and card/wallet use cases which will now start to fly once the card issuers have got through the current phase of pilot/evaluation before rolling out in volume. The imminent Apple iPhone6 announcement should confirm that Apple has finally decided to join the NFC party, but I’m sure it will be locked into the Apple ecosystem for sometime before all of the useful APIs and capabilities are properly open up for third parties.” Either way, I predict with a potential new mobile wallet out there, the debate will heat up once more. Especially if the new wallet is Secure Element protected.

5. Wearables will become the real ‘interaction’ element for the masses. Less a smartphone on the wrist and more an individuals interaction point. This could cause real change in human behaviour. The phone will remain ‘hidden’ as it were. No need to take out your ‘wallet’, if all you need to do is ‘tap’ your wrist. Imagine moving through the London public transport (or any other city - for that matter) with your ticket on your wrist. Or attending a concert, or anything that requires a ticket for access. After all, various companies and finical institutions have been passing out their own branded ‘wristbands’, look at CaixaBank, or Barclaycard PayBand. Imagine if there was just one and it all went through your wrist - multi-application orientated. There will be lots of apps available for when they become mainstream but Koichi Tagawa, Chairman of the NFC Forum recently said, “Don Norman, a cognitive science professor and designer, suggests that the real usefulness of wearables will depend on how users choose to use them. As with other digital devices, users must decide “whether we use them to focus and augment our activities or to distract. It is up to us, and up to those who create these new wearable wonders, to decide which it is to be.” Perhaps handshakes will be a thing of the past? Instead of the ‘fist bump’ might it not be a simple ‘’tap on the wrist’? (Doesn’t that mean something else?)

6. Expect to see beacons highlighted for their security flaws and their ability to be hacked and information diverted. I don’t want to go into much detail in this one – consider it a end-of-season cliffhanger. However I had a very interesting chat last week with DotOrigins’s Frank Viljoen who had a lot of interesting things to say on the subject. I intend to give Frank a full post on Contactless Intelligence later in September to expand on this issue, but for now, I will let Frank have the last word; “By virtue of the fact that beacons operate using Bluetooth, and nobody 'owns' digital air space, there is very little one can do to prevent competent developers from either cloning a beacon or ambushing a competitors App. For an App to connect with a beacon, the unique beacon ID along with its attributes HAS to be visible. With these details it becomes very simple for a seasoned developer to ambush a competitor brand or in the case of wayfinding, to confuse the consumer with incorrect information”. Interesting assessment, don’t you think…?

Thanks for reading and giving me feedback and thanks to those who agreed to be quoted in this editorial. I always reply, answer questions and respond to request, as many of you know. So don’t be shy about getting in touch. I will be back at the start of September with the second part of the year's editorials as well as some exciting news about the 2015 conference and some new forums within the event. 

So, until then, I wish all of you a restorative summer break and see you all in three weeks time!

Steve Atkins
Contactless Intelligence

Cricket, donkeys and Sherlock Holmes; what the industry did this summer…

This newsfeed is going out on the first day of September - Labour Day in the US and the unofficial end of Summer 2014. And what a summer it’s been! Industry news may have gone a little quiet (hence our smaller than normal news links below) but the uses and applications for NFC tags and beacons and innovative ways to use cashless payments continued on throughout the month of August, covering everything from cricket to donkeys to Sherlock Holmes himself…

First off, we saw the KIA Oval get fully ‘geo-fenced’ and ‘beaconed’ (it’s not a word - yet!). The technology was enabled by Proxama and was available during the fifth test match of England vs. India, from the 15th to the 19th of August. The Kia Oval was obviously impressed; Elliot Moore, General Manager, The KIA Oval said, “We see mobile as a great way to add value to our visitors, proximity technologies such as beacons and geo-fencing create a more enriching experience to fans. By enhancing digital capabilities at the cricket ground, we can help fans interact with our sport in a way that has not been possible before. Although the exclusive content is initially available to VIPs, the aim is to roll this out to the wider public audience, especially as we plan for the 2015 Ashes Series. We are delighted with both the results, with over 25% of all targeted fans downloading and using the app, the high number of interactions within the ground and the user experience.” Interestingly, this was by their own admission the first BLE enabled app that Proxama has deployed for a stadium client, and commented that ‘this initiative proves the positive impact the technology can offer all public spaces’. 

We also covered a number of other proximity technology-based stories over the summer, including the one concerning the City of Liverpool becoming one of the first cities to use mobile digital proximity technology to enhance visitor experience with venues and events concurrently across the city. The mobile app, I’m@app, uses beacon and geo-fencing technology to (quote the organisers) will “enrich visitors’ experience of arts and culture by providing timely and relevant content to the visitor based on their location in the city and its wide cultural offering.” The first of its kind to be available on both Android and iOS, the content-driven app provides visitors of the city’s galleries and museums with material about the cultural exhibitions taking place. 

Visitors to Liverpool can choose to tap and download the app using NFC and QR code enabled SmartPosters, or download the app from iTunes store and Google Play. Visitors become part of the digital experience as they enter the designated Bluetooth Beacon zone enabled by geo-fencing technology. Participating visitors receive messages straight to their smartphone with exclusive content provided by the creators of the city’s top arts and culture venues including Giants and ‘Dazzle Ship’. These messages are prompted as visitors walk past the Beacons located within this 37.6km² zone. The roll out was made possible via a collaboration between arts and entertainment insight specialists Purple Seven and (once again) Proxama. The solution can be adapted to exhibitions and events of varying sizes across individual venues or regions, to meet the growing trend within the arts and entertainment sector for greater interactivity.

Roaming the beaches of Blackpool, we reported on Dillion the Donkey (bear with me, I’m not about to make an ass of myself…), giving rides to small children perched upon his now famous contactless saddle. The saddle innovation allows parents to use their contactless payment cards to pay for a ride down the Blackpool Sands. Mark Ineson, owner of Real Donkeys, (as opposed to his supposed competition - ‘Fake Donkeys’) who has given donkey rides on Blackpool’s beach for nearly 20 years, has worked with Barclaycard to give Dillon a technology make-over. Mark explains, “Over the years I’ve had to turn hundreds of kids away because mums and dads don’t have the cash on them to pay for a ride on Dillon – and the beach is often the last place you want to be carrying lots of change. So I approached Barclaycard to see whether they could help solve the problem. The saddle they’ve come up with means hundreds more people will be able to experience one of the Great British seaside traditions and have a donkey ride along the sands. It also shows that, regardless of how traditional your business might be, there are always new things to trial that can give it a much-needed boost.” Barclaycard technologists collaborated with designers Seymourpowell (who have created everything from the world’s first cordless kettle to concepts for the interiors of Virgin Galactic spacecraft) to build Dillon’s new tack, ensuring the technology was seamlessly integrated and the saddle a comfortable fit. So animal lovers need not worry.

Perhaps the coolest story we covered during the last two weeks was the one about talking statues ‘In London, statues are coming to life thanks to NFC technology’. From August 19th, for approximately one year, 35 statues across London and Manchester will speak their minds and call you if you connect via the NFC tag or QR code.  Pass a Talking Statue, engage the NFC tag and get a call back from Queen Victoria, Sherlock Holmes or any number of historical or fictional characters. Talking Statues is the creation of Sing London, the non-profit arts organisation whose projects aim to lift the public’s spirit.  Previous projects include filling London with street pianos and Ping! – the public ping-pong project that has placed over 1000 ping-pong tables across England.“Most of us hardly notice the statues around us.  Talking Statues aims to change this,” says Colette Hiller, Creative Director of Sing London.  “They may be cast in stone but their voices have been set free. We are privileged to have a stellar line-up of writers and actors who have put themselves in the shoes – or in some cases the paws! – of these statues.” Actor Patrick Stewart said, “I think Talking Statues is a lovely idea.  It brings a sense of intimacy and personality to the statues that surround us all.”

Each plaque has embedded technology. Visitors use their phone’s embedded NFC or QR code capability or type in the code given to enable a call from the statue. ”There are 3 kinds of technology available to engage with the statues and it was important that visitors not need to download something to their phone first. None of this would happen if you had to download something ahead of time,” explained Hiller to Contactless Intelligence. “This way, you can bump into a talking statue and  have an impromptu conversation immediately!” This, to us, seemed an amazing way to develop city marketing campaigns using NFC technology. Asked what the hardest part of the project was, Hiller told us that getting actors to put their voice to the statues was easy - getting London local government to allow the placing of the plaques - that was the really hard part of the project…

However the first story we came across back at our desks was the one concerning IPC Media and their beacon/BLE approach to discounting a selection of the magazine titles through 740 of the Tesco-owned One Stop stores across the UK. The campaign will deliver the discount offers to people who have ‘opted in’ to receiving offers from either One Stop or the technology company Appflare. “To receive the offers, customers will need to download the One Stop or Appflare Redeem app, turn their notifications on and enable their Bluetooth connection when they enter the store,” said Owen Geddes, CEO and founder of Appflare. “They will then be sent the discount codes direct to their smartphone as they enter the store through beacon technology. The discount codes can be redeemed at the till, or shared with friends via Facebook.  Only customers who have chosen to take part will receive the offers, and they can easily opt out any time by turning their notifications off. This is the first time our beacons have been used, so our targets are in the tens of thousands. but we’d hope to reach hundreds of thousands by the end of the year and beyond. We’re not looking to ramp it up at breakneck pace, as we’ve got to get the user experience right.” Appflare hopes to expand the rollout to 500-odd independence convenience stores in London by mid-September, with more shops in Birmingham and Manchester to follow later.

I was quite impressed with the number of stories this month (normally a very quiet one in this industry) that referred to NFC tags or beacon-type activities. If this is how summer shaped up, imagine what the next few months will be like, especially after the 9th September! (hint, hint)…

Until next week,

Steve Atkins
Contactless Intelligence

Will nude pics be the undoing of Apple’s iWallet?

Apple must be livid about the timing of the latest media feeding frenzy involving a clutch (101 to be precise) of celebrities and their, shall we say, photographic indiscretions. After the photographs were taken, they were uploaded to the cloud for backup, most noticeably the Apple iCloud (all celebrities apparently use iPhones - perhaps it’s in their product placement contracts or something). So far so good. Then some sneaky hackers target them, crack the iCloud security, steal the photographs, release said photographs into the wild and announce their score on the 4CHAN network. Bad Apple! Lousy security in your cloud! How could you let this happen?

I said that Apple must be livid with the timing because even though I do not believe that iCloud was just hacked like that, having this happen just a week away from their release of an expected iWallet is not the kind of security-breach media attention that the company would relish. There have been some company statements put out by Apple and while some of my counterparts in the industry point out that Apple is a new company under the guidance of Tim Cook - I don’t think that Apple has changed that much when it comes to releasing unnecessary tit-bits to the media. Which, I think, shows just how shook up they are about the timing and potential fallout. Even if Apple were blameless, the high-profile incident erodes the perception that iCloud is a secure service and could create doubts about Apple's ability to protect other sensitive information, such as users’ payment information. 

Apple is expected to launch a mobile wallet (of some kind) next week when it unveils its next iPhone, and has reportedly partnered with Visa, MasterCard and American Express as part of this effort. Last year, Apple put a stake in the ground for a mobile wallet through the launch of the iCloud keychain, which stores users' credit card information for online shopping.  David Heun, writing in PaymentSource quoted a Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC, when asked about the breach he said, "Apple has to provide the utmost of security and strong authentication to really assure the consuming public that their personal information and payment credentials are safe.” I think we all agree with that.

On its website, Apple has a published reply in response to the security breach, “After more than 40 hours of investigation, we have discovered that certain celebrity accounts were compromised by a very targeted attack on user names, passwords and security questions…  None of the cases we have investigated has resulted from any breach in any of Apple’s systems including iCloud or Find my iPhone."

"They have the ability to do multi-factor authentication that ties the device to the consumer, their user name and password to that device, with biometrics capability for simplifying the process as well. A hacker getting through the front door of iCloud to steal photos is far different than the ‘Fort Knox’ that Apple has in securing and protecting payment credentials," Crone added in the PaymentsSource piece. “And Apple has already demonstrated its ability to protect payment data through the 800 million iTunes accounts it manages. No bank has that many payment credentials stored”, he added.

David Linthicum, InfoWorld, agrees that the breach is unlikely to have come from a brute force attack upon the cloud system itself. He writes, “Let's get this straight: All clouds and all traditional systems are vulnerable to attack. There's always some way to get in, even if it's scamming somebody to give up their user ID and password (the good, old-fashioned phishing method that was the actual cause of the iCloud breach), guessing passwords, or pushing your way in. There are many very effective security measures to lower the risks, but there is always a risk. Get over it. For the most part, clouds are not part of the problem. Only a small percentage of systems and data exists on cloud-based platforms, and enterprises have taken care to lock them up pretty tight. Indeed, if there are any breaches, they seem to be associated with more traditional on-premises systems, such as the Target breach earlier this year and the Sony breach a few years ago. Of course, they are often portrayed as cloud issues, but they are clearly not clouds.

In the case of the iCloud breach, Apple can take steps to ensure this type of event is unlikely to occur in the future, such as tightening its second-factor authentication to make phishing less effective. (In fact, Apple plans to do just that.) However, when people are involved, there is always the element of human error. That's what phishing actually targets, and there's no technology cure for that ailment.”

Whatever the intricacies of the breach were, the importance of data security is rising on the list of concerns from users of mobile or online transactional platforms. The wrong brand image can be extremely detrimental when pushing a new product. Mobile wallets can be an especially tough sell and brand image is a key element in winning their trust. 

The group behind the Isis mobile wallet learned this lesson, and committed to rebrand their product to eliminate any possible association with the ISIS militant group. They made their announcement last week and revealed to the world that they are no longer Isis but… Softcard. Softcard! Seriously? Knowing how important this was, with a fairly disappointing take-up of the wallet (not in the eyes of the telco partners, obviously), a piece of real bad luck with brand name association, the wallet platform decides to not only change the entire look and feel of the brand but rename it to something that sound as though it could be found in a geek’s lunch box. Was this a re-brand or a complete re-launch of the wallet? More importantly, will it matter? I don’t want kick ’Softcard’ while they are down but something drastic has to happen to turn this around and I don’t think this re-brand/re-launch is it.

Perhaps it’s because technology just keeps rolling on in the mobile payment sphere. Case in point - the new PayByAss technology, as can be seen in the video below. Why use fingerprint, iris scans or PIN numbers when all you have to do is drop your trousers and sit on a scanner? Don’t know what I’m talking about? Then take a look at the video here. It is well put together and dare I say it? Priceless? Also, if you work for some of the big names in payment, can you spot YOUR CEO in the video?

Next week we will be talking iWallet, or lack of it. Or NFC, or BLE or something else entirely with a small ‘i’ placed in from of it. Either way it is probably going to be about Apple. Again…

Until next week,

Steve Atkins
Contactless Intelligence

Apple launch – more lessons learnt than innovation?

Sometimes its easier to watch (no pun intended) where others go wrong than to be the innovator. Case in point is last weeks Apple product launch of the iPhone 6, 6 Plus and the Apple Watch, which was booed by a few (very few actually…) as showing no ‘real’ technology innovation. This may be the case, but what Apple has done this time around is to identify and tackle the challenges that have plagued parts of the mobile industry. Design with wearables? Check! Security with Mobile Payment? Check! Making use of existing credit card infrastructures? Check! Finally, well done Apple, for finally including NFC in your hardware, but what exactly does this NFC inclusion really mean for players in the NFC ecosystem? And more importantly – what lessons have you learnt by waiting so long?

First, let’s applaud Apple for putting on a great show last week and introducing some products that may indeed sell well for them. The Apple Watch particularly looks interesting and will no doubt have the wearable market booming for a few years to come, especially with the Apple Watch / Apple Pay combination. Wearable band shipments will grow 129% year on year to reach 43.2 million units in 2015, of which 28.2 million will be smart bands and 15.0 million will be basic bands, according to the latest device shipment forecasts by industry analyst firm Canalys. Canalys tracks wearable device shipments and segments the market into smart bands, which are capable of running third-party applications, and basic bands, which are not. Canalys forecast that Apple will be the biggest driver behind wearable band shipments in 2015. “By creating a new user interface tailored to its tiny display, Apple has produced a smart watch that mass-market consumers will actually want to wear,” said Canalys Analyst Daniel Matte. “The sleek software, variety of designs and reasonable entry price make for a compelling new product. Apple must still prove, however, that the final product will deliver adequate battery life for consumers.”

Apple bringing NFC into the mix for payment with their Apple Pay solution cannot be under-estimated (despite the grumblings from some sources that Apple made it look like like they invented Mobile Payments!). I personally think that this is a good thing for the entire industry – whatever the operating system behind the hardware. And I am alone in thinking this. “This is a big step forward. With Apple on board, NFC gets the final seal of approval it needs.  Apple’s formidable strength is in convincing consumers that they need something, so in that regard its support of NFC is a turning point for worldwide consumer adoption. It is likely to spark a reaction from Android and Windows phone makers who will want to ensure their devices match the innovative uses of NFC we expect from Apple,” commented Neil Garner, CEO and Founder, Proxama.

Security is vital to Apple's pitch, particularly because the company is still working to calm consumers' worries about the safety of its iCloud service, which was targeted as part of a leak of nude celebrity photos a few weeks ago. When it comes to restoring the public’s trust in the underlying security mechanisms, Apple is betting that tokenization systems offered by payment companies will provide a credible security boost to its new Apple Pay system. Apple Pay uses tokenization to replicate consumer card credentials and assign each account a randomly generated number in the cloud. That number, or token, is then stored on the device's secure element. First Data, TSYS, MasterCard and Visa have announced that their tokenization technology will support Apple Pay, enabling the upcoming iPhones and Apple Watch to make contactless payments at a variety of retailers.  Apple Pay uses tokenization to replicate consumer card credentials and assign each account a randomly generated number in the cloud. That number, or token, is then stored on the device's secure element. 

The iPhone also generates dynamic data for each contactless payment as Eddy Cue, Apple’s senior vice president of Internet Software and Services, said in his presentation, “We’ve also integrated security throughout both the hardware and software in a way that only Apple can so when you add a new credit card, we don’t store the credit card number, we don’t give it to the merchant. We create a device-only account number and we store it safely in the secure element and each time you pay, we use a one-time payment number along with a dynamic security code so you no longer have the static code on the back of your plastic card and if your iPhone is lost or stolen, you can use Find my iPhone and suspend all of the payments from that device and again, because the credit card isn’t stored on the device, there’s no need to cancel your credit card. Now, security is at the core of Apple Pay, but so is privacy.”

“We are not in the business of collecting your data. So, when you go to a physical location and use Apple Pay, Apple doesn’t know what you bought, where you bought it, or how much you paid for it. The transaction is between you, the merchant and your bank. It’s fast, it’s secure and it’s private.” he concluded by saying. 

At least Apple realises that the question of security is becoming the first and foremost thought on users list of why they are nervous about embracing mobile payments. Wether the solution is tokenisation and the necessity of having the secure Element on the handset itself is almost besides the point – they tackled the topic head-on and all credit to them. It’s an important topic, that others in the industry are also keen to cover. “Apple’s use of the secure element in the device, and the fact that Tim Cook spent a good deal of time talking about the importance of consumer privacy considering transaction data, is exactly in line with what we have been working on within our CardGateway product, with our work with ARM and Trustonic for TEE on security, and with our many customers like Barclaycard, Mastercard, Softcard (formerly ISIS) and others in other markets,” commented Neil Garner, CEO and Founder, Proxama. “The cryptography measures Apple described are in line with what we have done, and will also help allay both merchants’ and consumers’ potential worries about security, and ultimately help adoption of mobile payments thrive.”

The approach to installing the Secure Element on the phone (as say, within the SIM card) does have certain drawback though, as Softcard (The mobile payment venture formally known as Isis) CEO Michael Abbott alludes to in his blog post last Tuesday, “When our company was founded, our vision was to develop a simple wallet app that consumers could use on any device, anywhere with any card. To deliver on that promise, we selected NFC as the best technology that was secure, simple and open to innovation. We think that today’s announcement by Apple to support NFC is very significant and sets the stage for rapid scale adoption of mobile commerce. We would like to let you know that we are actively working with Apple to enable Softcard on the iPhone in 2015 — using an integrated secure SIM-based hardware solution.” There are no further details on what “an integrated secure SIM-based hardware solution” might be, or any other aspects of Softcard’s work with Apple, are being made available by the company at this time. 

Sarah Clark, writing for NFC World, attempted to decipher this a little more; “The solution described by those carefully chosen words does not sound like a SIM, however, as that is removable, but it does sound like some sort of embedded technology — and an Apple patent application from 2011 may point the way to understanding the iPhone maker’s plans here. The ‘Sim within’ patent set out a way for a virtual SIM card to be built into an embedded secure element which could, in turn, be attached to an NFC controller chip.The Apple concept is similar in nature to the NFC SIMs issued by mobile network operators bringing NFC to market around the world — except it is in reverse. In an NFC SIM, the NFC secure element sits inside the SIM, putting the carrier in overall control of a phone’s NFC functionality. In Apple’s concept, the SIM sits inside the embedded secure element, putting the iPhone maker in overall control of the unit and bringing in a trusted service manager (TSM) to provision customer credentials onto the unit on a carriers’ behalf.”

Another area that lacked detail during Apple’s launch of an NFC-embedded iPhone was that related to tags or pairing. Tag specialist RapidNFC’s founder and CEO, Phil Coote, after examining the Gold Master version of iOS 8 that was released to developers, was reported as saying, “As of the current software release, there isn’t any support for general access to the NFC controller. Clearly, this is a little odd because it might mean that pairing is not supported. However, being able, for example, to read and encode NFC tags is not an option at the moment. The barrier now would appear to be a software one rather than hardware, so it’s a step in the right direction.” 

This was a sentiment echoed by Rupert Englander, Managing Director of Wooshping, ““Naturally I am delighted that Apple has finally embraced NFC and the future of mobile payments seems assured. However I am concerned by the lack of information being offered by Apple on other equally as important aspects of  NFC implementation such as pairing, sharing and engagement. For NFC to continue to gain traction and buy-in the iOS system must support these other use cases or consumer will once again continue to be confused by what they can and cannot do. I have visions of iPhone 6 users waving their phones furiously against a Talking Statue  and nothing happening. That would not be great. So yes I am delighted that Apple has embraced NFC but remain cautious until we see further evidence of a full and open implementation.”

Until we see full release and delivery of the phones from 19th September onwards and how the following months progress and the development releases roll out, we won’t really know for sure. However, considering it took almost 12 months for Apple to open up programming access to Touch ID, it may be a case of ‘Better late, than never’. 

And that’s another headline I could have used…

Until next week,
Steve Atkins
Contactless Intelligence

PS - And what lessons did they learn from late entry to mobile payments? In my opinion, ‘make it simple and make it secure…’

Contactless comes of age on the Tube.

As expected, the market ripples associated with Apple Pay have yet to die down. With the shipping of the new iPhone 6 and iPhone 6 Plus starting last Friday, it is not surprising that the hope is going to give way to practical usage and hype to practicality. And, while there are companies offering wallet solutions that are now climbing on the Apple Pay wagon, others are firing shots across Apple’s bows (so to speak) and addressing security issues surround user payment issues. Yes, PayPal, I’m talking about you.

Before we get to that, however, let’s talk about a project that has also been a long time coming, promised a change in the way we pay and finally had its public release last week. Congratulations to TfL for now accepting contactless on the Tube! However, this is not the end for the Oyster card. "This is not the end of Oyster, and it's not the end of cash, but it is a significant dent in the market for cash," Shashi Verma, director of customer experience at TfL told Finextra. Verma's vision is for the system to eventually cover the entire UK transport network, so that "across the UK...you won't ever need to buy a ticket again and you can travel everywhere you want just with your contactless card". There was plenty of support for the  start of the new payment system from a variety of players in the contactless ecosystem. “By enabling contactless payments on the tube, TfL has taken something the majority of consumers do more than once a day and offered an alternative, easier and a cost effective way to do it. Incentivising customers with a daily and weekly price cap is a good idea, making the use of contactless payment methods more convenient for millions of people. This, combined with Apple’s NFC announcement last week, will add to the growing confidence in the technology, giving all merchants more of an impetus to roll out their own solutions and drive the use of mobile payments,” said Miles Quitmann, CCO, Proxama.

Other companies were also quick to highlight their support of contactless on London’s rail services. Most notably EE, with their Cash on Tap service, were keen to point out that their NFC system is now accepted on all Underground, tram, DLR, Overground and National Rail services that support Oyster cards. "The Transport for London network carries more than 30 million journeys around the capital every day, and contactless payments can help make these journeys easier and quicker for London's residents and businesses," said EE marketing chief Pippa Dunn. "This is why EE has continued to work so closely with TfL and MasterCard to bring the ease and efficiency of contactless mobile payments to London's Tube, tram, DLR, London Overground and National Rail services that accept Oyster."

And for those of you who use Waterloo station, Visa Europe have crafted an immersive 3D art installation there. The image enables passers-by to race to the London Underground gates where they can use their contactless card on the reader to pay directly for their journey. Contactless journeys – using credit, debit, charge or pre-paid cards or devices – will work in the same way as Oyster on TfL services, by touching in and out on the readers at the start and end of every journey. Visa Europe say that nearly 1 in 2 Londoners already have a contactless card. The availability of contactless journeys on all TfL services coincides with new figures released by Visa that show the use of contactless across the UK has continued to gain pace. In June 2014, the use of contactless cards to make payments increased month-on-month by 7%, reaching a total transaction value of £136.4 million. This also indicates a growth in contactless use of 207% since June 2013, with the transaction value increasing by 202%. “Tuesday 16th September marks a great day for Londoners,” says Nick Mackie, Head of Contactless at Visa Europe. “No longer will London transport users need to queue for a ticket, or to top up their Oyster card. Contactless journeys will offer a convenient, fast and cost effective way of paying for travel around the city. Contactless payment use has reached record highs in the past few months, as our latest stats show, and with TfL offering contactless across all its services this is only set to accelerate further.”

As we said, well done to Transport for London in bringing cashless, contactless transactions to the public transport travelling masses. I wonder when commuters will be able to use Apple Pay? (Oh, come on - we’re all thinking it…)

Actually, one company who was definitely NOT thinking that way last week was PayPal. The payment company has released an advert aimed at taking a little bit of the wind out of Apple’s mobile payment sails using the exact train of thought (another pun - I can’t help it!), that we had in this editorial a few weeks ago. This shot across the bows took the form of a new print ad that appeared in the New York Times, USA Today and San Francisco Chronicle last week. The advert ran with the headline, “ We the people want our money safer than our Selfies. PayPal protecting the people economy.” Anuj Nayar, senior director of global initiatives at PayPal, acknowledged the ad was referencing Apple and didn't exactly hold back his criticism for Apple's new payment platform. "What everyone has to go on is 10 minutes of a very consumer-focused presentation," Nayar told Mashable in an interview this week. "The devil is in those details. What happens when you have a problem, for instance?" He also dismissed Near Field Communication (NFC), the technology at the center of Apple Pay, as a "10-year-old technology that hasn't gained mass adoption." Nevertheless, he said if NFC catches on, PayPal will adapt to it.

Daniel Wolfe, Editor-in-Chief of PaymentsSource, wrote “It's a fair criticism, but it's one that makes PayPal look defensive. Apple Pay won't even launch until October, and at that point it will fall under as much scrutiny as Google Wallet and the Starbucks app did — and both of those were found to contain security flaws. Apple, already reeling from the iCloud scandal, may not need PayPal's help to erode consumer trust in its new payment system. If Apple Pay works as advertised, benefiting from the perceived security of Touch ID, it could finally win many consumers over to mobile payments. But it's up to consumers to decide whether to forgive Apple for iCloud's role in the celebrity photo leaks. If PayPal is the more trustworthy service, it should go without saying.”

It remains to be seen whether PayPal's more aggressive public statements pay off. eBay, PayPal's parent company, has seen its stock dip in recent days in part due to investor concern about Apple's impact on the payment service.

Either way, the positive news this week is that, once again, transit is driving the next stage of contactless payment forward. With the addition of mobile payment services also being used for the TfL transport network, perhaps it really will be only a matter of (little) time for mobile solutions to also catch a ride on this particular contactless train.

Until next week,
Steve Atkins
Contactless Intelligence

A crinkle for Clinkle? Timing is everything…

Here’s the thing; one of my colleagues at Contactless Intelligence was talking to her contact at a certain card technology company last week and both agreed an important point. Namely that after a rather depressed 2013, the contactless and NFC industry suddenly seems to be buzzing again. There could be a variety of factors for it; Apple Pay, Contactless payment acceptance on London’s public transport or something else - it does’t matter. What is important is there is a certain ‘something’ that makes the industry exciting to be in, once more. All of this means that cycle times will decrease as things speed up. Good news for some - perhaps bad news for others…

Let’s talk about Clinkle. For those not in the know, this was an interesting one. Supposedly a mobile payment wallet-type app that attracted between $25 million to $30 million of seed funding before it had even launched its first product, counting such luminaries as Richard Branson among them. Branson, no stranger to attaching himself to products as the ‘face’ of said product lost no time in grabbing a phone and ‘mugging’ for the cameras. All par for the course, but one element stood out: Namely that Clinkle would not say a damn word about their product. Clinkle was thought to be developing a prototype application that used high-frequency sound waves to transfer payment signals between mobile devices and merchant terminals but no-one knew anything for sure. We mentioned them briefly in an editorial last year but with nothing to really go on other than the massive amount of funding behind them - what was there to say?

The startup had promised to revolutionise the world of payments – creating a product that would allow mobile solutions to rival cash and cards with no need for extra hardware. And then, last week, they launched. Not to massive fanfare but to a rather deafening ‘ho-hum’. In this case, the story of this mobile wallet app  company was perhaps more interesting than their product, that promises ‘treats’. I say launched. What actually happened was that they updated their website and Silicon Valley magazines exposed it just after it went live. Clinkle say there are still a few kinks to be ironed out when explaining the service, which is currently only available on a few college campuses in the US. As Lucy England over at Mobile Payments Insider said, “One thing is clear – the Clinkle app might be slick and sociable, but it is not the product that was promised.”

Instead of replacing cards, Clinkle will send you a physical one, which you can load and reload with money. After swiping the card for a purchase seven times, you can earn ‘Treats’, which can be sent to friends. Friends then have to make a purchase using the card in order to access the treat, which is then ‘spun’, possibly paying for their purchase or allowing them to get something for free, like Baskin-Robbins ice cream. Clinkle can also be used to send money to friends, like Venmo. The service claims to be free when sending money from your bank account or loading your Clinkle card. But there are some fees involved, which are explained in a lengthy cardholder agreement. However, Clinkle has taken some time considering one aspect which tends to put potential users off mobile payments – security. The app employs 128-bit AES encryption, lets you set up a special PIN code to open the app, and insures its cards up to $250,000. 

What Clinkle doesn’t do is allow instant peer-to-merchant payments via high frequency sounds without a card, as it was hoping. Talking up a mobile wallet payment app is probably what lured investors in the first place. Techcrunch’s Josh Constine weighed in by saying that, “The trick is that Clinkle gamifies payments. You can only see Treats sent to you by friends if you pay with your Clinkle card, and you can “Spin the Treat to see if you won a refund on your last purchase.” Oh, and Clinkle trumpets “we’re not into fees” but will charge you them for a dozen different reasons. After raising $30 million only to endure a talent exodus, layoffs, and product delays, at least Clinkle got something out the door. Even if its doubtful anyone will use it… But arrogant, late, and without that technology, most people are asking themselves why they would need Clinkle.”

The startup appears to have altered its original plans after the launch of Apple Pay, with Clinkle founder Lucas Duplan telling Business Insider that the app is changing its focus. “Last year, we made the decision to focus our product around consumer engagement, not the hardware layer of storing payment instruments, so we are excited that this will give customers yet another way to use their Clinkle card,” he said. I am emphasising this story, not to demonise Crinkle but to point out that there have been a lot of investment in the last few years put into ill-thought out mobile wallet apps that are floundering, have flopped or are just not crossing the finish line as time runs out and Apple, PayPal and the like, started the final push. On the plus side – it has also made the industry exciting again!

Last week, Contactless Intelligence was in Marseille for the NFC World Congress (you can see some of our tweets in the listing below). Here’s a couple of things we took away from the keynotes - all seemed to involve Apple (!). First off, both Visa and MasterCard were very happy that Apple has now entered the mobile payments market with Apple Pay. When it came to the topic of security there was was a lot of buzz about the topic of ‘tokenization technology’; a technology that ensures payment transactions are not vulnerable through the use of clear text, as this solution replaces sensitive payment account information found on plastic cards with a digital account number or 'token', meaning that merchant POS systems do not have to be PCI compliant anymore.

The topic of tokenization has gained a lot of traction recently with both Visa and Mastercard championing the technology, albeit it under different guises. Visa has announced their Visa Token Service. “Visa Token Service is yet another example of where we have opened up our network to create meaningful solutions in the form of new standards, tools and services that can enable digital payment experiences that are both engaging and secure. When you make the payment environment safer, you open up a world of possibilities where commerce can take place in different forms and consumers can shop anywhere, on any device, with confidence,” said Charlie Scharf, Chief Executive Officer, Visa Inc. As we would expect, MasterCard have also announced their MasterCard Digital Enablement Service (MDES), and say that, “… this service, provided by MasterCard to banks, allows a connected device to be used for everyday shopping and payments. In addition to the banks announced by Apple, MasterCard is working with its partners to bring additional banks on board quickly through the MasterCard Digital Enablement Service”. 

Tokenization technology looks to also be getting the US Government seal of approval. The US Federal Reserve’s Mobile Payments Industry Workgroup (MPIW) has given cautious backing to the potential of tokenization in mobile payments and formed a subgroup dedicated to exploring the impact of the technology in more depth. “The security of mobile payments has always been a top concern and one of the main barriers to widespread adoption of certain mobile and digital payment technologies,” says Marianne Crowe, vice president of payment strategies at the Federal Reserve Bank of Boston and chair of the MPIW. “With the recent introductions of new platforms that use tokenization technologies, including Apple Pay, we are even more convinced of the need to evaluate the optimal approach to tokenization and determine how the payments industry can better coordinate efforts to protect consumers and businesses alike.”

This specific security technology is gaining traction among service providers however, Stefan Schmidt-Egermann, security expert at mobile IT security company certgate, voiced a note of optimistic caution, “Tokenization is a great way to to increase the level of security in online payment systems but it is only the beginning, because cyber-attacks are no longer a hobby - they are crimes that have become a billion dollar business. If you want to secure a holistic ecosystem - of which payment undoubtedly is – you can’t relax if you have only secured the way data is transported from A to B. But tokenization is a start; a good start.” There are a variety of tokenization models and specifications currently under development but one thing is for sure, if brands as big as Visa, MasterCard and Apple get behind the technology – while not a sure thing, people will listen to what they have to say.

PayPal was also there but were not so ecstatic about the the Apple launch - as you can expect. Although they did say, “Tech suppliers, including Apple, will not create the spark for ignition. That will come from the application developers and their smart applications. Expect to accept and embrace chaos!”

Contactless Intelligence asked speaker Koichi Tagawa, Chairman of the NFC Forum if Apple had looked to join the NFC Forum. His answer was "Apple was not part of the NFC Forum", however Apple had joined Global Platform, an association that Tagawa was keen to point out had many overlaps and connections to the NFC Forum. Apple, it was confirmed, had also declined to join the FIDO Alliance. Although later both speakers for the NFC Forum and FIDO Alliance hinted at back room talks. We have nothing more concrete to expand upon this. Apple does not conform to the NFC Forum standard, Tagawa confirmed, but attendees were told that this is not a problem as Apple have chosen the 13.56MHz range. By choosing that range, Apple have opened the doors for other opportunities, the audience was told.

One interesting question posed to the panel was, “How did Apple achieved something that no else was able to achieve, namely the ability to get paid within the Apple Pay system?” This was concerning the news that according to a report from The Financial Times, Apple stands to make quite a bit of money from its payments service. Banks and payment networks are to give over 0.15 percent of each purchase to Apple, which equates to 15 cents out of a $100 purchase. Jeremy Nicholds, Executive Director for Mobile, Visa Europe’s answer was simple and to the point; “It’s the sheer force of their brand!” he said.

Enough said.

Until next week,
Steve Atkins
Contactless Intelligence

Is the eBay PayPal split really about Apple Pay?

There was a lot of talk and coverage last week concerning the split of PayPal from eBay. It’s not surprising that so many commentators are covering the story as it follows in the wake of the Alibaba IPO last week and the shake up of the mobile payment that Apple might create with Apple Pay – to which we covered PayPals response to Apple Pay a few weeks ago in this same editorial space.

For those of you who have not been covering the story, eBay CEO John Donahoe announced last tuesday that PayPal will be split into its own publicly-traded company. The official statement said that “eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets. As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward. Our board and management team believe that putting eBay and PayPal on independent paths in 2015 is best for each business and will create additional value for our shareholders.”

So, in essence, eBay Inc plans to spin off PayPal, its fast-growing payments business, giving in to activist investor Carl Icahn's argument for a leaner company better equipped to compete in the competitive mobile payments market. eBay's shares rose as much as 8% after the company said it would spin off PayPal as a publicly traded company in the second half of 2015, a transaction that will be tax-free to shareholders.

eBay Chief Executive John Donahoe had previously resisted Icahn's proposal, saying PayPal was integral to eBay's business, and vice versa. PayPal admits that it still faces competition from Google Inc's Google Wallet and a number of other vendors and with Apple about to enter the mobile payments market - things could get very tough for the online payment company. "On PayPal, investors will still contemplate the risk of PayPal directly competing with Apple Pay and Google Wallet, which will likely add some uncertainty to PayPal's standalone valuation," Piper Jaffray senior research analyst Gene Munster wrote. PayPal's chief executive after the spinoff will be Dan Schulman, former head of American Express Co's online and mobile payment business.

In the payments market, though, the questions are focused on PayPal and whether an independent PayPal—or a PayPal that is slated to be independent, assuming it’s not acquired before the end of next year, is more or less attractive to do business with. Is it better for PayPal to have a little more freedom to sell to people who don’t like eBay? Or will it weaken PayPal, which might happen if eBay pulls some or all of its business from PayPal and gives it to various rivals?

Wall Street analyst Marshall Hargrave also put out a research note and made a curious comment, that he saw something very different than the payments hyper activity that most others saw. “The payments business is slowing down and now looks like the ideal time to sell off PayPal. This could also be a ploy to see what types of buyers or partnerships the company can drum up for PayPal. However, there are concerns where eBay accounts for over a quarter of PayPal’s transactions. That’s a large number of eBay customers that use PayPal to complete their transactions. PayPal is the mobile payment system, which services payments for eBay customers, and it makes sense to isolate the value of PayPal from eBay’s stock price. Thus, it’s likely that eBay is being valued at less than the sum of its separate parts, and a spin-off such as this would enhance the value of eBay as a whole.”

“Everyone is out to eat PayPal’s lunch,” said Jordan McKee, a senior analyst for mobile payments at 451 Research. “Now more than ever, PayPal needs to innovate, be nimble and move fast to fend off these competitive threats.”

The same could go for the airline and airport market when speaking about their adoption of beacon technology, they need to ‘innovate, be nimble and move fast to fend off these competitive threats’. First there was the report that Miami International airport has become the first airport to use an open approach to deploying Bluetooth beacons across its footprint. The beacons — located at entrances, check-in, gates, baggage claim and valet parking zones — can be used by a wide range of airport service providers including airlines and retailers, rather than being tied to one particular provider. The airport is using Sita’s Common-Use Beacon Registry (something we also covered on Contactless Intelligence earlier this year) to deliver the service to partners and passengers, allowing a wide range of providers to make shared use of the Bluetooth Low Energy (BLE) beacons it has deployed. “The passenger experience at Miami Airport is our number one concern and iBeacon technology allows us make it even better,” Miami International Airport’s spokesperson Maurice Jenkins explained. “We have installed beacons throughout the airport and made them available to all our stakeholders. Now we invite airlines and our other partners to invent new ways to make the passenger experience at Miami even better.”

Joining easyJet in the use of iBeacon technology is the Dutch airline KLM. Passengers travelling with KLM from Amsterdam’s Schiphol Airport can now use the airline’s app to get a map of the airport that shows the route they need to take to their gate and the time required to get to there. “Customer feedback, especially on social media, has told us that passengers – even experienced travellers – often worry about transferring to another flight,” Martijn van der Zee, SVP of ecommerce at Air France KLM was reported as saying in NFC World. “67% of our passengers at Amsterdam Airport Schiphol are transfer passengers. KLM aims to improve customers’ travel experience with this service.”

However, before we become too caught up in the beacon bonanza, beacon platform inMarket has performed a case study to find out how effective beacons really are. Since launching its M2M solution in January, inMarket can report that in-store beacon engagements achieve a 45% interaction rate, or 5x higher than traditional push messages that occur without location context (9%). The study also found that customer engagement significantly decreases when platforms ‘oversaturate’; inMarket's says that if a customer received more than one push notification from a beacon platform in the same store, app usage among existing users declines by 313 percent. The same goes if the notifications customers received were irrelevant: the beacon app gets deleted. “These stats clarify that beacons are a powerful tool that can alter the user experience depending on how they are deployed. Blanketing people with pop-ups on their phone is a sure-fire way to lose an audience, but reaching the right person with helpful info at the perfect time causes enormous lift. Simply deploying beacons is not enough, and misusing beacons can have the opposite of the intended effect,” said inMarket CEO Todd Dipaola.

We are going to be looking at this topic in one of the sections of the Contactless Intelligence conference next year (28th - 29th April 2015) but in the meantime, I know that some of you out there have opinions on the subject. Let me (and our readers) know what they are because this topic is about to get much, much hotter!

Until next week,
Steve Atkins
Contactless Intelligence

Is the secret to mobile payment adoption location, location, location?

Mobile interaction (payment, ticketing, ID, marketing etc) is supposed to be the ultimate demonstration of free movement, expression and of a simplified lifestyle. After all, you only need your phone, no cumbersome wallet, cards etc. So how ironic is it, that such an expanding and explosive market could be driven by the oldest of all price-to-purchase rules, namely location, location, location?

Don’t know what I’m talking about? Let me give you a couple of examples. For a start, after announcing the curtailing of its plans for a stand-alone mobile wallet app, Square last week launched a new feature on its Square Order app that makes heavy use of geo-fencing. You can place a standing order for your morning coffee from your local coffee house, but instead of picking it up at a set time everyday, your proximity to the coffee house triggers your order. When you’re five minutes away from it, you cross a geo-fence that sends an alert to the coffee shop telling it to begin to pull your order together. But geo-fencing isn’t the only element that the company has been trying out. It has also been looking at BLE as a proximity sensing tool and using it as a method of detecting when other Square users are nearby.

On Tuesday, Square also updated its Square Cash iPhone peer-to-peer payments app so users can send money to other Square users in the same room, without entering a phone number, email address or searching for a name in contacts. Basically, all of the Square Cash apps in the same room detect one another, allowing you to transfer money with a single click. The app works by connecting directly over BLE to other iPhones. So instead of sending a payment to an email or phone number, Square will give you the option of paying people who are in same room or general vicinity – assuming they also have iPhones with iOS 8 and the Cash app. And before anyone points out that it’s Apple-oriented once more, Square Cash’s other payment methods are available on its Android app, so there’s a good chance this feature will come to Android devices as well. I have to be honest, that as someone over 30, I don’t really get peer-to-peer payments for small transactions such as bill splitting. I hate to say it, but this is the moment that I still use cash. I know, right? What an admission and what a place to admit it. So far, industry observers maintain there are a limited number of use cases for these kind of proximity features, though it’s not hard to imagine it expanding to other systems and creating an ever expanding market. 

Certainly there are more and more cases each week of apps that are centred around proximity marketing or mobile payments either being released or finding new merchants, retailers or other service providers that are signing up to their services. For example, 

Dash Software LLC, a mobile payment platform for restaurants, recently announced their expansion to Chicago after launching in New York City at the end of 2013. Customers use the Dash app to pay their bill, split checks, tip and more, using the credit card stored in the app. Customers inform their server when they arrive that they will be paying with Dash, which is integrated into the restaurant's POS. In another example, US-based Dunkin’ Donuts are also to test a mobile ordering platform that will allow customers to order and pre-pay for menu items and then pick up at selected locations. “For our guests, there’s an opportunity to improve order accuracy and speed and our restaurants have an opportunity to improve throughout, which is something we’re excited about,” said Justin Drake, the Dunkin’ Brands public relations manager. “We launched the app as a way to enhance our guests’ experience. With the app, guests can easily find their nearest Dunkin’, use their phone to pay either in-store or in the drive-thru, claim special offers, and send mobile gift cards to friends and family.” Opportunities in this area really appear to be growing, if news such as this create concrete results.

Norwich-headquartered Proxama certainly thinks that proximity marketing, as well as NFC and BLE markets are expanding in the US. They are looking beyond the UK to North America where they are setting up shop and take advantage of the interest in these new technologies. “We’re on the cusp of widespread NFC technology adoption, so now is the perfect time to bring our expertise into the North American region,” said Proxama’s new General Manager for North America, Pascal Caillon. “By tapping into our deep-rooted experience in Europe, a region that has been driving a lot of the mobile commerce activity to date, we are confident that we can bring similar success to the North American market. By connecting physical and digital, we are able to help merchants, brands, and banks uncover opportunities for mobile loyalty programmes, targeted offers and deeper customer relationships they never thought possible.”

And it’s not just traditional mobile payment players who are trying to get in on the act. Last week, it was leaked that Facebook may also be developing a payment feature through its Messenger app that allows friends to engage in peer-to-peer payments. (Again - is this an age thing or a geographical thing?). Using a tool called Cycript, computer science major Andrew Aude was able to take a look at unpublished code being worked on by the Facebook team, which would allow users to send money to each other as easily as they would a photo. It follows hints from the social media giant that it is looking to push into the mobile payment space. On its second-quarter earnings call, CEO Mark Zuckerberg said the company was doing work on payments, and the recent hiring of the former president of PayPal was seen as another sign the company is serious about the payment arena. The code for a payments system within Facebook was first uncovered by security researcher Jonathan Zdziarski last month, but Aude took it one step further by accessing it through the Cycript tool. Cycript allows users to modify and play with the code in apps. Payments will initially just be individual-to-individual, according to a note in the code discovered by Aude, but group payments look to be enabled eventually. "In the short term, we will only support single payment attachment. Multiple payment attachments will be supported in the future," the note said. Facebook said it did not comment on rumour or speculation. 

On the company's most recent earnings call, Zuckerberg said the company would not "compete directly" in the online payments space, and would instead be a "partner" to others in the sector. But analysts suggested the Messenger payments system could lay the groundwork for a bigger plan. "Ultimately, Facebook already has a large and very engaged active user base, and it will now integrate additional transactional services to ensure that it rapidly acquires users' payments details," Enrique Velasco-Castillo, digital economy analyst at Analyses Mason, was reported by CNBC as saying. "(This) can be coupled in turn with a more comprehensive mobile payments, advertising, and location and proximity marketing portfolio."

But it’s not all happening overseas. Last week was also the week that the UK mobile payment company, Zapp, announced a wide range of retail partnerships that will work to introduce Zapp from 2015 onwards. Five of the most customer-focused and innovative retailers across a range of sectors are leading the way – Asda, Sainsbury’s, House of Fraser, Thomas Cook and Shop Direct – have chosen to support Zapp. The company said that would mean that millions of customers will have the ability to via mobile payments. They may actually be onto something here. Other major retailers and billers partnering with Zapp include: Clarks, Dune, Spar, Best Western Hotels (GB), Starstock, QD Stores, Anglian Water, Bristol & Wessex Water, Sutton and East Surrey Water. Support for Zapp from the charity sector through Oxfam and Charities Aid Foundation has been previously announced. Additionally, many of the largest payment providers in the UK including Verifone, Klarna, Touch Go, Siemens, Apogee International, Vix Technologies, Global Charge, Just Desire and RSL – are announcing that they will work with Zapp to bring mobile payments to market. This broad group of retailers, billers and payment providers will roll out Zapp to more than 35 million customers and represents the largest coalition of retailer support for a new payment method ever announced in the UK. Peter Keenan, Chief Executive of Zapp, commented, “Today is a hugely significant milestone in the history of money in the UK. At last the promise of a truly mobile and digital payment method will become a reality, meaning easier and more secure checkouts for millions. It’s amazing to have the support of such well known retailers. Together with our other partners this means millions of consumers will be able to shop at tens of thousands of merchants up and down the UK at launch.”

For the first time that I can remember, Bill Gates had a thing or two to say about mobile payments (Apple Pay in particular). In an interview last week to Bloomberg TV, the ex-Microsoft CEO , philanthropist and gazillionaire said, “Apple Pay is a great example of how a cell phone that identifies its user in a pretty strong way lets you make a transaction that should be very, very inexpensive. So the fact that in any application, I can buy something, that’s fantastic. The fact that I don’t need a physical card anymore, I just do that transaction, and you’re going to be quite sure about who it is on the other end, that is a real contribution and all the platforms, whether it’s Apple’s or Google’s or Microsoft’s, you’ll see this payment capability get built in. That’s built on industry standard protocols, NFC, and these companies have all participated in getting those going, Apple will help make sure it gets to critical mass for all the devices.”

And so, to finish this week with a little bit of business. I have been contacted via the Contactless Intelligence Facebook site by a reputable company with the following message, “I am the IT Director at XXX and am searching for an innovative solution that will track visitors around our innovation parks, give staff access, permit restaurant payments and link with our AD for staff details and MS Dynamics CRM. Please contact me at XXX if you can help with a solution or point me in the right direction.” 

I have the gentleman’s details and from what we can see (and we looked), it appears to be a genuine request. I am happy to pass on his details to anyone who got to the end of this editorial and is interested in pursuing this business further. Just drop me an email.

Until next week,
Steve Atkins
Contactless Intelligence