Apple Pay launches, cash gets tweeted, cards go biometric…

After Apple’s big announcement concerning Apple Pay, the question on everyone’s mind was “When will it launch?” Last week, the date announced by Apple during their developers conference was the 20th October - today! This is it - D-Day, or Pay-Day rather… With another 500 banks signed up to the service, it’s time for Apple to put its money where its phone is and show us whether they really have learnt something by being last to the party. At least in the U.S. It could be 2015 before we see something like it in Europe.

The card technology guys – Visa and Mastercard -  have been promoting the U.S. launch of Apple Pay with a wave of releases and information aimed at educating the consumer on how to use Apple Pay. I find this interesting because they didn’t do anything comparable for other mobile wallets. It certainly seems that they are throwing their collective weights behind this particular wallet launch. “Today marks a new era for Visa and the payments industry. Combining the power, reach and security of Visa’s network with a new payment experience from Apple will truly change the way people pay,” said Ryan McInerney, President, Visa Inc. “And this is just the beginning. Visa has built new technology that Apple has integrated into Apple Pay to allow almost any merchant to offer great commerce experiences on any mobile device, while delivering the trust and benefits that consumers have come to expect from Visa.” 

This was the sentiment echoed by Mastercard, “The simplicity of Apple Pay is what makes it compelling,” said Ed McLaughlin, chief emerging payments officer, MasterCard. “Along with simplicity, it is important that MasterCard cardholders enjoy a secure and private experience – along with all the rights and privileges of a genuine MasterCard transaction. We worked closely with Apple toward a vision of building a user-friendly, secure payment experience and delivered on that vision by providing the most secure combination of payment technologies ever deployed in Apple Pay to the benefit of our cardholders.” To help consumers take advantage of Apple Pay, MasterCard has also developed the MasterCard Nearby app, available in the App Store, which helps you to easily find merchants near your that accept contactless payments. I have seen this type of activity during the ‘early days(!)’ of contactless payment introductions (2008-9) but nothing quite so slick; it shows how far we’ve moved on.

Apple announced a raft of new iPads and iMacs last week but it was Certgate’s security expert Stefan Schmidt-Egermann who pointed out to me (Apple didn’t cover it during the launch) that the new software SIM card in the cellular versions of the iPad Air 2 and Mini 3 models can be configured to work with various carriers in the US and UK; this allows for quick switches between providers without the need to physically switch out the SIM card. Called AppleSIM, the system places one SIM card in the device which can be configured to work with multiple carriers and switched as needed. The new cards are being offered with new iPad Air 2 and iPad Mini 3 models in the US and UK. Apple hopes that the new card system will make it easy for users to not only manage their main data plan providers, but also configure their iPads to use temporary data plans from local carriers when users travel. "The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and UK right on your iPad”, Apple says on its site. 

Schmidt-Egermann highlighted the fact that should this solution become standard, the need for an independent Secure Element becomes more important than ever. “The mobile network operators have tried to set up security based on a SIM card in the past, but it looks like this could now be integrated in the device (starting with these iPads), by default. On the other hand, some device manufacturers have developed trusted execution environments (TEE) and other consortiums have thought about cloud-based secure elements (HCE). Not all of them will be able to bring in a security solution which is platform independent and manageable by the customer,” Schmidt-Egermann wrote in an email to us. 

The AppleSIM in the new iPads is currently compatible with AT&T, Sprint and T-Mobile in the U.S., and EE in the UK. This list will presumably expand in time, as carriers realise that not being one of the available options is probably bad for business. It looks like things could be changing in the world of MNOs, SIM and hardware-based security…

Talking of things changing from five years ago - the French are now ‘tweeting’ cash - sacré bleu! C’est incroyable, but true! Starting this month, all Twitter users in France – irrespective of their bank – will be able to ‘Tweet’ money to one another thanks to the S-money service developed by French bank Groupe BPCE. “Everyone with a bank card and a Twitter account in France will be able to send money to other users easily, rapidly, securely and free of charge with a simple Tweet”, says the bank. For Nicolas Chatillon, CEO of S-Money, “the ease of use and immediacy of the S-Money payment solution for individuals is perfectly adapted to the Twitter user experience. It offers Twitter users in France a new way to send each other money, irrespective of their bank and without having to enter the beneficiary’s bank details, with a simple Tweet.” Payment by tweets will be managed via the bank’s S-Money service, which allows money transfers via text message and relies on the credit card industry’s data security standards. 

 “This initiative is a good example of our innovation strategy regarding payments. Groupe BPCE is the first banking group to offer individuals a payment solution where they can transfer money with a simple Tweet. This S-Money initiative opens up a whole new range of payment possibilities on the social networks,” added Jean-Yves Forel, Groupe BPCE Chief Executive Officer responsible for Commercial Banking and Insurance. “We warmly welcome this innovation developed by Groupe BPCE and the service it provides to Twitter users in France by integrating its S-Money service into a live, public, conversational dimension characteristic of Twitter,” said Olivier Gonzalez, CEO of Twitter France.

And, finally, if cash being tweeted wasn’t mind-bending enough - last week, MasterCard and Zwipe announced their partnership for the launch of the world’s first contactless payment card featuring an integrated fingerprint sensor. The launch of the card comes after a successful live pilot with Norway’s Sparebanken DIN, aligned to the Eika Group, as an answer to the complex challenge of providing a fast, convenient payment solution that does not compromise on security. The Zwipe MasterCard payment card is the world’s first fingerprint authenticated contactless payment card. It includes an integrated biometric sensor and the Zwipe secure biometric authentication technology that holds the cardholder’s biometric data. It contains an EMV certified secure element and MasterCard’s contactless application.

The card is the first of its kind to combine the security of biometric authentication with the speed and convenience of contactless payment. Cardholder fingerprint data is stored directly on the card, not in an external database. After activation by a simple fingerprint scan, the Zwipe MasterCard card can be used to make contactless payments. The biometric authentication replaces the PIN entry, thus enabling cardholders to make payments of any amount, unlike other contactless payment cards on the market. “Our belief is that we should be able to identify ourselves without having to use passwords or PIN numbers. Biometric authentication can help us achieve this. However, our challenge is to ensure the technology offers robust security, simplicity of use and convenience for the customer. Zwipe’s first trial is a significant milestone and its results are very encouraging,” said Ajay Bhalla, President of Enterprise Security Solutions at MasterCard.

Zwipe is now working on the next generation of its card that will be the same format as a standard card and designed to work with all payment terminals for release in 2015. This new card will harvest energy from the payment terminals without the need for a battery. Kim Humborstad, founder and CEO of Zwipe, said, “Response to our pilot with Sparebanken DIN has been very positive. Cardholders love how easy the card is to use with the added security feature. We have also had exceptionally good reaction from retailers participating in the pilot. This pilot enabled the partners to gather valuable customer feedback, experience and best practice for the enrolment and deployment phase.”

So there you have it. In a single week where Apple Pay rolls out in the US, SIM cards could be installed in hand-held devices as standard, cash is to be ’tweeted’ in France and we could all end up with fingerprint sensors on our cards - how much more evidence do you need to see that the industry is on a roll again? Next week we will be taking one of our rare breaks for the news feed but will return on the 3rd November; just in time for the start of CARTES 2014 in Paris, France. We still have a couple of slots open, if anyone out there wants to have a chat with us and perhaps run a media briefing session by us. Just drop me a quick email and we can sort something out.

We’re back on the 3rd November, so until then…

Steve Atkins
Contactless Intelligence

Turn ons, turn offs, data hacks and the ‘unholy alliance’

It is not normal in this industry to follow a story as it unfolds, grows, exhibits some twists and turns, a data hack, unlikely allies, and a ‘pivot’ - all in about five days. This is not ‘Game of Thrones’ - it’s the mobile payment industry! Although, I have to say, it’s been brilliant to follow. For those of you not aware of what has been happening, I will attempt to relay the story as close to its chronology as possible, as well as adding in some other information that came to light over the course of the week. Please forgive me if it gets confusing, but I think it will be worth it.

At the beginning of last week, a report came to light explaining that both US pharmacies Rite Aid and CVS Health Corp had deliberately modified or disabled NFC-enabled POS terminals to prevent access for customers wanting to use Apple Pay. Both pharmacies are members of the Merchant Customer Exchange (MCX), the consortium that is still months away from officially launching its own mobile wallet. However, the fact that it is coming, means that retail partners are in a difficult position concerning NFC-enabled mobile payment transactions. CVS and Rite Aid were never official Apple Pay partners, but the mobile wallet worked at those locations because of payment terminals supporting NFC. Then Rite Aid turned off the NFC support 24 hours after Apple Pay became available to consumers with the new iPhones. CVS followed closely after.

While none of the sources make a specific reference to MCX, Rite Aid did say that it was launching its own mobile wallet next year. MCX gives retail partners the ability to add to a standalone app to the venture’s branded mobile wallet, CurrentC. “CurrentC will offer customers the freedom to pay with a variety of financial accounts, including personal checking accounts, merchant gift cards and select merchant-branded credit and debit accounts. Additional payment options will be available in the coming months,” MCX said in the announcement about the CurrenctC brand. The system will use a QR-code system displayed on the merchant’s POS which is then scanned by the customer’s phone. CurrentC will automatically apply discounts, initiate loyalty programs and withdraw funds from a customer’s current accounts – cutting out credit-card processing fees.

Pretty soon, Wal-Mart had waded into the skirmish with their views on the subject, which were a little negative towards the credit card companies. Understandable, as the company is is suing Visa for $5 billion for what it says are excessive card swipe fees. On the other hand, the MCX-backet wallet, CurrentC, unlike Apple Pay, which encrypts payment data and keeps it out of the hands of retailers, connects directly to a customer's bank account. It will also allow retailers to mine valuable data on spending patterns, which they can use to better target advertising and drive loyalty programs. You can read more on the data being mined in an interesting post from Nick Arnott over at iMore, in a piece titled; ‘In-depth look at CurrentC and the personal data they want to collect’. He looks closely at the data capture and concludes; “I have additional concerns about CurrentC, but am hoping to hear back from them before disclosing them. Needless to say, CurrentC doesn't look like a great app for consumers to trust their information with. With CurrentC, you're not the customer — you're the product being sold.” How ominous.

Meanwhile, we heard very little from MCX themselves. They stayed fairly quiet, speaking only to selected journalists. However, MCX Chief Executive Dekkers Davidson was quoted during a conference call with Reuters that, “MCX and the merchants that founded MCX are challenging ... an entrenched, very large status quo, a $500 billion ecosystem on the payments side.” The MXC and their retail members were also backed up by the National Retail Federation. “Merchants large and small make business decisions every single day based upon what makes the best sense for the business, their associates and most importantly, their customers,” commented Mallory Duncan, senior vice president of the US’s National Retail Federation, in a statement issued in response to the NFC/Apple Pay shut-off. “The payment systems they decide to implement are no different. Data security is paramount, but so is flexibility, cost and ease of use. There are a number of new technologies reaching the marketplace, and a number of other systems on the horizon. It is easy to second guess why a specific retailer chooses one technology or another, or what payments they will or will not accept, but you can be sure that the bottom line consideration is what is best for their company and their consumer.”

Meanwhile, speaking at a WSJD Live conference by, Apple CEO Tim Cook revealed that there have already been over one million card activations through the Apple Pay mobile payments system over the first 72 hours of the service. "The early ramp [of Apple Pay] looks fantastic," said Cook to The Wall Street Journal managing editor Gerry Baker in an interview. Cook did not reveal any specific numbers regarding the first few days of the Apple Pay service. However, Cook did describe the problem with Wal-Mart, Rite Aid and CVS as a "skirmish," and that the resolution of the problem will be on the consumers. Cook said mobile payments had failed so far because they were built to serve the business models of their creators, rather than to provide a useful experience for customers. Because Apple’s primary goal is to sell more phones, tablets, and laptops, its system is more straightforward.

However, by pulling the plug on NFC-based payments, MCX partners not only killed Apple Pay but also killed all other tap-to-pay platforms, including Google Wallet, and Softcard. It didn't take long for what one protestor described on Reddit as "An unholy alliance forged in the fires of hate" to form: users of the Apple SubReddit and the Android SubReddit joined forces to protest Current C's partners—which according to a TechCrunch report now consists of 110,000 retail stores representing $1 trillion. "Let's invite /r/Android to help us boycott retailers that are disabling NFC readers," reads the boycott call posted by Apple supporters. "We can unite to put pressure on them, since it affects us both!" And in the Android SubReddit, a mirror post. "We wanted to invite you to /r/apple to help support us boycotting retailers that are disabling NFC. It affects us both!" Unholy alliance indeed.

In January 2013, Fierce Retail reported MCX had been asking retailers in 2012 to pay a big upfront fee from $250,000 to $500,000 to get on board, and sign three-year mobile payment app exclusivity deals with MCX. Retailers who signed up may have had a one-year grace period from the start of their exclusivity contract to bail out of the deal. If Apple Pay gains steam early, some retailers might look to take advantage of this option to ditch MCX. However, if deals were signed in 2012, that grace period is long gone but retailers may be coming up on the end of their exclusivity agreements even though CurrentC hasn’t launched yet, MCX said, during the conference call, that when retailers join the consortium they do so on an exclusive basis, but there are no fines if they leave the group.While Wal-Mart has said it has no plans to support Apple Pay, its rival Target is taking a more pragmatic approach. Target said it plans to use MCX for in-store checkout but is allowing Apple Pay for online purchases through its mobile app. Target is featured on the Apple Pay website.

MCX also claimed that their retailers were worried about the security of Apple Pay and that their own offering - CurrentC - would be more secure. However, this assertion was tested last Wednesday when, less than 36 hours after this ‘kerfuffle’ over the shutting down of NFC POS’s were made public, MCX confirmed that hackers had obtained the e-mail addresses of some participants in a pilot programme. It appears that only the emails of these early mobile app testers have been stolen, which is not as significant a data breach as having payment data or other personal information taken, like home addresses or phone numbers. In addition, many of these email address were dummy accounts used for testing purposes. However, MCX says it’s continuing to investigate the situation and will provide more updates as they arrive. With interesting timing, MCX, the same morning, published a blog post to clear up misconceptions about its technology and its aims as a company. One section in the post discussed the security aspects to CurrentC, saying “the technology choices we’ve made take consumers’ security into account at every aspect of their core functionality.” Embarrassing.

By the end of week, there was a ‘pivot’ in place. For those of you not familiar with the term, a ‘pivot’ is the 21st Century equivalent of the old 20th Century ‘u-turn’. It’s basically corporate speak for ‘We screwed up here, the consumers are not happy, which will invariably lead to the shareholders not being happy, meaning we have to retreat and go back to the drawing board.” This ‘pivot’ was slyly brought out during another conference call held between CEO Dekkers Davidson and COO Scott Rankin and selected journalists. The new rule is, apparently, that MCX partners who want to accept Apple Pay won’t be fined but must leave MCX if they wish to accept Apple Pay. The following is a series of amalgamated quotes from a number of publications who reported on the line and from private interviews afterwards. These cumulative quotes give a nice conclusion to the story:

Techcrunch; “We’re agnostic about technology. We started with QR code-based technology that allows us to go to market broadly. If we need, we can pivot to NFC.” Davidson

New York Times; “CurrentC was built on QR because that was seen as the fastest way to get the app in consumers’ hands. People in the industry had largely written off near field communication as a mobile payment option — until, that is, Apple incorporated it. It’s ironic in a way that we’re talking about a really old technology being employed here. Way before Apple Pay, merchants hadn’t enabled it or planned on using it.” Davidson

PC World; “We started with a cloud-based QR code because it allows us to go to market right away on any phone. If we need, we can pivot to NFC at any time. There are also opportunities to work with low-energy Bluetooth.” Davidson

There are even reports that MCX is considering accepting payment cards in its mobile wallet; going against its original development purpose. Re/Code reported that MCX executives “did give themselves some wiggle room, saying CurrentC will eventually be open to all credit and debit cards, but they didn’t say when that will happen, or which specific cards will be supported.” They continued to be cagey when asked if MCX members who accepted Apple Pay would be fined or asked to leave MCX. Business Insider reported that following the conference call, in a private interview with COO Scott Rankin, Rankin said, “Despite what has been reported, MCX retailers were allowed to use Apple Pay without suffering any sort of penalty. However, MCX retailers will have to leave MCX if they want to accept Apple Pay.”

However, in an interview with Re/Code, when asked about Meijer — a grocery chain that is continuing to accept Apple Pay despite being a member of MCX — Rankin gave what the publication called “a non-answer”, saying that “I think if they want to go forward and continue to accept Apple Pay, down the road at some point if they want to be a customer of MCX and roll out CurrentC and offer it to customers that’s great.” All very confusing.

NFC World+ did uncover a little bit of news of their own, “NFC World+ understands that there is a bigger goal to generate new revenues for members beyond cutting costs. That will be achieved, we understand, by providing customers with a credit account which functions like a single store card account that works across all MCX merchants so that customers have one credit balance available to them that they can use at any merchant that accepts CurrentC. This would enable the lucrative interest income currently earned by credit card issuers on outstanding balances to be captured instead by MCX member merchants via a single giant store card scheme.”

It’s amazing to think that this all played out over a single week. Ultimately, Rite Aid and CVS screwed up the handling of this. As Business Week argues; “It’s hard to argue that you’re doing right by your customers when you stop accepting a form of payment that you’ve already demonstrated presents no technical hurdles and you don’t have an alternative to offer. CurrentC isn’t expected to be ready until 2015, and the specifics of the system aren’t public.”

No doubt this will be a topic of conversation at this weeks Cartes in Paris. I look forward to discussing it with you all there.

Steve Atkins
Contactless Intelligence

Everything old is new again.

If there were prevailing undertones that struck me during this year’s visit to CARTES, it would be reinvention and reinvigoration. Companies showed off brand new corporate designs, presented mergers and acquisitions and newly created divisions to address anticipated emerging markets and generally thanked Apple for creating a ’tipping point’ for the payment industry.

The phrase came courtesy of Verifone Europe’s President June Yee Felix. During her address at the opening Summit of Cartes she said, “Apple Pay is something wonderful for our industry. They have engaged the consumer. The technology has been there for some time. Others, such as Google, have gone down the same road, but what’s different is that Apple has captured the imagination of the consumer. Having over 200,000 merchants as places to pay in the US alone is a tipping point, I believe, in creating momentum. It will get consumer excitement going and that is very, very important.” This sentiment was also echoed by Eurosmart’s Chairman Oyvind Rastad. When asked to comment on the arrival of Apple Pay he said, “It’s great news for the industry,” and predicted, “Next year will be the year of NFC. I know this is the third time I’ve said this, but NFC is becoming a commercial reality.” As I said before, everything old is new again.

Verifone, in my opinion, was one of the winners of Cartes. With a brand new corporate design, relevant demonstrations and an overall buzz all over their first row booth, the company left quite an impression. Along with a number of other US-based companies, the company also touched upon other elements that have a critical impact on the payments industry, namely the structure of secure commerce and reducing merchant exposure to large-scale data breaches, and accelerating the acceptance of EMV in the U.S. market. Amongst Verifone’s announcements was the one concerning the the global availability of its secure commerce architecture, which the company said is designed to “reduce merchant exposure to large-scale data breaches, and reduce the certification burden on U.S. merchants, acquirers and other payment providers looking to enable EMV acceptance.” The company showcased this quite heavily at the Money 20/20 event that was taking place at the same time as Cartes in Las Vegas. Verifone’s secure commerce architecture decouples payment data from the merchant’s POS system and enables encrypted delivery of this data from the payment terminal directly to the merchant’s processor. This benefits merchants by removing the POS system from the scope of EMV certification, which Verifone said greatly reducing the burden for clients. It also prevents consumer payment data from entering the POS by transmitting it directly to the merchant’s payment processor, which takes away the risk of the data being stolen. This secure commerce architecture is now available to all of Verifone’s direct merchant customers and all merchant acquirers in the U.S. Merchants; Global availability will begin in 2015.

Also last week, American Express announced their new online payment security services — American Express Token Services, a suite of solutions designed to enable its card-issuing partners, processors, acquirers and merchants to create a safer online and mobile payments environment for consumers. With American Express Token Service, traditional card account numbers are replaced with unique “tokens,” which can then be used to complete payment transactions online, in a mobile app or in-store with a mobile Near Field Communication (NFC)-enabled device. By using tokens, merchants and digital wallet operators will no longer need to store consumers’ sensitive payment account information in their systems. In addition, tokens can be assigned for use with a specific merchant, transaction type or payment device to provide further protection against fraud. “We believe our payments network is a tremendous asset to American Express – one that will allow us to offer our customers new features and technologies to meet their evolving spending needs,” said Paul Fabara, President, Global Banking and Global Network Business, American Express. “As we move ahead, we are excited to bring these new capabilities to our customers and look forward to continuing to serve them.”

Other news was the laboratory hacking of a flaw in the contactless Visa card. I am cautious in emphasising it was ‘laboratory hacking’ because after covering security related news through The Silicon Trust for so long I am left with a healthy disregard for those researchers who make such claims under ideal circumstances. Usually just before they are about to present a paper at some conference somewhere. In this instance Scottsdale, Arizona. Researchers from the University of Newcastle said the flaw is simple: when the amount is requested in a foreign currency, the system will approve unlimited cash transactions without a PIN, while the card is still in the victim's pocket or bag. The transactions can be valued up to 999,999.99 in any foreign currency – while the system limits transaction in the U.K. to a maximum of £20 before a PIN is required, making the purchase in a foreign currency sidesteps the £20 limit. Newcastle University’s lead researcher Martin Emms said, "With just a mobile phone we created a point-of-sale terminal that could read a card through a wallet. By pre-setting the amount you want to transfer, you can bump your mobile against someone’s pocket or swipe your phone over a wallet left on a table and approve a transaction. It took less than a second for the transaction to be approved." After reviewing Newcastle University’s findings, Visa Europe responded with the following statement, “The research does not take into account the multiple safeguards put into place throughout the Visa system, each of which must be met in order to make a transaction possible in the real world. For these reasons we do not believe the findings to be a cause for concern, as it would be very difficult to complete a fraudulent payment of this kind outside a laboratory environment. We are updating the safeguards in the payment system to require more transactions to come online for authentication, making it even more difficult to make this kind of fraudulent attack. This process was already underway before we were made aware of the Newcastle research."

The UK Cards Association told the Daily Mail, "While this complex fraud may be theoretically feasible in a laboratory, it hasn’t been attempted in the real world and absolutely no money has ever been lost as a result. There are robust security checks in place at every single stage of a payment – by the retailer’s bank, the card scheme and the customer’s bank – which monitor, and stop, suspicious transactions. Consumers can be assured they are legally protected from any fraud losses and will never be out of pocket."

It’s only when things are moving again that the researchers even bother to have a go at this sort of thing. I take it as a good sign for a reinvigorated industry. 

So should Visa.

Steve Atkins
Contactless Intelligence

MasterCard travel coup and the opening of the 2015 CMAs

If you were in London last Friday taking the Tube, chances are (if you were smart) you used your contactless MasterCard. After all, why wouldn’t you - it meant free travel for the whole day! In fact, in an attempt to encourage customers to pay with a contactless card,  Mastercard is actually offering two free days of travel this November. If the amount of tweets about this subject are to be believed, users were impressed.

If you didn’t use the Tube last Friday - never fear. Those who find themselves in the capital on November 28 and own a contactless Mastercard will get another free travel all day across TfL's (Transport for London) network including buses, tubes, London overground and the DLR. The good news is that users don't have to sign up or enable any option on their account, they just simply turn up and tap on the oyster reader at the corresponding station gate or London bus. Daily spends will be capped at £21.80 (the price of a full day of unlimited travel on TfL services), and this will be automatically refunded to the users account. A Mastercard spokesperson is on record saying, “We (MasterCard) are looking to encourage the use of contactless, and the offer of free travel should tempt some people to try out the technology”. While just two 'Fare Free Fridays" have been announced so far, the spokesperson didn't rule out similar offers in the future.

We could also start to see proximity marketing, similar to the Apple-type iBeacons from Samsung soon, reported 9 To 5 Mac. The system is called ‘Samsung Proximity’, and while the underlying technology is exactly the same – with the same Bluetooth LE beacons able to broadcast information to both services – Samsung does appear to be taking a slightly different approach in the way that information is delivered. With iBeacon, retailers and other businesses wanting to send alerts do so via their own iPhone app. Samsung is apparently embedding support for Proximity right into its Android overlay, so it’s always on. Businesses have the option of offering customers their own app, but it isn’t a requirement.

While this is good news for retailers – who will be able to send alerts to visiting customers whether or not they are running the store’s own app – it’s not yet clear whether it will be good news for owners of Samsung phones: the company hasn’t provided any detail on how people choose which alerts they do and don’t want to receive. Says 9 To 5 Mac, “Samsung Proximity is a mobile marketing platform that connects consumers with places via cutting-edge Samsung location and context-aware technology. With Samsung Proximity, visitors are able to experience rich content related to their location, and marketers can better engage with customers for increased sales and brand awareness”. Samsung has not revealed when their new Proximity service will launch, in the meantime, the company is apparently working with a number of retailers on the service.

I have highlighted these two stories, a marketing campaign to get people using contactless cards and the growth of BLE/Beacons, to illustrate that there are still new areas out there for the industry. Why is that more relevant than last week? Well, the Contactless & Mobile Awards 2015 nominations are now open. Now in its 8th year, the Contactless & Mobile Awards are presented to those companies, organizations and retailers who have done the most to embrace and implement contactless/NFC technology into their day-to-day operating practices. These awards represent a real promotional springboard and give the winners a reputation and credibility for their efforts within the industry. The competition is open to all implemented contactless applications within the relevant sectors, regardless of geographic region or size of corporation. In fact 2014 saw our most diverse percentage of nominees per region than ever before, with 13% based in the UK, 34% based in mainland Europe, and 53% Rest of World.

This year there is a total of 14 categories, including the 2 Visa PayWave Awards as well as the popular Industry Choice Award. This year we have 3 new categories; Unattended; Vending & Parking, Contactless ID & Security and Gamechanger. Here is a little info about the 3 new Categories;

Unattended; Vending & Parking

In an increasingly convenience-focused market, we will look at the customer driven, practical innovations and how it creates new solutions. From interactive services, to multimedia output and online connectivity, today’s service oriented kiosks, ticketing and self-service applications may be one of the key drivers for contactless and mobile implementations.

Contactless ID & Security

Security is key when it comes to securing people’s identity. Contactless and mobile technology adds the convenience to ID applications, facilitating the use of government and or private sector issued schemes. Awarded to the most prolific secure ID system out there.

Gamechanger

Popular Kickstarter (or as we refer to them – ‘Gamechanger’) projects have included potato salad or the perfect butter knife. This new CMA category, however, is a bit more technical than that. This award is handed to the individual or company with the most convincing business idea using NFC and mobile. The kind of idea that could work on a crowd funding platform because it fills a void or catches people’s imagination.

All CMA entries are free and you can enter as many categories/solutions as you like. Although this does not apply to the Visa PayWave Awards as these categories are not open to nominations. If you are interested in nominating your company/partner/supplier, please complete this form by 31st December 2014, providing the name of the company you are nominating, the project/solution and the categories you would like to enter. We will then contact you to provide you with details of the submission process.

The competition is open to all contactless applications within the relevant sectors, regardless of geographic region or size of corporation. You can be a one-man-band or a multi-national company; a charitable organisation or major retailer; a system integrator or government department. Your project/solution doesn’t actually have to have been implemented, as long as you can provide strong evidence for a successful implementation and support. You can submit as many entries as you like: multiple projects under one category, the same project across different categories or different projects across different categories. But when it comes to making the full submissions, we will ask you to send in a separate document for each entry you make.

On the initial form all we need is your name, who you are nominating, which project and which categories you wish to enter. We will then send you details on how to submit the full nomination, which will involve answering 10 questions as fully as possible. You will also be able to include any links to web pages, videos or reports. Once we have received all the nominations, the Contactless Intelligence team selects four Finalists in each category. These Finalists are then judged by a panel of industry experts, the results are collated and a Winner is produced. The Industry Choice Award is different, as all Finalists are eligible and the votes are cast online by the industry as a whole. The Visa PayWave Awards are not open to nominations and the Winners are selected directly by Visa Europe. The CMAs are totally FREE OF CHARGE – to enter, become a Finalist or even become a Winner. The Winners will be announced at the CMA Dinner on 28th April 2015.

So take this opportunity to visit the nomination site and get nominating. It’s free, its fun and for the finalists and the winners - well worth it. We look forward to seeing your nominations. Good luck.

Until next week.

Steve Atkins
Contactless Intelligence

Contactless was almost in the dictionary - is it now mainstream?

Something strange has happened since last summer - contactless appears to have picked up steam. To the point where one could, if required, make a compelling argument that the technology has become mainstream. I’m not talking so much about mobile payments and the like - more the use of the contactless cards and the general implementation and acceptance of the technology itself.

After all, the word ‘contactless’ made the Oxford Dictionaries’ shortlist for international word of the year. Contactless was one of seven words to make the list but ultimately lost out on the top spot to ‘vape’, which refers to electronic cigarettes. Explaining its decision to recognise the word, Oxford Dictionaries says that there has been a corresponding rise in usage, with a peak in September when the technology was adopted across London’s transport network and Apple Pay was unveiled. For me, losing out to ‘vape’ doesn’t matter so much than the fact ‘contactless’ was even considered. That is evidence enough for me that the industry has moved on.

Not to be outdone on this word game, MasterCard too offered up it’s five buzzwords last week. Says Jennifer Stalzer of MasterCard on the companies blog, “We are geeking out over the fact that payments lingo is going mainstream. In our view, there are a variety of up-and-coming buzzwords to look out for in 2015 that are worthy of new or broadened definitions themselves (we’re looking at you, Oxford Dictionaries!). The words were tokenisation, chip card, digital wallet, hackathon, and biometrics. Chip card and biometrics - buzzwords in 2015? For IC veterans such ourselves, that’s nearly cringeworthy!

So what’s got everyone so giddy with excitement all of a sudden? Well, it could well be that a slew of reports were released last week that showed a clear upswing in the use of contactless payments. First, a Forrester report had the following to say; “The media frenzy around mobile payments — most recently Apple Pay — has reached fever pitch and led some industry spectators to conclude that a payments revolution is at hand. Not so. The adoption of mobile payments is an evolution — not a revolution — and the evolution is well underway. Although the landscape of mobile payment providers is in an ongoing state of flux, the ecosystem and mobile capabilities are maturing and consumer and merchant adoption is accelerating. Over the next five years, US mobile payments will grow to $142 billion”. Wow! That is a BIG number in a short timeframe. But the good news doesn’t seem to stop there.

Next came the news that Transport for London had released figures that show more than 12 million public transport journeys had been made using contactless payment cards and devices since TfL initiated contactless payments on their public transport services last September. Contactless already represents close to 8% of all pay-as-you-go journeys on the network, TfL said, with one million journeys being paid for with a contactless card in the first ten days after the launch. 

Following on from the TfL report, payment processing company Worldpay reported a 150% rise in volume over the past six months. The company says it handled 16.69 million contactless transaction in October compared to just 6.65 million in April this year. In total, Worldpay says that UK contactless transactions have passed £1billion with total transaction volumes using contactless increasing by 1591% in the past two years and that contactless transactions had increased by more than 150% in the last six months. According to the report, supermarkets dominate the ‘tap and go’ payments market, accounting for 44% of all contactless transactions and that fast food outlets have also taken to contactless in significant numbers, processing a quarter (24%) of all transactions.

Dave Hobday, Managing Director of Worldpay UK, commented, “Contactless is really a no-brainer for businesses that process a significant number of low-value transactions. It keeps customers happy by making their lives easy, and it helps staff make as many sales as possible during peak times. While this is still a relatively new market with just 18% of Brits claiming to possess a contactless card that they use regularly, it is phenomenal how quickly the technology is moving from nice to have to a must in sectors like hospitality, food, entertainment and retail. Any retailer still on the side-lines is going to end up a step behind their competitors and missing out on ‘tap and go’ trade.”

This information is backed up by a report that came out a few months last september from the UK Cards Association that reported the total number of retail purchases on cards rose by 0.4%, while it fell by 0.3% for all spending. Similarly, spending by retail value rose by 0.2% to £23.3 billion on cards, but fell by 0.6%t to £30.9 billion for all spending. These figures reinforce the trend that consumers are relying more and more on cards over cash – even in an environment where overall retail spending is slowing down. Richard Koch, head of policy at The UK Cards Association said, “The move from cash to card is becoming more and more evident. People are now using their card even for small purchases when they once would have used the change in their pockets. Contactless cards have helped to accelerate this change in behaviour as more consumers begin to see the benefits and simplicity of using contactless technology.”

I like to think that with the increasing acceptance of contactless technology in payments, certainly in the UK, we will start to see a adoption of contactless technology into other everyday applications. That’s when I would really accept that the technology has gone ‘mainstream’. Opinions, anyone?

Until next week.

Steve Atkins
Contactless Intelligence

From Black Friday to Christmas - How digital mobile stole the holiday shopping season

Like it or not, holiday shopping has become the one major obsession that everybody suffers from, running, approximately, from after Thanksgiving to Christmas Day and beyond, if we count the January sales. Like it or loath it - it’s become a ‘thing’. However, according to some sources and articles last week, it’s a ‘thing’ that the digital and mobile world are muscling in on in a big way. 

Business advisory firm Deloitte has released research that says 40% of physical shop sales will be "digitally influenced" this Christmas in the UK. The term "digitally influenced" means consumers will use some form of digital technology to inform or facilitate their purchase, and Deloitte says it will represent £15 billion of festive sales in 2014, almost three times the size of estimated online sales for December.  Overall sales in December are forecasted to rise 4% year-on-year to £42.4 billion – over £1.5 billion more than Christmas 2013 – while online sales are expected to account for 13% of total sales. Ian Geddes, head of retail at Deloitte, commented: "Growth in the influence of digital on physical retail has been driven by consumers' desire to access information on products and services, compare prices and increasingly pay and transact via digital devices. As investment in in-store digital technologies increases, such as mobile payments to facilitate faster, more convenient transactions and beacon technology to track shoppers in-store and deliver personalised messages and promotions, so will the digital influence on the physical environment. Just as physical retailers have benefited from the growth of click & collect, technology investment in-store will increase the number of shop visitors who buy and how much they spend, as well as help join the online and offline worlds."

This last long weekend period (Friday - Monday) has become the unofficial start to the annual Christmas spending rush, with a Centre of Retail Research survey, commissioned by Vouchercodes.co.uk owner RetailMeNot, predicting that Britons will spend £6,435 per second on Monday 1 December. Called 'Cyber Monday' and marking the first Monday after what will typically be consumers' final pay cheque before Christmas, the research said the UK will spend £556 million online over the course of the day as shoppers try and complete their digital orders well ahead of retailers' Christmas delivery cut-off dates.

Interesting figures but I have to believe that they are age-skewed towards younger people. A survey conducted by digital payments company Skrill reveals that more than one in ten 18-24 year old consumers (14%) now use digital wallets for every purchase they make online. However, a generational gap is forming with over a third (37%) of those aged 55 and above admitting to never having used a digital wallet to pay for goods and services online. Findings also indicate just 4% of people saying they have never bought a product or service online. Yet the influence of technology is not confined to shopping online. When 18-24 year old consumers shop on the high street, one in five (17%) now pay for goods or services in-store with a mobile device, contactless reader, text service or a sensor that determines their location via their phone. This compared to only 2% of people aged 55 and over.

Over in the US, there are similar findings. Stratos, Inc., creator of the Bluetooth Connected Card™ Platform, last week also announced results from its 2014 Holiday Mobile Payments Survey. The consumer survey found that nearly one out of three (30 percent) US smartphone owners plan to use mobile payment offerings such as Apple Pay or Google Wallet for shopping in stores this holiday shopping season. In fact, 17 percent of the smartphone users said they would spend more because of these new payment options. The report said smartphone users wanted to use mobile payments applications like Apple Pay and Google Wallet in the following locations for the holidays:

• 66% Department stores
• 48% Discount retailers/super stores
• 43% Coffee shops
• 42% Fast food
• 41% Toy stores
• 35% Drug stores
• 28% Hotel
• 28% Upscale restaurant
• 26% Bars
• 23% Boutiques

However, when it came to American smartphone users’ comfort level with the new technology, Stratos found less than 5 percent were “more comfortable” paying with their devices than using traditional payment cards such as credit or debit cards. A clear majority of smartphone users were uncertain which stores would actually accept this type of phone payment. When asked what appeals most about mobile payments for in-store shopping, the number one reason was “I don’t have to worry about getting my credit or debit cards stolen” at 37 percent. The second most important reason was “I can track my spending more easily electronically” at 32 percent, followed by 31 percent of smartphone users saying, “Phone pay is not appealing – I would rather pay by payment card.”

Ah, but would mobile phone payments be more appealing if the maximum transaction value was raised beyond the paltry £20 limit? The Logic Group announced last week that they have a new service available to those with NFC-enable phones that  lets users enter their PIN on their mobile device to confirm a high value transaction - above the £20 limit. The new high value contactless service requires a software update to merchants’ contactless POS terminals and is currently live in the stores of a UK carrier, a client of payments and loyalty specialist The Logic Group, which has gained accreditation from Visa for the service. Two other merchants are also in the process of rolling out the service ahead of wider availability in 2015.

Explaining that the solution used two-stage authentication to NFC World+. was Mark Prior-Egerton, solutions marketing manager at The Logic Group, “From the consumer perspective, there are two user experiences. The first user experience is where the customer goes up to the terminal and instead of presenting your card, you’re going to be presenting your mobile. So, you’ll say you want to do a contactless transaction, you’ll take the phone and go near to the reader and it’s almost like a two-tap interaction, and then you bring the phone back and it will identify that it’s over £20 and will request your PIN. So you’ll put your PIN into the phone and, of course, it will do something similar to how it works with the terminal at the moment; it will actually come up so you will be able to see it on the phone display. Once that comes up, you tap again and that’s when it confirms that it is your PIN with the issuer and goes off and the transaction’s complete. The other use story is the interaction in the queue. You’ve already identified that you’re going to be making a transaction of over £20 and you’ll input your PIN whilst you’re stood in the queue so it will speed up the process.”

And the British certainly have a lot of time on their hands while waiting in those queues. The average Brit spends over 18 hours a year queuing, with local shops, post offices and supermarkets the worst contributors to the UK ‘queuing culture’, according to stats released last week by Visa Contactless. The survey revealed that Londoners are worst off, with those in the capital averaging 9.11 minutes per week in queues – more than two minutes longer than those in the West Midlands who suffer the second longest queues.

Over 89% of the 2,000 consumers surveyed have recently left a store as a result of the length of the queue, with two thirds (65%) admitting they’ve visited a rival store straight after in order to get what they need. Almost half felt that the length of queues was down to slow payment options and people having to find the right cash rather than using quicker payment methods such as contactless. True to form, 78% of Brits smile sweetly or tell the cashier it’s not a problem when they get to a front of the long queue, despite feeling aggrieved at the time wasted.

“These stats clearly show that consumers are incredibly frustrated by long queues,” comments Kevin Jenkins, managing director UK & Ireland at Visa Europe. “I’d encourage those who have a contactless card (or perhaps a mobile wallet?) to use it for small purchases whenever they can to help reduce tedious queuing in store, particularly over the busy Christmas shopping period.” 

If things go well, with so many people doing their shopping digitally at home, perhaps even the Christmas queue will become a thing of the past. Considering the scenes we saw on the news of customers going nuts at these events, that has to be a good thing, right?

Until next week.

Steve Atkins
Contactless Intelligence

The mobile payment ‘inbetweeners’ - just a part of growing up?

Something has come to my attention this week. It’s the use of a particular payment product that bridges the gap between using multiple cards and the implementation of a fully digital mobile wallet. I know, why would you want one? But stay with me, because I don’t want to dismiss the idea out of hand. After all, if we dismissed some of these ‘new’ ideas then mobile payments or contactless transactions would never have gotten off the ground.

It has to be said, that these in-between steps have been launched in the US. And we know that, at the moment, with the change from magnetic stripe to EMV and mobile payments, there are a lot of alternative wallets looking to get launched in that specific region. So lets look at a couple – Coin and Plastc. First up is Coin, described as a smart card that can replace all of the credit cards and debit cards currently in your wallet. We covered Coin on Contactless Intelligence last year but they have suffered some delays in the shipping of the product so have only just reappeared in our headlights again.  Coin is a smart card that looks like a credit card but actually stores the swipe data from as many as eight cards at a time on one device. It receives data from a companion iPhone app and has a small E Ink screen that displays the last four digits of the selected card along with other information such as expiration dates.

A single button on the Coin is used to cycle through the card accounts stored on the device, and optional on-device security is achieved by setting a morse code-like tap pattern that can be set as a requirement before each use. Coin was supposed to be released this past summer after a wildly successful crowdfunding campaign, but the company ran into several problems that delayed its launch. Coin is now set to be released to the public sometime next year, and a small number of users have been given beta versions of the card to test in the meantime.

Journalist Zach Epstein, writing for BGR, field tested the smart card and had this to say, “My favorite thing about Coin so far is its simplicity. Apple Pay will be terrific a few years down the road, but right now it doesn’t work at the majority of retailers in America. For the time being, it’s unnatural and it’s a burden. To use Apple Pay, you have to first remember it exists and then actively seek out a person or a payment terminal to find out if it works at the store you’re in. You also have to learn an entirely new behaviour, and the payoff is diminished by the fact that it barely works anywhere. Coin is a card, and it works just about everywhere credit cards are accepted. There are no extra steps to take and no new behaviors to be learned.” Not surprising then that he gave the card A+ for function.

Similar in design to Coin, Plastc’s product is called the Plastc Card, also a digital credit card sized device with a magnetic strip and a touchscreen E Ink display. The card works with every payment system that supports standard credit cards, and it can store all of your current credit and debit cards on one device. Beyond payments, the Plastc Card’s E Ink display is also dynamic and large enough to display barcodes and QR codes, so it can also store all of your scannable loyalty cards. Wireless charging support helps ensure that it’s easy to refill the device’s 30-day battery, it ships with chip and PIN support, and it connects to your smartphone using Bluetooth Low Energy technology. Plastc says iPhones and Android smartphones will be supported at launch. Also included is Plastc Card’s re-writable NFC/RFID technology that lets Plastc Card mimic any RFID access cards. 

Chip and PIN support on the card and facial recognition security features in the companion app is also listed among Plastc’s main benefits, as is the companion app itself, which will also be a one-stop-shop that allows users to check account balances and perform other tasks without the need to open their banks’ apps. Plastc will launch in mid 2015 with seven partner banks including American Express, Bank of America, Chase, Charles Schwab, Citi, US Bank and Wells Fargo.

Both Coin and Plastc are very similar products and have managed to raise a lot of funding. Coin raised $15.5 million in Series A funding after a success crowd funding campaign and Plastc announced at the end of last month that they had raised $5.2 million in Plastc Card’s first week of preorders — given that the card retails at $155, this means the company has sold well over 33,000 units already. The Plastc Card has received a lot of interest in many countries, the company says, including the U.S., Canada, United Kingdom, Australia and Malaysia, suggesting that people are very much interested in smart payment solutions, even if that doesn’t necessarily mean using a smartphone for buying stuff in stores. “The growing worldwide demand for Plastc Card illustrates the real need people have to bridge the physical and digital wallet,” Plastc co-founder and COO Ryan Marquis said. “Our intuition was correct, based on our customers’ feedback and the preorders we have received so far.“

I am not totally convinced about these products myself, but am ready to admit that they may have some role to play along the road to actual mobile wallets - convenience, for one and also there is that ‘wow’ factor to it. While they may incorporate such technology as NFC and BLE, their main saving grace could be the fact that they are  impervious to proximity marketing and for some that may be a good thing. I am interested in finding out what our readers think of this form of ‘middle step’ towards mobile payments, so if you have an opinion, please get in touch.

Finally, a reminder - the time for nominations for the CMA 2015 will be drawing to a close soon. Entry is still free and we have a few new categories that you may find your company (or another company, partner, alliance or customer) can fit into. There is nothing to do at the moment other than to go to the nomination page and let us know that you are interested. The entry forms will be sent to you early in the New Year. So good luck and start nominating!

Until next week.

Steve Atkins
Contactless Intelligence

In 2015, security will start with the handset.

It’s that time again, when I find myself typing the last editorial post of the year. A candid review of the past twelve months springs to mind and this year has certainly had its real breakthroughs. Some of the true winners this year, in our opinion, were Transport of London and Apple. Their announcements really stood out and had real impact on the industry as a whole. 

Transport for London introduced contactless payments for London’s public transportation system and, in doing so, brought contactless payments into the mainstream. Apple finally released a phone that was both NFC enabled and supported their own mobile wallet - Apple Pay. This, for many, was an enormous step forward in bringing the public focus back to mobile payments and the idea of a mobile wallet. We shall have to wait and see what will happen when the Apple Watch is released early next year (and joins other similar available items in the market) and how wearables will start to factor into the equation. Ultimately though, it will mean a further reluctance on users behalf to part from their precious smartphone or, as is quickly becoming evident, their social/economical lifeline. The phone is becoming more than a mere phone.

So, with that sentiment in mind, the focus of the end-of-year editorial is not a “Best of 2014” but on what I think will be the most important subject for 2015. Namely the rise of the BYOD (Bring Your Own Device) in corporate environments and the need for further security in and around the smartphone. If we, as an industry, are driving users to load cards and wallets and whatever onto their phones, then we can hardly be surprised if those same individuals will both carry and expect to use their devices within a work environment. The German industry association BITKOM sees a growing trend in the use of personal devices at work: According to their BYOD survey, 43% of German ICT companies allow their employees to connect to the corporate network using their own devices. The motivation for such a choice is that 81% are hoping for a higher employee satisfaction, 74% expect more efficiency and about 40% want to be perceived as a modern employer. In this way the need for security both for the individual and for organisation in whose environment they operate will become of paramount importance.

It’s not just employers who are looking at the smartphone and their ubiquitous involvement in everyday lives. Governments, too, are looking to make their citizen documentation available within a smartphone environment. Only last week I saw a piece that claimed driving licenses were coming to an iPhone near you in 2015. Says Josh Smith on ‘Gotta be Mobile’, “We already carry credit cards on iPhone and Android devices with Apple Pay, Soft Card, Google Wallet and other secured services and the Iowa Department of Transportation is investigating the right way to deliver an e-driver’s license on iPhone and Android. This new driver’s license would be in addition to or even in place of a traditional plastic license. Combined with Apple Pay, the iPhone could actually serve as your only wallet for many trips. This is not just a backup driver’s license on your iPhone, but the real deal that you could use anywhere you need a state-issued ID. That includes traffic stops, air travel and even when you are carded at bars or liquor stores”. “We are really moving forward on this,”DOT Director Paul Trombino told the The Des Moines Register, adding, “The way things are going, we may be the first in the nation.” Iowa and many other states already allow drivers to show electronic proof of insurance, so adding Android and iPhone driver’s licenses are a logical next step. I should also use this moment to remind readers that next year we will be hosting the Silicon Trust’s Mobile ID Forum during the Contactless Intelligence Conference (29.04.2015) that will look further into such topics.

Late 2013 and early 2014 saw the introduction of Host Card Emulation (HCE) as a software/cloud alternative to an embedded secure element within the handset or SIM. This year we saw the spotlight fall upon Tokenization (again, pushed by Apple and backed by such heavyweights as Visa, MasterCard and American Express). The need for increased security while carrying out a payment transaction is one that is accepted and well understood but we may be about to move beyond that and to embrace the need for security in ALL online/offline interactions. Last week, Global Platform released an infographic (available below) that looks at the TEE (Trusted Execution Environment). As Global Platform says, “The richness of today’s connected devices such as smartphones, tablets, set-top boxes and televisions, is bringing new challenges to service providers wanting to protect their offering against hackers and malware attacks. At the same time, an increasing number of applications are hosting sensitive, personal and confidential information that could have significant consequences if compromised. Such applications require more protection than can be offered by software solutions alone. This is where the trusted execution environment (TEE) adds value.” The infographic looks at the TEE’s use cases to protect services in connected devices (premium content, mCommerce/mPayments and enterprise/government environments) and the market issues that are driving demand for this innovative technology.

But the question of securing the actual smartphone is one that will refuse to go away anytime soon. Particularly as the jury is still out on wether the solution should be entirely software or hardware-based, embedded or removable, or a mixture of all. There are a variety of security companies working in this area such as Certgate or Go-Trust and, of course, there is Silent Circle’s Blackphone, voted ‘One of the Top Ten Technology Breakthroughs of 2014’ by MIT Technology Review. Generally speaking, in 2014, the industry started to get organised in terms of security standardisation: the FIDO alliance is growing from strength to strength, the GSMA is getting involved… So 2015, in our opinion, will see a lot of movement and roll-outs in the area of data protection, privacy, security vs. convenience, two-factor authentication, to name a few. If implementors, from retail to governments, encourage users to engage in handset-based digital interactions such as payment, loyalty, marketing, transport, ID verification and eGovernment services etc., the personal handset WILL become an increasingly attractive target for hackers. I do not think that I am being unduly negative when I say that I expect to hear about the first smartphone operating system hack next year. If we wish the future to be mobile then we should take steps to ensure that it is also safe and secure. 

So there you have it; a topic that I expect to delve further into next year. This is the last Contactless Intelligence editorial of 2014 and while I am aware that there is always next Monday, I am inclined to think that very few of you will bother reading this newsfeed in the last run up to Christmas. The next Newsfeed will be on Monday the 12th January 2015. So, until then, all that remains for me to do is to wish all our partners, contributors and, of course, our readers a very Merry Christmas and a Happy and Prosperous New Year! 

Until next year.
 

Steve Atkins

Contactless Intelligence

CES2015: We were promised personal jetpacks, we got… smart belts.

First of all, a belated Happy New Year to our readers and subscribers. This time last year, I started this editorial saying that the mood in the NFC and contactless industry seemed subdued. I am very happy to say that this year I feel the mood is one of optimism - almost giddy with possibilities. The future is here to be embraced. Oh, and to prove how cool the next 12 months are going to be - there is always the CES in Las Vegas.

For those of you old enough to have seen ‘Back to the Future II’ (when it was released in the cinema - not on DVD), you may remember that Marty McFly travels into the future to the year 2015 and is surrounded by flying cars and hover boards. I am sure that NFC and contactless technology were also prevalent in this envisaged scenario. Lucky for us that CES this year included products that worked with NFC technology but not in personal jetpacks, working hover boards and flying cars (as we were promised), but in washing machines, luggage tags and smart belts. The future is a little more humdrum than I expected.

Yes, you read correctly, a ‘smart belt’ – called ‘Belty’. There is no way that I can do justice to this product so I will let the Guardian’s columnist Charlie Booker do it for me (cue sneering sarcasm): “This week it’s the Consumer Electronics Show in Las Vegas, an annual opportunity for tech companies to unveil their latest gizmos during January’s traditional slow news week, thereby picking up precious coverage that might otherwise be spent detailing something – anything – more important than an egg whisk with a USB port in the side. At the time of writing, the show is yet to kick off, although some of the offerings have already been unveiled – such as “Belty”, the world’s first “smart belt”, which monitors your waistline and tells you when it’s time to lose weight, just like a mirror or a close friend might. More excitingly, it adjusts to your girth (again, like a close friend might), and will tighten or loosen itself according to your current level of blubber. No word yet on whether it’s possible to pop a Belty round your neck and order it to squeeze you into the afterlife, but there’s no reason they can’t incorporate that feature in Belty 2.0, except maybe on basic ethical, moral and humanitarian grounds. According to Bertrand Duplat, whose company manufactures the Belty, “the belt experience hasn’t changed in centuries”, which is a) true but b) wasn’t formerly a problem worth solving, and also c) how does “doing up a belt” qualify as an “experience” anyway?”

I told you there would be sneering sarcasm, didn’t I?

There were, however, a couple of other decent NFC-based idea out there (I am disregarding the almost sentient-like washing machines that were unveiled  - it sometimes feels that NFC has almost become more ubiquitous and pervasive in them than in smartphones. Probably because Apple doesn’t do a washing machine). Leaving aside payment-based solutions, the two solutions we singled out were security locking devices; for the house and for your luggage.

First was a solution demonstrated by those well-know lock people – Yale. Yale Locks & Hardware will now offer homeowners a new level of convenience and security with the introduction of the first NFC residential door lock designed for the U.S. market, operated with the tap of a smartphone app. The new Yale Real Living™ NFC Deadbolt replaces conventional keys with digital keys accessed through the Yale Digital Keys app for NFC-equipped Android mobile devices. 

The Yale app allows homeowners to unlock doors, send keys to others, control when others have access, get a message when someone enters, and revoke a digital key at any time. Homeowners can also unlock the deadbolt using its capacitive touchscreen and a four- to eight-digit code, which makes the new deadbolt the only key free digital lock that provides two electronic options for unlocking. or enhanced security, the lock and app are powered by HID Global’s Seos® technology, a multi-platform ecosystem for issuing, delivering and revoking digital keys across a broad range of smart devices.

“Our NFC lock and Digital Keys app deliver a new level of security, convenience and versatility to homeowners, and most importantly, keeps it simple – all that’s needed is the lock and a phone to manage access to your home,” said Jason Williams, General Manager, Yale Residential. “And Seos reassures homeowners that their homes are secured by robust, proven technology.”

The Yale Real Living Digital Keys app displays a patent-pending digital key ring that’s swiped to easily scan keys. Set colors and upload photos to match keys and locks with people and lock locations. Share or revoke keys any time, manage when each user can access the lock, and receive notifications when a key is accepted or used. For convenience, the same digital key can be used to access multiple locks on one or more properties, and there’s no limit on the number of digital key users.

Following this physical security trend is DIGIPAS USA, with their eGeeTouch® Smart Luggage Lock – an NFC-enabled luggage lock that can be unlocked with a tap of an NFC device or a pre-programmed NFC tag. It was named as a 2015 CES Innovation Awards Honoree under the ‘Tech for Better World’ category for its outstanding innovation, engineering design and positive impact in enhancing the quality of life for the increasingly mobile worldwide travellers. The patented eGeeTouch® Smart Luggage Lock is embedded with state-of-art proximity access security technology effectively resolves the foregoing disadvantages; requiring no key, no digit-wheel dials and no code-memorizing to safeguard personal belongings in a luggage/suitcase unmatched by any conventional lock. DIGIPAS say that these radically simplified one-touch function and enhanced security features offer differentiated value propositions of a truly hassle-free user experience with unique selling point. “Unlocking a luggage is now a breeze providing incredible convenience and peace of mind to frequent travellers, family as well as senior citizens’ holiday makers”, says the company. The device can be unlocked using an NFC tag or an NFC mobile device, as well as a mechanical backup key. A built-in USB port allows users to power the lock from an external source if the two AAA batteries inside it — expected to last for at least three years — run flat.

Perhaps the future for personal NFC is more connected to a feeling of security for your person or belongings than an experience on the high street? Either way, anything must be better than a smart belt – although a personal jetpack WOULD be nice.

Nominations for the Contactless & Mobile Awards have continued unabated over the holiday season. We have already gone past the number of entries that we had at this time last year and so we are set to have our biggest award show ever! There is still a couple of weeks to go before deadline so anyone interested in entering should do so now, by visiting the nomination page and letting us know. I really think that will be our biggest and best CMA event ever!

Don't miss it. Make a note of the date, 28th April, and get those nominations in. It's free to enter so there really should be no excuse not to.

Until next week.

Steve Atkins

Contactless Intelligence

Rumour has it… Softcard is in trouble - “glassless” Google to the rescue?

Can you spare a little sympathy for the mobile wallet joint venture Softcard? Either a small show of sympathy or a dose of ‘schadenfreude’ (the please derived from the misfortune of others)? They just don’t seem to be getting it right, no matter what they do. Judging by last week’s news of layoffs, it could be that the partners are finally losing patience with the venture. Although, there may be the possibility of a helping hand from Google if some rumours are to be believed.

To re-cap; the payment technology consortium backed by Verizon Wireless, AT&T and T-Mobile has reported that it will have to lay off 60 employees in a ‘restructuring action’. This has fuelled rumours that the MNO backers have decided to stop putting more funds into the joint venture. The layoffs affected between 12 percent and 30 percent of its employees. Finextra has reported that the companies workforce is in the hundreds but this is a bit of an educated guess as the company never released actual employee figures. This percentage was calculated by going through LinkedIN to find how many people put down Softcard as their place of employment.

“Softcard is taking steps to reduce costs and strengthen its business,” the company said in a statement. “This includes simplifying the company’s organizational structure and consolidating all operations into its Dallas and New York offices, which involves layoffs across the company. We believe these efficiencies will best position Softcard in the marketplace while maintaining focus on serving our market.” 

Softcard has had its fair share of misfortune, even having to change its name from Isis to distance itself from the muslim jihadist terrorist group of the same name. The venture created an app that lets shoppers pay in stores using their phones instead of a credit card or cash. It transmits payments using NFC in the same way that Apple Pay does. Apple’s entrance into the market meant that Softcard is locked out of Apple phones. But at a payments conference in November, Softcard’s CEO, Mike Abbott tried to frame this as a positive for his company and mobile payments on the whole. “We faced an industry that’s been fragmented, confused and riddled with inaction,” he said. “We can all now bet on NFC.”

However, despite reporting that the app had been downloaded more than four million times and using a muppet to educate users about the benefits of using Softcard, it still faces stiff competition from the likes of Apple Pay, Google Wallet, MCX, PayPal and a range of mobile wallet start-ups. At the start of last week it looked like this could be the beginning of the end for the mobile wallet joint venture.

Then news leaked out this weekend that search giant Google had made an approach to Softcard and stated their interest in buying the company. The price may be under $100 million, according to Techcrunch sources. Says Techcrunch, “That is either a huge bargain or a testament to Softcard’s difficulties as an enterprise: sources tell us that AT&T, Verizon and T-Mobile — the three carriers that started Isis in 2010 — have collectively invested hundreds of millions of dollars in the joint venture. Google (also) declined to comment. “We don’t have a comment, background, deep background, off the record steer, nod, wink or any other verbal or non-verbal response to these sorts of rumors,” the company said in an emailed statement.” Another Techcrunch source says that at one point the company’s burn rate was around half a million dollars per day, or around $15 million per month.

Google is not the only company interested in Softcard. According to other sources, PayPal and Microsoft have also expressed in the company. However, rumour has it that Google are specifically interested in Softcard’s patents, or more specifically what appear to be applications for patents. The company has just over 120 in all. As you can imagine, moral is supposed to be pretty low in the company at the moment. Ed Busby, the ex-COO of Softcard has gone on record saying, “It’s unfortunate that they’ve chosen now as a time to scale back. Externally, for the first time since I’ve been in this industry, the signs are pointing positively for mobile payments. I just think everyone realised that this would be a longer haul than people thought going into it, and as a result they aren’t willing to make the types of investment that would be required to sustain this.”

Even Google has a history of misreading markets that need a long haul approach to them. The wearable markets may be taking off (at least if you believe the forecasts) but Google has decided to discontinue selling their Google Glass headsets. It was reported last Thursday that the company is planning to stop the sale of the £1,000 smart glasses next week, just months after launching in the UK. That may be true but let’s be real: Even from the early days people loved to hate Google Glass. There was even a new word ‘Glassholes’ that was coined to describe those who went around wearing the headsets.

The company will also discontinue its ‘Glass Explorer' programme. Now that really WAS a stroke of marketing genius. This was a club where, for small price of  $1500, if you were chosen, you could own your very own Glass. Google got people to pay for the privilege of beta testing their new wearable technology and reporting back to the company with their findings. And people did! How smart an idea was that from Google?

However, Google insisted it is not abandoning the project altogether. The company will continue to invest in its Glass at Work offering for enterprise developers and companies, and plans to release a new version of its wearable device "when it's ready".

The Google Glass team, led by Ivy Ross, will be moved out of the Google X division, where Google projects are incubated, and become its own entity within Google.

Analysts and industry commentators said the move was a backward step. Nicky Danino, senior lecturer in computing at the University of Central Lancashire, said: "It’s patently obvious that Google released this product before it should have. People spent a lot of money to get hold of the ‘beta’ version, but when they actually did, there’s wasn't much they can do with it. Personally I think the biggest disappointment is the lack of apps for it. In my opinion, Google should have kept this project under wraps for longer and waited to release when it was more reliable, and had other uses."

My point is that some of these new markets are long haul rides and so many companies these days seem to expect short term returns that seem out of phase from what should be genuine expectations. After seeming to miss the bus a few times and initial delays, Softcard may have finally had a half decent wallet and (apart from ‘Tappy’ IMHO) showed some decent marketing acumen by focusing on specific special offers for wallet users but ultimately they needed to account for that with revenue generation. Which can be slow. Or you could just be ahead of the curve with a product that only the early, early adopters will embrace. Either way, miss your correct window and the market will punish you for it.

Or create a really nasty name to call the users of your product. Either way; #fail.

Until next week.

Steve Atkins

Contactless Intelligence

Smart ticketing remains gateway for multi-application mobile solutions

Last week’s OMNICARD in Berlin reminded us of just how important the public transportation segment remains when looking at the take up of multi application elements within a mobile wallet scenario. This particular conference, which has been running for over 20 years and has its roots in the secure ID world, looks across a whole range of security relevant market segments and at the larger picture of implementing citizen-based scenarios and interdependent systems.

Samsung re-iterated the idea of an interdependent system throughout their demonstrations and presentations by highlighting the benefits of the CIPURSE standard, which is being championed through the OSPT Alliance. Samsung, with their multi-application demo, was keen to remind everyone that the use of the SIM card in a mobile wallet scenario is still a very viable option. Their session, joined by T-Mobile, E Money Group and G&D tackled the SIM topic head on: “In 2014, contactless payment became a feature on mobile phones and the industry has been taken by surprise by new concepts which work without the security of a SIM card. The embedded secure element has found its way back into the world of NFC and for the time being, the SIM card seems to have fallen behind in the NFC payment function race. Or has it? Only NFC in collaboration with the SIM card can offer the ideal interface for secure, fast and easy processing of NFC-based payments and NFC-based valued added services (loyalty points, coupons) with transactions which can be conducted both online and offline.” The use of apps loaded on the SIM card by third parties and accessed through a single wallet system can still be an interesting value proposition - no matter how much spotlight has been stolen by those companies only pushing a simple payment solution scenario.

I do not think I am alone when I say that I believe it will be through public transportation projects that the foundation for mobile wallet multi-applications will bear fruit. After all, public transport contracts are usually led by central or regional governments and these government-led initiatives tend to result in a bedrock that others can build upon. And there are a lot of new public transport initiatives that appear to be gaining steam. Only last week we reported that Indra has signed a €266M contract to implement the entire ticketing and access control technology in the new public transportation system currently under construction in the capital of Saudi Arabia, Riyadh. In Riyadh, Indra will develop the entire advanced pricing management system for the city’s public transportation network. 

This includes a ticketing control center with information from the various systems, financial management software, the operator clearing house, and other value-added systems for commercial management. Indra will provide onboard ticket sale and validation systems for the entire public bus network, which will include around 800 to 1,000 vehicles; and the sale and access control systems for more than 80 stations in six subway lines (this network will total 175 kilometers and serve about six million users). Thanks to contactless technology, users will be able to access the entire public transportation system using only one card, which they can validate quickly and easily by placing it near the reader. This solution will also include one-way tickets with a bar code (similar to the tickets for the high-speed service in Spain) and a cell phone payment application that uses NFC (Near Field Communication). This will no doubt be the gateway for other companies to add on other applications into the system and ensure that they have a ready-made, and educated, user base.

Riyadh is not the only city looking for a smart ticketing solution that looks to contactless or mobile NFC for implementation. New York City’s Metro Transit Authority (MTA) is in discussions to replace its MetroCard payment system with a new US$450m system set to include support for NFC mobile payments and contactless cards. The plan calls for passengers to be able to pay by phone on buses and on the subway by 2020, and at vending machines in 2022.

If there has been one category that I am told has received an unprecedented amount of entries in this year’s Contactless and Mobile Awards, it would be Transportation. Already a popular category, this year we have doubled the amount of entries and if the amount of coverage that I see concerning the topic is anything to go by – then rightly so. After all, a smart ticketing solution (contactless card or mobile-based) for a public transportation company can have a major impact not just upon that corporation but the surrounding local economy and even the expanded region in general.

I believe that smart ticketing schemes have the potential to make individual cities’ transport networks simpler and more accessible, increase the number and length of journeys made by individuals, and boost efficiency and revenues for operators. Manchester and Sheffield’s respective devolution deals, which were agreed in 2014, include the opportunity to introduce smart ticketing systems, and similar schemes could be introduced as more cities agree new devolved powers. However, to be truly transformational for the wider country region as well as individual city regions, cities’ smart ticketing schemes should be designed to integrate with those of neighbouring cities in the future

Nathan Marsh, an infrastructure specialist who has helped to plan and deliver smart ticketing projects in major UK cities such as Manchester and Birmingham says “London saw a significant increase in distances travelled on public transport between 2000 and 2010, which was partly induced by the introduction of the Oyster card in 2003. Equally, the rapid take up of contactless Europay, MasterCard and Visa (EMV) systems on bus and now underground rail networks shows that customers want a single, consistent experience across all modes of transport and boundaries. A similar initiative not just in individual cities but right across the entire North of England, coupled with the major transport infrastructure investment we’re likely to see over the coming years, could have a comparable impact – helping to connect an increasingly mobile workforce with businesses right across the North and contributing to economic growth.”

With time, these public transportation systems  - if interlinked and following the same standard – could pave the way for countrywide adoption of mobile value added apps as well as ticketing and payment. After that happens, pilot programs that some cities are working through at the moment (think Norwich with their LOKA app) make a lot of sense and the idea of a connected digital high-street, city to city, could also one day be a reality. 

Until next week.

Steve Atkins

Contactless Intelligence

2015 is set to be the “Year of Apple Pay” - according to Apple...           

You must have been vacationing on Mars last week to not have heard how super-duper Apple has been, having the most profitable quarter of any company – ever! In a conference call to discuss the fiscal quarter, Apple CEO, Tim Cook, came off close to sounding like an Oscar winner with a downplayed, ‘Aw, shucks’ acceptance speech. When he talked about their Apple Pay solution, you would have thought that a) they invented mobile payments or b) everyone (including merchants) were just waiting for Apple to arrive before diving into a new payment experience. 

Whatever. Well done them, I guess. Other folks though, have a couple more problems with Apple beyond their announced results… but we’ll get to that later.

Cook said that around $2 out of every $3 spent using contactless payments across Visa, MasterCard, and American Express are being made with Apple Pay since the service launched last October. That’s more than two-thirds of Visa, MasterCard and American Express contactless payments by value across the US. Cook revealed Apple made the largest ever quarterly profit by a public company of US$18bn and said Apple Pay was “Off to a very strong start and the feedback that we are getting from both individuals and institutions is extremely positive”. By the end of Apple Pay's first four months, it had enlisted 750 banks and credit unions. By comparison, Google Wallet had only one bank on board during its first year; to get any more participants, Google had to drastically lower its requirements for participation.

The impressive start for Apple Pay was tied to sales of 74.5 million new iPhone 6 and iPhone 6 Plus devices. Sales of the iPhone 6 Plus appeared to help boost profits and increase the iPhone’s gross profit margin, although Cook did not give a detailed breakdown of the iPhone sales recorded during the three months to the end of December 2014. Most analysts had predicted about 66 million units prior to the earnings call; the new iPhone models are the only ones supporting Apple Pay contactless payments, and they do not support Softcard or Google Wallet at the POS. That means anyone who traded an Android or Windows Phone handset for a new iPhone has most probably ditched their Google Wallet or Softcard mobile payment solution. "We see that we are appealing to new customers, with those switching from other phones to the new iPhones," Cook said. The growth was "absolutely stunning" in various global markets as well, he added.

Apple Pay also enjoys the support of merchants, Cook noted. One retailer, Panera Bread, reported that Apple Pay accounts for 80% of the mobile payment transactions it accepted, Cook added. Since using Apple Pay, Whole Foods Market has seen mobile payment activity increase by more than 400%, Cook said. It also looks as though Apple is going to heavily target the unattended POS market too. “Just today, USA Technologies announced they made Apple Pay available at about 200,000 places where everyday payments happen, including vending machines and businesses, airports and schools, colleges, universities, laundromats, and parking meters and payment kiosks in lots across the country. Point-of-sale suppliers tell us they are seeing unprecedented demand from merchants, and all of our partners and customers simply love this new service. With all this momentum in the early days, we are more convinced than ever that 2015 will be the year of Apple Pay.”

“Our customers are excited to accept Apple Pay at the self-serve locations they operate,” said Stephen P. Herbert, Chairman and Chief Executive Officer of USA Technologies. “We anticipate that the millions of consumers who frequent these locations will appreciate the convenience and security of using Apple Pay for their everyday purchases, and we believe that Apple Pay will help to drive additional sales for our customers. USA Technologies has always sought to provide convenience, security and an easy way to pay for consumers who are less and less likely to carry cash. We recognized early on the potential for mobile payment, and promoted the technology to ensure our customers were ready for this shift to occur.”

“In terms of how it evolves, I think we’re in the first inning on it, we haven’t even completed the first inning yet,” Cook continued. “There’s tons of things on our roadmap of adding functionality to it. We’re just in the US right now and so there’s tons of countries to go to and there is not a day that goes by that I don’t get notes from many businesses outside the US wanting Apple Pay. And, of course, we still have a lot of merchants left in the US but I have to tell you that, given that we launched in October, I’m actually unbelievably shocked, positively shocked, at how many merchants were able to implement Apple Pay in the heart of their holiday season. Generally, most people sort of lock down and don’t do very much but we were able to get this in a lot of different merchants and I give them a lot of credit for that. I think we’re just on the front end, but I think this is the year of Apple Pay.”

Yeah, he mentioned the whole ‘year of Apple Pay’ a lot on the call.

Apple plans to further develop its mobile wallet and expand it into other markets, Cook said. The company has "some heavy lifting to reach scale" in other countries because of the different telcos and banks involved, he added. Apple Pay's contactless payment technology at the point of sale and in-app payment capabilities are equally important, Cook added. "Geographic region will determine which one is bigger than the other," he said. 

Development of the Apple Watch meanwhile was “right on schedule and we expect to begin shipping in April,” said Cook adding that the Apple Watch will operate as a payments wearable. "Expectations are very high on the Apple Watch. The number of developers writing apps for it is impressive. Developers are hard at work on apps, notifications and information summaries that we call Glances, all designed specifically for the watch’s user interface. The creativity and software innovation going on around Apple Watch is incredibly exciting and we can’t wait for our customers to experience them when Apple Watch becomes available.” Does this mean that 2015 will be the year of the Apple wearable too?

Not everyone was in a jolly mood though, last week. I did catch a piece concerning the reason why the Nexus 6 has no fingerprint sensor. It’s all Apple’s fault, according to Former Motorola CEO Dennis Woodside. Dennis Woodside was reported in an interview with the Telegraph’s Matt Warman, that Motorola - who co-developed the Nexus 6 with Google - had plans to put a fingerprint sensor on the back of the phone but that the idea was ultimately scuttled after Apple acquired fingerprint sensor maker AuthenTec in 2012. "The secret behind that is that it was supposed to be fingerprint recognition, and Apple bought the best supplier," Woodside said referring to the round groove on the back of the Nexus 6 that currently houses the Motorola logo. "So the second-best supplier was the only one available to everyone else in the industry and they weren't there yet." 

Still, the groove on the back of the handset caused some to question what Motorola might have been thinking when it added the feature to the backplate. Woodside, who served as Motorola's chief executive when it was planning and building the smartphone, has finally answered that question. If the Nexus 6 had come with a fingerprint sensor, it wouldn't have been the first Android device to have one. Products such as the HTC One Max and the Samsung Galaxy S5 have come with fingerprint sensors. However, they were engineered by companies other than AuthenTec and have been roundly criticized for being unreliable - a complaint echoed by Woodside in his comments to the Telegraph. Motorola's Atrix 4G smartphone had a fingerprint reader from AuthenTec, but it was an earlier version that proved inconsistent. So now you know - it’s Apple’s fault.

There was also another sour note last week from Blackberry in an attempt to get help from the US government. According to BlackBerry CEO John Chen, “All wireless broadband customers must have the ability to access any lawful applications and content they choose, and applications/content providers must be prohibited from discriminating based on the customer’s mobile operating system.” Translation: Blackberry wants the US government to make make Blackberry apps mandatory. To make sure that the US Congress understand, Chen has written to them arguing that since Blackberry made its messenger service available to iPhone users—which he refers to as “neutrality”—the same consideration should be reciprocated. But he’s not appealing to Apple CEO Tim Cook here, he’s speaking directly to lawmakers. You can read Chen’s post on the Blackberry blog. 

And it’s not just those pesky app developers themselves - it is also the service providers who use these apps (such as Netflix). “Many other applications providers similarly offer service only to iPhone and Android users. This dynamic has created a two-tiered wireless broadband ecosystem, in which iPhone and Android users are able to access far more content and applications than customers using devices running other operating systems. These are precisely the sort of discriminatory practices that neutrality advocates have criticized at the carrier level. Therefore, neutrality must be mandated at the application and content layer if we truly want a free, open and non-discriminatory internet.”

Yep. It’s not a joke. Chen wants Blackberry apps to be mandated by law. Any developer thinking about releasing content on iOS or Android would be forced by the government to develop for Blackberry and, presumably, Windows Phone and every other platform, no matter how small. It’s not fair that developers are not writing enough apps for Blackberry. Damn that Google. Damn that Apple. 

But hang on a minute, it may be Apple’s year (according to Apple) but didn't Blackberry once have an entire decade all to itself?

Until next week.

Steve Atkins

Contactless Intelligence

Will MWC 2015 be full of wearables and wallets?

Traditionally, the next three weeks are rife with rumour and speculation as the industry gears up for the annual pilgrimage to Barcelona to worship at the altar of all that is mobile - the Mobile World Congress. This year is following the traditional pattern; only the subject matter has changed. Instead of interest around new phones and add-on apps, this year it's wearables and wallets that have caught the industry's imagination.

The Swatch Group made an announcement last week during an interview between CEO Nick Hayek and Bloomsberg concerning their move into the smart watch market. A bit of an about-face for the group; last year Hayek stated that Swatch would not be participating in a race to be first in developing the products because of consumer resistance. “You won’t see us participating in a race of who’s going to introduce what first,” Hayek said at the time. “There’s still big resistance from the consumer, so we’re going to wait.” Hayek has been skeptical about the smartwatch’s potential. Two years ago, he said that he didn’t think the smartwatch would be a “revolution” for the industry. He has repeatedly voiced concern that watch screens are too small for communicating and that such devices might need too much charging.

He also once said Swatch’s luxury brands such as Blancpain are smart watches because “they make you look smart.” 

How quickly things change.

Now, in a remarkable change of strategy, the Swatch Group is planning to bring a smartwatch to market within the next three months, potentially as a stand against the debut of the Apple Watch in that same timeframe. The Swatch smartwatch will be NFC-enabled and won’t have to be charged, CEO Nick Hayek said in an interview. The Swatch smartwatch will also let consumers make mobile payments and work with Windows and Android software, he said.

Hayek is ready to go head-to-head with Apple, which has scheduled its smartwatch introduction for April. The market for smartwatches will probably reach about $US10 billion in 2018, Citigroup analysts forecasted last year, with half of the market coming from traditional watch wearers switching to the devices. 

We will cover more MWC unveiled wearables as, and when, they happen. I don’t believe Swatch will be the only traditional watch company competing in this new market.

Talking of going head-to-head with Apple, there is also a heavy rumour that Samsung will be unveiling their wallet at MWC next month – the company has already announced it will release its next flagship Galaxy S6 during the show. Serious rumors from different sources indicate that the Korean electronics giant will also introduce its version of a global mobile payment system, which has already been given the moniker "Samsung Pay." The company needs to be fairly bold to pull this off - especially doing it so closely behind the Apple Pay release and the ensuing increase in number of Apple phones sold. While the revenue that Apple is collecting from fees associated with Apple Pay is still small, the “cool factor” of the technology has helped the Cupertino company to position the iPhone 6 as the best selling smartphone ever released. I would argue that Apple Pay has played a significant role in the success of the new iPhone.

Two years ago, during the Mobile World Congress, Samsung and  Visa Europe announced an agreement to develop a NFC payment system that could be incorporated into Samsung’s upcoming Galaxy smartphones. A similar agreement was also reached between Samsung and Mastercard three months later, in May 2013. It was expected that Samsung was going to introduce such a system last year with the Galaxy S5. But the complicated mobile payments market, the resistance of the carriers, the complexity of the provision of the payment systems, plus security concerns, have stopped Samsung and other OEMs from introducing an independent, easy to use, NFC tap-and-pay service.

NXP could certainly help Samsung out here. The introduction of NXP’s PN66T, a module combining a highly secure Smart MX2 element (P61), NFC, operating system and trust provisioning, can change all that.  The PN66T is Europay, MasterCard, and Visa (EMVCo) certified, and also supports American Express ExpressPay, thus fully covering the three big credit card companies, ensuring the compatibility and interoperability with existing and future payment solutions.

It has been rumored that Samsung will incorporate the PN66T into the Galaxy S6 and the biggest opportunity for Samsung now could be the European market. Europe is not yet serviced by Apple Pay, but has the highest number of contactless cards and payment terminals in the world. Because EMV has been in use for more than 10 years in Europe the infrastructure is ready for NFC mobile payments. As of last September, there were 1.5m contactless terminals across Europe, six times more than in the US, and a fifth of all credit cards in circulation were contactless.

Samsung will have to resist the strong pressure from MNO's to control the payments ecosystem. For several years they have been trying to launch mobile payment systems together with financial institutions, using their SIM cards as security modules. In the past, pressure from the MNO'S have forced several Android manufacturers to drop or disable NFC secure modules on their phones, so the MNO's could deploy NFC services such as payments or transit, on their SIM cards. This is great for them but very limiting for consumers and providers. Some observers have argued that for Samsung to be successful with their “Samsung Pay” they will need a system that users can trust, that banks are eager to sign onto, and that sidelines MNOs from the process (just like Apple did). Otherwise it will be another “pilot” without real customer acceptance. The first target markets for Samsung could indeed be Europe and Asia - perhaps to head off Apple Pay before it reaches these shores. The take-up may be faster than in the US as the market there struggles to come to terms not just with mobile payments but EMV payment in general. For all the noise generated by Apple Pay, the rewards could be far greater elsewhere in the world.

Concerning mobile and digital payments, MasterCard CEO Ajay Banga speaking to analysts during MasterCard’s Q4 results, said NFC was still a ‘slow burn’ despite the buzz around Apple Pay. “You saw Apply Pay talk about their mobile payment growth, and at the end of the day, yes, they’ve done a great job and it’s excited the market, but it’s still a very small percentage of what the total number of transactions are,” he said. A few weeks ago CEO Tim Cook said Apple Pay accounts for more than $2 out of $3 spent on contactless payments across the three leading credit cards in the US. But, as Banga points out, this is still a relatively small figure. So it would appear that there is still everything to play for.

Google certainly think so. The search company has launched a new payment service in the United Kingdom. Those using Gmail will be able to send money to their friends and family via email using this service. The service was launched in the United States last year and has enjoyed modest success, utilizing the Google Wallet infrastructure. Google Wallet is the company’s mobile payments service, which has managed to gain some momentum among consumers that are interested in mobile commerce. Google users will need a Wallet account in order to transfer money over email. Those receiving funds in this way will not have to have to Gmail account, but they will need to create a Google Wallet account before they can access these funds. Google Wallet must be linked with a bank account in order to work and functions in a way that is similar to traditional payment cards. The service is available only to Gmail users that are 18 years old or older.

The new service is currently only available for the desktop version of Gmail. Google Wallet, however, is available for mobile devices and can be used to send and receive money. Google’s new service may provide it a stronger foothold in the UK mobile commerce space, especially as Apple prepares to launch its own mobile payments platform in the country in the near future.

Could there be a wave of wallets and digital commerce from the US/Asia that is about to arrive in Europe? It would be exciting to think so. I expect product and solutions unveiled at this year’s MWC to have more immediate impact in Europe than in previous years.

About time, too.

Until next week.

Steve Atkins

Contactless Intelligence

Charities and disaster relief - prime candidates for contactless technology?

The UK, in my opinion, is a very charitable nation. Its a country known for church bazaars, jumble sales and all sorts of sponsored craziness: swimming across ice-cold lakes, cycling across the country, triathlons in the middle of winter. If it involves dressing up in something outrageous, making a tit of yourself and getting people to sponsor you for doing it - the Brits, as a nation, are there. After all, we brought the whole world Red Nose Day. You’re welcome.

Some of our readers who are not UK-based are probably scratching their heads and wondering what on earth I am wittering on about, so let me break it down for you: I am talking about the long tradition of charity in the UK; the giving of money for charitable organisations by the man on the street. Back when I was at University doing my Marketing degree (yes, I have a real qualifications in Marketing!) we were told that the the porn industry was the most innovative industry on the planet (the worlds oldest profession and all that). This was an industry that embraced change and innovation. The second most innovative industry, we were told, was the charity industry. After all, this is an industry that gets you to give money to feel good about yourself - all because you have helped others.

Is it any wonder that this industry (after transportation and ticketing) is embracing contactless and mobile payments so much? 

Despite the recession, Britons still top the developed world in giving money to charity, with more than half of adults regularly giving to good causes. While cash donations are still the most common way of giving, direct debits are a growing market. In 2011/12, direct debit donations  accounted for one-third of the £9.3 billion donated. This is in the face of the news that a report in 2012 found that the fundraising organisations had become unwelcome in almost three out of four of the towns in the country and there have been moves to get MPs to force the workers into revealing how much of a cut they take from their activities.  

I have seen a steady increase in stories and news releases over the past 18 months that cover contactless payments being used to collect charitable donations. Gone are the days of some Kagool-clad individual (I know, I’m stereotyping - that, and showing my age - do they wear fleeces now?) in the street, rattling a tin or a small bucket at you (these charity collection representatives are unkindly known as ‘chuggers’). Today you can simply tap and pay with a contactless card or a use a form of mobile payments to make a donation. Over the past couple of years we have covered stories such as Royal British Legion using NFC for Poppy Appeal, Wristbands for premature babies ‘Bliss’ and Breast cancer charity ‘Coppafeel’using NFC wristbands to name but a few. This may have been a reaction to the public backlash against street ‘chuggers’ as many charities have switched to phones and have looked to technology as a way to raise money in a less aggressive way. 

In a world-first use of contactless technology, the British public have had the opportunity to donate £2 to the charity’s research to beat cancer by tapping their contactless debit or credit card on the Cancer Research shop window recently. The opportunity to donate through the shop window was available 24 hours a day. Once a donation was made, an interactive screen showed the supporter the positive impact their donation will have in the fight against cancer. The technology was available in the windows of Cancer Research shops in Kensington, Guildford, Marylebone and Brighton from the 30 January, until last Friday - World Cancer Day on 13 February. 

“Cancer Research UK is excited to be trialling contactless giving in four of our shop windows. We believe contactless technology will continue to grow in the future so it’s important that Cancer Research UK are active in this space and exploring it as a potential new way for people to donate to our work. We will still support more traditional forms of fundraising such as collection boxes, and indeed as part of the World Cancer Day campaign, we will have over 350 volunteer collections across the country, but we are always looking for innovative ways to fundraise,” said Cancer Research’s director of innovation, Paul Clarke. “We believe that contactless technology has the ability to drive substantial income for Cancer Research UK in the medium to long term. We also see this as a great opportunity to use our highly visible shops in 570 locations across the country as a new marketing channel, using interactive creative that really engages with our supporters old and new.” 

This was made a reality by UK outdoor media owners Clear Channel. ‘’This collaboration is a great example of how we can leverage both existing and emerging technology along with consumer behaviour to deliver an innovative new way for Cancer Research UK to raise funding,” said Neil Chapman, head of create at Clear Channel. 

Not to be outdone, Richard Curtis, Comic Relief co-founder has also looked to using contactless technology to bring in donations for the charity’s Red Nose Day. This year, Comic Relief will be offering shoppers yet another way to donate to Red Nose Day, in the form of contactless payments while at the same time, taking a selfie with a famous comedians. Some larger than life replicas of Comic Relief celebrities such as Billy Connolly, David Walliams, Dawn French, Rowan Atkinson, John Bishop and Miranda Hart will appear in cities across the UK. Passers-by will be able to donate £1 to Comic Relief simply by tapping their debit card on the comedians’ pocket.

People can donate via the contactless method by holding their card to the contactless reader in the comedian’s pocket until they see the “approved” message or they can choose to donate via their mobile phone using Pingit, Barclays’ mobile payment tool, which also enables a Gift Aid declaration to be made. A QR code will be positioned near the statue so that people can download the app. In addition, a Barclays ‘Digital Eagle’ or helper will be on hand to help you download the app to your phone and guide you through the giving process.

“Since the beginning of Comic Relief I’ve asked hundreds of exceptionally talented and generous comedians to do strange things to raise money and this might be the oddest request yet. Huge thanks to all ten who agreed to let us turn them into a statue. As well as perfect selfie opportunities, just a simple tap on the pocket with a contactless card will give a £1 donation to help incredibly vulnerable people in the UK and across Africa,” said Richard Curtis. You can see the promotional video here.

These acts of contactless donating also encourage the use of different payment methods. In one sense traditional ‘chuggers’ may find themselves becoming unofficial educators on how to make mobile or contactless payments. Now that’s something that delivers an unintended win/win scenario. Donate a pound to be taught how to make a mobile payment!

This year at the 9th Contactless Intelligence Conference on April 28th, we’ll be reviewing some of these charities’ use of this new payment technology, how they have implemented it and, more importantly, what the results have been. We’re calling it Implementing Contactless Innovation: Humanitarian aid in our own back yard? We’re showcasing an innovative charity campaign, as well as demonstrating contactless technology in disaster relief. And not to labour a point but flooding and storms (as seen across Europe) count as disaster relief. It’s not just natural disasters that occur on the other side of the world that we are interested in. Either way, it should be worth a listen to. 

Kagools (and fleeces) are entirely optional.

Until next week.

Steve Atkins

Contactless Intelligence

Samsung and LoopPay: Strategy or ’stop gap’?

The big news last week was that Samsung bought a mobile payment service company called LoopPay for an undisclosed amount, saying it will bring “consumers a mobile wallet solution that is not just safe and reliable, but also widely accepted at more locations than any competing service.” Anyone in this industry will immediately recognise that this competing payment service is a response to Apple Pay, which has grown and has been quickly accepted as a ‘de-facto’ mobile payments service in a very short time. 

LoopPay is a new twist on old credit/debit card ‘mag-swipe’ payment technology and is accepted at roughly 90 percent of all locations that accept traditional card payments in the US. LoopPay does this by creating a magnetic field that replicates the data on the magnetic strip of standard cards. As a result, in theory, there’s no need for retail locations to add or use point-of-sale terminals that use NFC wireless technology; much of the existing retail infrastructure already supports LoopPay. LoopPay's technology executes contactless payments by using a fob or phone case to transmit a magnetic signal to a standard point of sale terminal.

Instead of using a LoopPay fob, Samsung can start to build LoopPay's technology into its next smartphone, eliminating the need for consumers to buy separate hardware to make mobile payments. The technology can co-exist with NFC, even though some observers say that Samsung's deal for LoopPay demonstrates its reluctance to go with an NFC-only strategy. Perhaps a case of ‘hedging one’s bets?’ After all, the US mobile proximity payments market – defined as payments made with a smartphone at the point of sale in place of a credit card or cash – totalled $3.5 billion in 2014, according to eMarketer. eMarketer sees 2016 as the tipping point for mobile payment adoption, when the mobile proximity payment transaction value will increase significantly to reach $27.5 billion. By 2018, that figure will balloon further to $118.01 billion. There were 15.9 million US mobile proximity payment users in 2014, according to eMarketer. By 2016, that figure will more than double to reach 36.2 billion and total 57 million by 2018. So there is definitely a case for making sure that your mobile payment solution is an all encompassing one. Something that Samsung is aware of. Hence the LoopPay purchase.

"Samsung's acquisition of LoopPay signals how serious it is about building and launching a competitive mobile payments system in the United States," said Bryan Yeager, analyst at eMarketer. "It also likely gives Samsung exclusive access to LoopPay's technology, which enables mobile payments to be made at merchants who haven't upgraded their point of sale technology to support newer contactless payment methods like NFC – of which there are many."

However, with the upcoming move to EMV payments (Chip & PIN), surely new equipment upgrades will also include NFC technology to support mobile payments, too? Isn’t Samsung trying to cover a payment technology that has had its day? Contactless Intelligence posed this question to eMarketer’s Bryan Yeager, who had this to say, “In terms of the adoption of chip-and-pin and LoopPay becoming a redundant technology, there is some credence to that. As merchants continue to upgrade their point of sale technology to support chip-and-pin due to the liability shift, they will likely buy systems that also support NFC contactless payments. Though that transition is certainly happening, mag stripe terminals are going to be around for at least the next few years. In a sense, LoopPay is a stopgap or bridge technology that could potentially give Samsung an edge in positioning their mobile payment system as being accepted more widely than competitive systems that rely on NFC. Additionally, Samsung already has several phones with NFC and it wouldn’t be surprising to see a phone that includes both LoopPay and NFC embedded in it — so long as it’s technically feasible.”

Samsung was already a strategic investor in LoopPay, along with Visa and Synchrony Financial. Samsung and LoopPay were also rumored to be collaborating on a mobile payments project. In addition to providing Samsung with an alternative to NFC payments, the acquisition addresses a problem with LoopPay's own business model. LoopPay has typically required consumers to buy the add-on hardware, which can cost up to $90. This would have been a tough sell for consumers who are used to getting payment cards or apps for free. 

The question remains if this acquisition is a long term strategy for Samsung to cover mag-stripe payments or merely a stopgap solution to put the brakes on a seemingly unstoppable juggernaut in the form of Apple Pay. We are sure to hear more about this at next week’s Mobile World Congress in Barcelona.

Speaking of Apple, their Touch ID technology is to be used by banks RBS and Natwest to allow customers to access their accounts. RBS and NatWest customers must activate the feature with their security information, but would only need to use Apple's Touch ID thereafter. The banks, both part of the Royal Bank of Scotland Group, said that the feature would be available on the iPhone 5s, 6 and 6 Plus. Customers would have to enable the feature using their existing login details. Some of the in-app features that are used to pay money that required additional verification would continue to do so and limits were set on new payments, the banks said. They said that around 880,000 of their customers currently use the apps on those handsets.

As always, there is criticism from certain quarters about the security risks of biometric technology with the inevitable examples of biometric fingerprinting ‘spoofing’ to fool the technology. Apple insists that TouchID is secure, saying its not a total replacement for traditional security measures and is meant to make unlocking the phone more convenient. In a similar vein, the banks have now said they wanted to make it "even easier and more convenient for customers to access their accounts online”. 

According to a British Banking Association report, banking apps have been downloaded more than 12.4 million times in Britain. The Way We Bank Now study, which was released last June, showed that people were making "around 5.7 million transactions each day using smartphones and other internet-enabled technology". The banks claim that nearly 50% of their combined customer base of 15 million people used online banking and that around three million accessed their accounts via an app each week. Stuart Haire, managing director, RBS and NatWest Direct Bank, said: "There has been a revolution in banking, as more and more of our customers are using digital technology to bank with us. Adding TouchID to our mobile banking app makes it even easier and more convenient for customers to manage their finances on the move and directly responds to their requests."

Finally, speaking of security, breaking news at the end of last week informed us that National Security Agency whistleblower Edward Snowden had released documents claiming that both the US’s NSA and the UK’s GCHQ had hacked into the internal computer network of the largest manufacturer of SIM cards in the world – Gemalto – stealing encryption keys used to protect the privacy of cellphone communications across the globe. The hack was perpetrated by a joint unit consisting of operatives from the NSA and its British counterpart Government Communications Headquarters, or GCHQ. The breach, detailed in a secret 2010 GCHQ document, gave the surveillance agencies the potential to secretly monitor a large portion of the world’s cellular communications, including both voice and data. You can read the full article here.

Gemalto was quick to release a statement acknowledging that there was a story out there but without any more details were unable to say much more. The entire statement reads, “A publication reported yesterday that in 2010 and 2011, a joint unit composed of operatives from the British GCHQ (Government Communications Headquarters) and the American NSA (National Security Agency) hacked SIM card encryption keys engraved in Gemalto (Euronext NL0000400653 - GTO) and possibly other SIM vendors' cards. The publication indicates the target was not Gemalto per se - it was an attempt to try and cast the widest net possible to reach as many mobile phones as possible, with the aim to monitor mobile communications without mobile network operators and users consent. We cannot at this early stage verify the findings of the publication and had no prior knowledge that these agencies were conducting this operation. Gemalto, the world leader in digital security, is especially vigilant against malicious hackers, and has detected, logged and mitigated many types of attempts over the years. At present we cannot prove a link between those past attempts and what was reported yesterday. We take this publication very seriously and will devote all resources necessary to fully investigate and understand the scope of such sophisticated techniques.” 

This is a story that has the ability to embarrass all parties involved, NSA, GCHQ and Gemalto, so at the moment no-one is saying anything; leading to speculation and supposition. I expect to hear a little more on the topic later this week, when Gemalto will be holding a press conference dedicated to this matter (Wednesday, 10:30am) but I also expect details to be very scarce indeed. This is a story all parties would probably prefer to blow over as soon as possible.

Whether it will, though, remains to be seen.

Until next week.

Steve Atkins

Contactless Intelligence

Gemalto: “They don’t know, what they don’t know”

News of the Gemalto hack dominated almost all of last week. The details of the hack by the NSA and GCHQ had been made public the week before, but it was down to news punditry to keep the story alive until Gemalto could investigate further and give a press conference to release the findings of their own, internal, investigation. Then there was the obligatory review of Gemalto’s findings. Ultimately it came down to a phrase digitally muttered by The Intercept (the online publication that broke the news) “Gemalto doesn’t know, what it doesn’t know”.

How apt and what a total non-surprise.

Really, what did people expect? Of course, Gemalto is not going to admit to a serious hacking that caused untold damage and neither are the NSA or GCHQ going to admit to any liability in the matter. Gemalto did have the following to say: “No breaches were found in the infrastructure running our SIM activity or in other parts of the secure network which manage our other products such as banking cards, ID cards or electronic passports. Each of these networks is isolated from one another and they are not connected to external networks. It is extremely difficult to remotely attack a large number of SIM cards on an individual basis. This fact, combined with the complex architecture of our networks explains why the intelligence services instead, chose to target the data as it was transmitted between suppliers and mobile operators as explained in the (accompanying) documents.” 

In other words, the hacks by the security services were greatly exaggerated. To re-cap, Gemalto added that after a 'thorough' investigation, it concluded that although the company did experience hacks in 2010, it suffered none that could have resulted in the loss of the vast number of SIM encryption keys that The Intercept article referenced. And, the company continued, if some keys had been stolen, then technology pertaining to the 3G and 4G networks that Gemalto builds SIMs for would have prevented substantial hacking. The company believes 2G networks were the only ones that would have truly suffered under such a hack.

The Intercept (the before-mentioned online publication that first published the report of the alleged hack) took the position that “the company (Gemalto) tried to downplay the significance of NSA and GCHQ efforts against its mobile phone encryption keys — and, in the process, made erroneous statements about cellphone technology and sweeping claims about its own security that experts describe as highly questionable”. The publication said that “security experts and cryptography specialists immediately challenged Gemalto’s claim to have done a “thorough” investigation into the state-sponsored attack in just six days, saying the company was greatly underestimating the abilities of the NSA and GCHQ to penetrate its systems without leaving detectable traces”.

Bringing in their own experts for statements, The Intercept reported this quote by Christopher Soghoian, the Chief Technologist at the American Civil Liberties Union, “Gemalto learned about this five-year-old hack by GCHQ when the The Intercept called them up for a comment last week. That doesn’t sound like they’re on top of things, and it certainly suggests they don’t have the in-house capability to detect and thwart sophisticated state-sponsored attacks.” He added that Gemalto remains “a high-profile target for intelligence agencies.” Matthew Green, a cryptography specialist at the Johns Hopkins Information Security Institute, added, “This is an investigation that seems mainly designed to produce positive statements. It is not an investigation at all.”

In my humble opinion, everyone is missing the point here: It’s not that Gemalto doesn’t know what it doesn’t know (as the Intercept points out), it’s more a case that Gemalto can’t admit what it does or does not know. On some level, perhaps Gemalto does’t even want to know. You know?

Interestingly - in the midst of all this mess it was a report by the UK’s Daily Mail — that media bastion for truth and justice (for those of you not picking it up, I’m being sarcastic here) — which picked up a nuance that no one else had: When covering the topic of making a complaint or taking legal action over the hacking incident, Gemalto pointed out that complaining to the UK and US would be a waste of time. Olivier Piou, Chief Executive of Gemalto, downplayed the scale of the theft as he said any legal action against the British and US digital espionage agencies was destined to fail.

Now that is a truth that I think we all know.

In other news, I am going to go out on a limb here and guess that the majority of our readers are working their way through this Monday morning editorial on some kind of mobile or tablet device at this year’s MWC – providing their WIFI is working. They may also be stood on a booth worrying if their demos have made the journey intact and are actually going to work for the rest of the week. There is nothing more frustrating than finding the product demo that worked last week in the office now stubbornly refuses to function on a booth in Barcelona. Am I right? Well I hope that all is working for everyone this year. 

Especially for those 44 companies who have made it as finalists into the 2015 Contactless and Mobile Awards. Even though the 28th April may still seem a long way away, as always, time will fly! Yes, the whittling of nominations is (finally) over and we have our finalists - many of whom will be at MWC 2015. We have decided to wait until next week to make the announcement but from next Monday onwards - it’s in the hands of our judges to pick the category winners. 

We are now finishing up our agenda for the Contactless Intelligence Conference, as well as the Open Standards Forum and Mobile ID Forum that are being held the following day. So please stop by our site to check out this years speakers, the companies they are representing and the topics they will be covering. From next week onwards we move into the countdown to this annual Contactless Intelligence event –expect further details from then on.

Until next week, I would like to say to all you MWC attendees ‘Live long and may your demos prosper’.
 

Steve Atkins

Contactless Intelligence

R.I.P Leonard Nimoy 1931 - 2015

CMA Finalists are announced, Transport makes a comeback

Let’s take the second part of the title first - ‘Transport makes a comeback’. Although many would say it never went away, I feel that coverage of the transportation industry as a contactless catalyst kind of dissipated. Specifically when Transport for London announced that users could use their contactless credit or debit cards to travel on public transport around the country’s metropolis. It was a big deal - one recognised around the world - what could be bigger than that? Game over.

Or is it? I wrote an editorial at the end of January that touched on an idea of using a smart ticketing scheme in the UK that would have the potential to make individual cities’ transport networks simpler and more accessible, increase the number and length of journeys made by individuals, and boost efficiency and revenues for operators. Manchester and Sheffield’s respective devolution deals, which were agreed in 2014, included the opportunity to introduce smart ticketing systems, and similar schemes could be introduced as more cities agree new devolved powers. However, to be truly transformational for the wider country region as well as individual city regions, cities’ smart ticketing schemes would have to be designed to integrate those of neighbouring cities in the future.

Nathan Marsh, an infrastructure specialist who has helped to plan and deliver smart ticketing projects in major UK cities such as Manchester and Birmingham was quoted as saying “London saw a significant increase in distances travelled on public transport between 2000 and 2010, which was partly induced by the introduction of the Oyster card in 2003. Equally, the rapid take up of contactless Europay, MasterCard and Visa (EMV) systems on bus and now underground rail networks shows that customers want a single, consistent experience across all modes of transport and boundaries. A similar initiative not just in individual cities but right across the entire North of England, coupled with the major transport infrastructure investment we’re likely to see over the coming years, could have a comparable impact – helping to connect an increasingly mobile workforce with businesses right across the North and contributing to economic growth.”

So it was with interest that that I read last week about a report from a Transport Think Tank recommending the Chancellor to use this month's budget to give £15 billion to the North East. They recommend creating a 'Transport for North' network, imitating the existing Transport for London. It said the body would be built out of the existing Transport for the North alliance set up last year by the government. IPPR North (the authors of the report) have set out a 10-year blueprint for what they think Transport for North (TfN) should do, including one vital recommendation for the contactless industry;  Move towards a contactless, cross-boundary ticketing system - using mobile phones and contactless payments for journeys across different modes of transport.

This could be another huge step in contactless adoption outside of London. Other commentators agree.

Will Judge, head of urban mobility at MasterCard said: “The creation of Transport for the North presents a huge opportunity to advance the public transport infrastructure of the region and for the UK. Ticketing, payments and mobile technology are converging, and this presents huge potential to improve the transportation experience, and deliver costs savings for operators. We know from working with authorities in cities such as London, Chicago and Athens the benefits of implementing smarter payment systems on businesses, jobs and the increased convenience to users. In London, three million daily commuters and 19 million annual visitors can now benefit from the ease, speed and security which contactless payments bring. Reduced complexity in the system and increased traveller confidence has added to the number of passengers travelling on TfL services. The importance of how we access travel services should not be underestimated, so if public transport operators in the north can embrace smarter systems, the results can help create much a more inclusive and connected region for decades to come.”

There is still plenty of life in public transport for contactless technology adoption.

Onto the second part of our headline (after reader feedback from last week’s MWC - I’m trying to keep my editorial pieces shorter…); the CMA 2015 Finalists have been announced! I could go on at length and cover which Finalists made the first round but there are 44 Finalists, so that could take a while. Instead you can click the link here or the banner below and you will be taken to the page on Contactless Intelligence that covers the subject in far more detail. We had more entries than ever before and so it took a lot longer than previous years to whittle the names down to just 44 contenders. Best of luck to all that made it through and I am glad that from now on, it’s out of our hands and into the hands of the judges.

I will be covering the Finalists in more detail over the next few weeks as the run-up to the show begins so look out for more in-depth posts covering the Finalists and their product/solution/application. And if you made it to the finals - don’t forget that next month we will once more be opening up voting on the Industry Choice Award and that it itself can be a real game changer. It’s the only award that can achieve a David vs. Goliath moment and is completely dependent upon how badly you want to win!

For now though, here are the Finalists for this year’s 2015 CMAs.

Until next week,

Steve Atkins
Contactless Intelligence

Watch out, there’s an Apple about…

You may have already guessed what the topic of this weeks editorial is, so let’s just get it out of the way so we can swiftly move on to something that will have a more immediate impact on our lives and on the industry. I am, of course, talking about the release of the Apple Watch; the product that (supposedly) is heralding in the age of wearables. Just as long as you ignore those companies that already had similar product out there in the marketplace. 

Certainly, riding high on the growing momentum for increasing acceptance of contactless payments, the idea of another form factor that could enhance the consumer experience is one that many payment technology companies are not going to ignore. Apple Pay is expected to be an important convenience feature of the new Apple Watch, facilitating ease for in-store payments without a credit card. US mobile proximity payments - which include payments made with a smartphone at the point of sale in place of a credit card or cash - totalled $3.5 billion in 2014, according to eMarketer. That figure will increase significantly to reach $27.5 billion by 2016, and $118 billion by 2018. There were 15.9 million US mobile proximity payments users in the US in 2014, according to eMarketer. By 2016, that figure will more than double to reach 36.2 billion.

How Apple Watch owners will be able to use their device to make payments, unlock hotel rooms and the garage doors at their home was demonstrated by Kevin Lynch, Apple’s VP of Technology, at the company’s Spring Forward launch event. “If you go to lunch and want to pick up dinner on the way home, you might go to Whole Foods,” he explained. “You can use Apple Watch to actually pay for things while you’re checking out. I’ve got my credit cards right inside my watch. To bring one up, all I have to do is double tap the side button and it brings up my credit card and then I just put my watch near the merchant’s terminal and I’ve paid, that’s it, I’m done. It’s super simple to pay with Apple Watch.” Lynch also showed attendees how Apple Pay works at a store, using a handheld merchant terminal. “It’s a lot of fun to use and you don’t have to bring the watch face and touch the merchant terminal; as soon as you get to it, you’ll hear the audible noise that you hear and you also have feedback on your wrist so you know the transaction was done. It’s super easy to do.”

It's super easy to say, too, but reality may be a little more complicated. “Smartphones already offer a convenient way to check the time, access the web and apps, and increasingly pay for products," said Cathy Boyle, senior mobile analyst at eMarketer. "So, to succeed with a smart watch, Apple needs to create a compelling use case for the device, a feature set that offers far more than simply saving consumers the few seconds it takes to pull a smartphone out of a pocket or purse. Enthusiasm for smart watches has been relatively low, suggesting the wearable tech sector needs a 'magic' product to spark adoption. Apple Watch is best positioned to be that  product, given the device's close association with the iPhone and the size of the iPhone user base-one in four US consumers regularly uses an iPhone." 

iPhone users will account for 43.3% of all US smartphone users in 2015, according to eMarketer, up from 42.3% last year. By comparison, Android users accounted for 51.7% in 2015, up from 51.3% the previous year. The adoption of another form factor for payment enablement on based on the kind of figures is one that cannot be ignored. Looking more closely into the UK, iPhone users accounted for 30.8% of smartphone users in 2014, eMarketer estimates, and will increase share to 32.2% this year. Meanwhile, Android users represented 55.9% of all smartphone users in the UK in 2014, and will also increase share this year to 56.2%. Is it any wonder that so many companies are seeing potential in this introduction and take-up of the product?

The watch promises to open up further contactless technology introduction into the mainstream through associative applications and uses. “Now when I arrive at my hotel room, I also get a notification when I get near hotels like SPG’s W Hotel,” Apple’s Lynch demonstrated, showing attendees his reservation information for the New York hotel on his Apple Watch. “You can see it’s got all the information I need to check-in, my confirmation number, my room number. You can see these are really rich notifications; they have images, they have great typography and rich layout and it not only looks great and reflects the brand and the company, but it also makes it easier for you to understand very quickly and you can act on these. In this case I can use this to unlock my door right from the notification from my watch. So I press ‘unlock your door’, I can bypass the front desk entirely, go to my room and then my watch is my room key. I just wave it in front of the door and I go into my room.”

Examples like this may take a little time to bear fruit but many companies are seeing more immediate possibilities within a retail environment. Especially since the idea of beacons captured the imagination of proximity marketeers. “Retailers and brands should take note of the opportunities that Apple Watch will offer them. The device provides an immediate connection to consumers and will enhance their digital experience in-store. The likelihood of responding to a beacon-pushed message delivered to your watch is also perhaps a lot greater than taking your phone out of a pocket or bag, unlocking it and clicking on the alert in the notification area.  Once in-store, whether used for getting information on a product, checking in, paying, registering a loyalty card, or receiving offers, the options available will give brands and retailers a number of different engagement touch points to help drive sales,” said Jon Worley, CEO of Marketing, Proxama. “As we have seen with the US launch of Apple Pay, the inclusion of the payment scheme within the watch will no doubt continue to drive contactless payments over the next 12 months. Consumers will soon realise the added convenience to mobile contactless and wearable transactions, paying with a simple, single touch of a device which is already in their hand or on their wrist.”

Even though the news was focused on the Apple Watch last week, other watch companies have also put a stake in the ground. Swiss watch company Swatch also wants in on the market, albeit on their terms. They have admitted that they like the idea of using their Swatch watches for payment applications but have played down the possibility of a one-to-one face off with the Apple Watch. "We don't want to produce a mini mobile phone on your wrist," Swatch Chief Executive Nick Hayek said while discussing the company's financial results. "Others can do that. Samsung did it, Sony did it. Everybody does it. We are not a consumer electronics company.”

Nevertheless the Apple Watch is likely to sell at least 10 million and possibly as many as 20 million units this year, Forbes says. This "reveals anew the company's unsurpassed ability to gain interest for a product that people don't really know what to do with yet". Agreed, but I bet there are plenty of companies in our industry sector that are already trying to figure out how to make the best out of the new ‘payment devices’ people may soon have strapped to their wrists.

Until next week,

Steve Atkins
Contactless Intelligence

TfL breaks contactless records. Germany takes a different track.

I think everyone in the industry knows just how much Transport for London has been a supporter of contactless technology. First, the Oyster card for contactless ticketing and then, last year, the massive efforts to bring contactless payments and ticketing via payment cards to the whole of the metropolis that is London. Some thought it may have been a little bit of a stretch and (perhaps) a gamble. But guess what? The latest figures figures released show that it paid off in a big way! And TfL are not the only winners.

During the time period we were asked to ‘touch in and out’ with our payment cards, some 60 million journeys have taken place using contactless payments. Transport for London (TfL) is also now the fastest growing contactless Visa merchant in Europe (almost 9 out 10 journey are done using a Visa card), and also for MasterCard and American Express in the UK - just six months after contactless payment was launched on London Underground, tram, DLR, London Overground, buses and most National Rail services in London. On 13 March the number of contactless taps made on a single day reached one million. Over 14 per cent of all pay as you go journeys across TfL services are now made using contactless, with over 60 million journeys made in the last six months. 

The top five London Underground stations where customers have made contactless payments are Oxford Circus, Kings Cross, London Bridge, Liverpool Street and Canary Wharf. The Mayor of London, Boris Johnson, said, “London was the first city in the world to offer passengers the option of getting from A to B with a simple flourish of a contactless payment card. Clearly Londoners and visitors to the capital have embraced this innovative technology – with a million card swipes taking place each day as people zip around our fine city on TfL services.” Good for them. Hopefully the recent Transport think tank recommendations of creating a 'Transport for North' network, imitating the existing Transport for London will also see some success. Here’s hoping that the Chancellor will also think it is worth investing in as he emphasises how ‘Britain is now walking tall again’.

With such a success story as seen with TfL is it any wonder that companies and organisations have looked to duplicating it around Europe? With some success, it has to be said, but success that was always overshadowed by the transport giant from London. I have never really understood why, because the technology and perhaps more importantly, the actual application of the technology is relatively straightforward. Tap in with your payment card to start the journey and tap out when you finish your journey. 

But now, a parking solutions company called Scheidt & Bachmann appear to have duplicated the TfL approach of ’Touch in, Touch out’; but for parking. Albeit it for the moment, only in a small shopping mall in Mönchengladbach, Germany - but ‘from small acorns’, as the the saying goes. This new contactless payment system has been installed into parking machines at the underground car park at the Rheydt marketplace and it may not be based on the payment cards used elsewhere in Europe but on Sparkasse’s contactless top up card, Girogo. Girogo is a contactless payment function of the German credit industry and is automatically integrated in all newly issued German Sparkasse giro cards as well as in several own giro cards of credit unions, Volkbank Raiffeisenbank as well as the Volkswagen Bank in the greater Hannover, Braunschweig and Wolfsburg area. Sums of up to 20 Euro can be paid contactlessly with the card. Girocards with girogo are based on the principle of pre-payment. A maximum of 200 Euro is possible, which is then available for contactless payments.

“Payment is simple and intuitive”, says Manfred Hübner, head of the department of Electronic Banking at the Stadtsparkasse Mönchengladbach. “Add a credit balance onto your cash card and hold the card closely to the ticket machine for payment. The amount will be debited from the prepaid credit balance without a signature or PIN entry being required when paying.” This is a standard contactless payment approach that we all know.

However, Scheidt & Bachmann went a step further: the Sparkasse card with the topped up girogo-chip can be used as a control medium when entering the car park ensuring a better customer experience through contactless. With the need for a paper ticket no longer necessary, the company says this not only protects the environment but it also extends the working life of machine parts that can be prone to ‘wear and tear’. The card is held in front of the terminal on the control device and the barrier will open to allow entry. When exiting, the control device becomes the “automatic pay station”. Here the bankcard is held in front of the device, the system calculates the parking fee and the amount is debited from the credit on the cash card. On a basic level, how the TfL systems works in theory.

If this parking solution proves to be a success - and the parking associations to agree upon specs, could we see the next great contactless opportunity to be in public parking rather than public transport? I know we will be talking to some of the parking solution companies about this, and I don’t think we will be alone…

Until next week,

Steve Atkins
Contactless Intelligence

A Window of opportunity for a new wallet

Microsoft may be a little late to the party following Apple, Samsung and Google but where there’s a will, there’s a (mobile) wallet. Yes, Microsoft has gone all macrohard (my pun) for a wallet inclusion in their new Windows 10 build for smartphones as well as a new secure login called ‘Windows Hello’.

Last week, during the WinHEC event in China, the company shared some of the secrets behind Windows 10 for handsets. One of them is a new way of handling mobile payments, as Microsoft appears to be interested in competing against Apple Pay, Samsung Pay and other similar products. A short demo video, revealed that Microsoft will enable a “Tap to Pay” functionality in Windows 10. In addition to NFC support, the company will also include Host Card Emulation support in Windows 10 in order to implement mobile payments on mobile devices without requiring a Secure Element present on a phone or SIM card and, perhaps, in order to skip some of the agreements with carriers. This means that Microsoft can work directly with VISA, Mastercard and American Express to bring its own NFC payments service into the market. It will work with all contactless card readers, similar to Apple Pay and Google Wallet.

It’s not clear at this time whether Microsoft will also add fingerprint protection to its wireless payments product, thus potentially limiting the feature only to certain Windows 10 smartphones that will have built-in fingerprint sensors. The company, however, has already announced that it’ll offer Windows 10 users across devices a new way of logging in, called 'Windows Hello', which uses biometric sensors, including fingerprint, iris and face sensors. Windows Hello is going to offer “enterprise-grade” security, Microsoft said, "that would be good enough for companies and governmental agencies in various branches including defense and health."

“A combination of special hardware and software will be used to accurately verify it is you, not a picture of you or someone trying to impersonate you,” Microsoft said. “The cameras use infrared technology to identify your face or iris and can recognize you in a variety of lighting conditions.” The company also revealed that Windows 10 devices shipping this fall will have built-in Windows Hello features, and devices that already have fingerprint readers will also support the technology. “OEM systems incorporating Intel’s RealSense 3D Camera (F200) will support the facial and iris unlock features of Windows Hello, including automatic sign-in to Windows, and support to unlock Passport without the need for a PIN,” the company said. Finally, these security features are opt-in, meaning that users will be able to still rely on passwords and PINs to unlock devices and features if they so desire. As for biometric data, Microsoft says it won’t be shared with anyone but the user.

Microsoft plans to launch the service on Windows 10, coming this summer in 190 countries.

Another item of interest that caught our eye last week (and was retweeted a lot!) concerned the news that less than a third of marketers are aware that out of home (OOH) advertising offers contactless technology, motion detection, and QR and NFC integration. The ‘Look Again’ report from Clear Channel UK, a survey of more than 200 marketing professional, revealed that ‘innovation’ was the top buying consideration among marketers looking to find new ways to reach mass audiences.

“We are at the point where many marketing professionals’ perceptions are at odds with the new levels of digital sophistication available across the OOH medium,” remarked Sarah Speake, chief marketing officer at Clear Channel UK. “In the UK, millions of pounds worth of investment in digital over the last few years has created a medium that is capable of delivering broadcast reach, measurability and brand fame at a national and regional level. It’s no coincidence that some of the world’s top brands are already taking advantage. It’s now paramount that we educate the masses on the new digital opportunities available as well as reiterating the strengths of our traditional formats.”

Of those surveyed NFC/QR technology was dubbed as the ‘most exciting’ new technology by 72 per cent of respondents, followed by environmentally friendly technology (70 per cent), contactless technology (70 per cent) and motion detection technology (67 per cent). “Today Clear Channel is transforming bus shelters into tweet-activated vending machines and ad-serving aeroplanes. There’s a wealth of sophistication available across the medium to tap into. It’s our job to shout louder and champion the new capabilities on offer to help our customers engage their audiences on a deeper and more meaningful level,” Speake added.

And finally, we posted a video last week featuring Samsung Seminconductor presenting a solution that was developed in cooperation with Deutsche Telekom, EMoney Group, MS4B and ZeitControl: The CIPURSE-based Open Platform for Contactless Applications. The truly open platform enables mobile contactless card and NFC use cases within an unified ecosystem. Without complex wallet applications, this platform can significantly reduce time-to-market of new contactless service offers. It supports different form factors – from cards to wearables – and offers interoperability, security and flexibility. Take some time (8 minutes!) and watch the detailed video presentation. Alternatively, come along to the Contactless Intelligence Conference and the Open Standards Forum on the following day, where I am sure that Samsung will be more than happy to give you a personal demonstration!

There will be no news review next week because of Easter Monday but we will be returning on the 13th April. However, if you are a CMA finalist keep a watch on the site because voting will be starting for the CMA Industry Choice after Easter. We’ll tell you when, and then it’s all up to you!

Steve Atkins
Contactless Intelligence