Don’t count out your CurrentC just yet…

Remember the flare up that happened late last year over the shutting off of NFC-enabled POS by a couple of US drugstore chains backed by service operator, Merchant Customer Exchange (MCX), just after the launch of Apple Pay? All in the name of protecting a rival MCX mobile payment solution called CurrentC. We covered it for days as the plot became more convoluted than an episode of ‘Game of Thrones’.

CurrentC was first announced in September 2014 and gained more publicity in October when MCX member companies Rite Aid and CVS stopped accepting Apple Pay a week after it launched. This caused speculation that it was an attempt to hinder the rival payment service in favour of CurrentC which was still being tested. Other notable MCX retailers to deny Apple Pay transactions included Best Buy and Wal-Mart. The release date for the wallet was to be mid 2015.

Now, according to a report from MacWorld last Monday, CurrentC will launch in the next few months and will provide competition to existing mobile payments services available from large corporations such as Apple, Samsung and Google. According to reports, CurrentC is being tested in several undisclosed markets around the US and will officially launch over the next few months in a single market.

CurrentC said that initial availability "will be determined based on a number of factors, including retail support, infrastructure and consumer population." 

Unlike Apple Pay, which completes credit and debit card-based transactions using NFC technology, CurrentC relies on what some consider to be a less secure means of payment processing. CurrentC enables users to pay in-store by pointing their camera at a one-time barcode displayed on a retailer terminal to authorise payment. The payment amount is directly deducted from the user's bank account, which is linked with CurrentC on the backend. 

Some believe that NFC is a simpler to use (including some of our readers, I suspect), however, CurrentC said that barcodes are more widely supported than the NFC in smartphones and will simplify the checkout process. “When the app's full functionality is released to consumers, CurrentC will simplify and expedite the customer checkout process by applying qualifying offers and coupons, participating merchant rewards, loyalty programs and membership accounts, and offering payment options through the consumer's selected financial account, all with a single scan,” said MCX in a statement. CurrentC said they will issue a secure passcode which does not require any hardware from most customers or merchants, and are also open to using other technologies such as a version based on Bluetooth which is also being tested.

Merchant Customer Exchange CEO Dekkers Davidson previously noted POS terminals offering support for CurrentC are also compatible with NFC systems, meaning Apple Pay can technically be used on hardware at partner merchant locations. However, retailers in the consortium inked exclusivity agreements that preclude them from using alternative forms of electronic payment, something Davidson said was necessary for a successful rollout. In November, however, Davidson said CurrentC's exclusivity timeline would be "measured in months, not years," meaning Apple Pay could show up at MCX merchants sooner than previously thought. Let’s see.

Other news I wanted to bring to your attention is that the Contactless Intelligence 2015 Industry Award are now open - for another five days at least. We already have a a couple of companies starting to make the leap from the pack but things can still change and the greatest danger is one of complacency. Over the last two years I have seen early winners get pipped at the post as they relax. Don’t let this be you! Remember; every vote counts. Let me repeat. Every. Vote. Counts. Got it? After all, that’s what interns are there for - right? Five days to go and the voting ends, so good luck to all. 

Until next week.

Steve Atkins
Contactless Intelligence

Thunderbirds are go - CIC/CMA in one weeks time!

First of all, please accept my apologies for such a short and, well there's no denying it, shameless piece of self-promotion. By self promotion I mean prominently featuring the Contactless Intelligence Conference and Contactless and Mobile Awards in London next week on the 28th and 29th April. Apparently, I have not embraced the opportunity that this weekly editorial column gives me, to relay to you how great this year’s two day event  is going to be. And that’s coming straight from people around our office. So, let me remedy the situation right now and give you, the reader, some highlights for the upcoming Contactless Intelligence event. This  - and the fact that you can meet all of us in person  - should give you plenty of reasons to book a ticket in the next couple of days. 

Oh, and what’s with the Thunderbird headline? You will have have to read on to find out more….

First off, during the conference we will be hearing from one of the most impressive partnerships of the last few years, namely Visa Europe and Transport for London. They will be kicking off the conference with some exclusive and high level insights into the metropolitan transport payment scheme that we now know to have changed the scope of contactless infrastructures worldwide. A partnership that many are trying to duplicate in other regions of the world with varying degrees of success.

We are not going to let Transport totally off the hook after the keynotes as we will be hearing more from First Group, Digimobee, Tfl, Nottingham City Council, ITSO and Infineon on the subject. Certainly in the UK, we have witnessed a major uptake in the usage of contactless technology in the transport sector over the last few years. From ITSO smart card solutions to mobile barcode technology to the acceptance of bank issued contactless payment cards. But how do transport operators make their decisions on the solutions to adopt, with such a diverse range of options now available? We’ll be hearing from some of the solutions in use in the UK today, look abroad for European success stories and discuss the possible ways forward.

We are also going to be looking at the topic of Unattended and the role it is playing in the contactless market. After all, contactless has long been considered by the unattended sector as a way of moving away from cash, but there have been a significant number of barriers to overcome.  What issues will the unattended market face compared to retail and transit? To help us in this discussion we have representatives from the parking and vending industries such as VINCI Park and Nayax as well as Coca-Cola, the BPA, the AVA and Verifone Europe.

Now onto a session that I personally pushed for; the subject of charity or humanitarian aid within the contactless industry. Over the past few months we have seen a considerable increase in the use of contactless technology being used in the third sector; from enabling donation payments to delivering aid, which (we are told) is set to rise in the future. Contactless technology provides an ideal mix of convenience, speed and security, with the added bonuses of removing cash from the equation. How does the provision of contactless cards and readers into the field after a natural disaster (flooding, landslides, storms, gales etc) ensure aid reaches the right people? How can organisations engage with the public to encourage more donations to charitable causes? And how can this new technology save charitable organisations and government departments money when collecting and distributing this essential aid to those who urgently require it? We have some speakers that really know what they are talking about; Transaxiom, Cancer Research and Oxfam.

Finally, we have a review of mobile technologies being used in the retail environment and helping us with this will be Samsung, Proxama, Ecrebo, Norwich BID and Mobilize Solutions. Questions will be asked such as; what impact has Apple Pay really had on the market? What uptake have other “mobile wallets” experienced? Has BLE (Bluetooth Low Energy) delivered the targeted marketing experience hoped for? Are consumers still concerned about security? Have our high streets really become more “Digital”? I look forward to hearing what the real answers will be.

Now, to relay this part of the pitch (I mean editorial) back to the headline of Thunderbirds are go! This was a TV show that many of you in the UK may remember from your childhood, a TV show that has been updated this year to reflect a 21st century TV audience. In other words same great content but with an expanded and much slickers format. We feel that we have done the same with our event. Let me introduce you to our second day that incorporates two great technical forums (both free of charge!); the Open Standards Forum and the Mobile ID Forum.

First up is the Open Standards Forum. The topic of Open Standards is part of most technology debates across the entire value chain of mobile and contactless implementations. And the discussions about standards are getting more and more heated. Initiatives such as FIDO and OSPT are developing open, scalable and interoperable specs to increase the speed of technology adoption without the ties to a proprietary solution and the license fees that go with it. For decades, proprietary systems have been successfully implemented throughout multiple markets and in all regions on the world. In recent years, however, the tech industry is getting organized in various forms, such as associations, alliances and working groups. The motivation behind it: Establishing open standards to make secure technology implementations smoother, cheaper and flexible. Hence the term “Open Standards”. 

In the course of the Forum, delegates get an introduction from Alliances that have set the bar for the future, namely the FIDO Alliance and the OSPT Alliance. In the course of the morning tech companies such as Deutsche Telekom, Samsung Semiconductor, Giesecke & Devrient and Infineon Technologies will expand on the ins and outs of the CIPURSE standard while implementers such as ATM Barcelona and EMoney Group will explain how projects can be rolled out using open infrastructures. To shake things up a bit, we have also invited companies that have done just fine without jumping on the open standards wagon, such as the Smart Ticketing Alliance and Cubic’s much praised TfL implementation.

And the same time, in the next room, the Mobile ID Forum (run by the Silicon Trust Program - a government ID platform that was set up all the way back in 2000 and has been running strong since) will be taking place. With most government ID schemes based on contactless cards, this Forum is looking at the next step: Mobile ID. The Forum is focussing on the growing trend of Mobile ID and secure mobile devices. It is going to evaluate the feasibility of implementations where secure ID attributes and credentials are either stored on the mobile or where the mobile device acts as a secure reader for a token, such as a contactless smart card. 

With two application scenarios in focus, payment and government ID, the experts in this forum will debate to what extent the public sector can benefit from private sector experiences. How important is the acceptance of the contactless card form factor before moving to mobile? What business cases have proven successful in the private sector and should be an inspiration the public sector? Key speakers from the European Commission, the German Ministry of the Interior, the Estonian Government Trust Centre and from Visa Europe, Airside Mobile and ecec share their insights into the up and coming challenges of Mobile ID.

So there you have it. Same team, same excitement, excellent content but a new format for todays audience! Just like Thunderbirds. (F.A.B.)

Until next week.

Steve Atkins
Contactless Intelligence

PS - I hope there are some readers out there who remember the Thunderbirds TV show - otherwise I am going to look really stupid…

Turn offs for contactless payments, coincidence or strategy?

Occasionally, while trawling through news reports and analysises on the contactless industry, I see a pattern emerge. It may only be a couple of news items published in different parts of the world but it catches my interest in terms of synchronicity. And no, I’m not going all ‘Beautiful Mind’ on you. Although the pressures of getting ready for the 2015 Contactless Intelligence Conference, Contactless & Mobile Awards and the Forums this week in London are mounting… Anyway, back to topic. This is just a coincidence, I’m sure, but there seems to be an increase in news stories surrounding retailers and banks who are opening up the door to switching off contactless payments.

For instance, last week in Canada, Joe Oliver, Canada's Finance Minister, announced that the Code of Conduct for the Credit and Debit Card Industry in Canada, a set of rules designed to protect merchants and cardholders, has been extended to mobile payments. It will ‘provide regulatory certainty for Canada's nascent mobile payments market, particularly given the prospect of Apple Pay coming to Canda in the near future. Reportedly, Apple is negotiations with Canada's major financial institutions to launch Apple Pay in the country in 2015. The Royal Bank of Canada,Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada all are supposedly involved in discussions with Apple, but the main obstacle to a deal involves the fees Apple collects on each Apple Pay transaction, according to a number of sources.

"It's very early days for mobile payments at the point-of-sale in Canada, but the stakeholders such as the banks and telcos are establishing their positions," Christie Christelis, president of Canadian consultancy Technology Strategies International, told Mobile Payments Today. "There's very little mobile payments adoption in Canada, as NFC-enabled smartphones aren't available in sufficient quantities yet. Also, consumers lack awareness about NFC payments at the point-of-sale and need to learn how to load their card credentials onto smartphones." However, Christelis said Canadian consumers are enthusiastic about using smartphones for purchases. "They're already doing a lot of remote mobile payments," he said. "Also, over the last year or two, I've been seeing a lot more contactless credit card payments in stores. Many Canadian POS terminals are already NFC-enabled on the back of the country's EMV migration." A bottleneck to Canadian contactless card and mobile payments adoption is the fact that, while many Canadian credit cards contain contactless chips, there are still few contactless debit cards in circulation. This is a problem, as Canada is a large debit card market, Christelis said.

Which brings us back to this ‘Code of Conduct for the Credit and Debit Card Industry in Canada’. The updated code includes 3 additional elements which allow merchants to reject contactless payments, require new disclosure requirements for merchant-acquirer agreements and require a dispute resolution process for complaints from merchants. With immediate effect is the extension to mobile payments of merchant right to accept only debit or credit card payments from a particular network as well as the right to cancel contactless payment acceptance with 30 days' notice while keeping other parts of the contract, without penalty. This right of cancellation will also be available in respect of a merchant's acceptance of mobile contactless payments if fees in respect of mobile contactless payments increase relative to fees applicable to card-based contactless payments.

Interestingly, there is also a section that says “competing debit card credentials will need to be represented as separate applets with consumers having full discretion to choose which debit card applet to use at point-of-sale, payment card networks will need to ensure equal branding of brands available on mobile devices or in mobile wallets and consumers must be provided with complete control over default settings on their mobile devices and mobile wallets to select debit or credit payment applets”.

I saw the same point of control over mobile payment from New Zealand bank, ABS, last week, too. A smartphone app update released by New Zealand bank, ASB, says they are giving their users the ability to switch off contactless payments as part of a suite of new tools launched by the bank, which also includes the ability to block temporarily misplaced cards. The bank have taken this step after customers voiced their concerns over security and their inability to turn the contactless function off, while several shoppers have reported having the wrong card in their wallets charged. ASB’s head of credit cards, Glen Martin, said a “small but vocal minority” of customers were not happy with contactless payments. It would be interesting to see which of the various new payment controls would prove to be most popular, he said.

Caroline Ada, Visa country manager for New Zealand and the South Pacific, said she did not believe the new technology would impact on the number of contactless transactions. “What ASB has done is they’ve listened, they’ve given the cardholder some choice,” she said. “If we look at the numbers, it’s gone from one million to over five million [transactions a month] in the space of a year. It’s not like people don’t like it, they’re using it.” Ada said security fears around contactless payments were unfounded, and she was not aware of any instances of electronic pick-pocketing actually occurring. 

This comes at a time for New Zealand when various players in the mobile payment market are gaining ground and publicity for their offering. Last month Semble launched an app that allows people to swipe selected Android smartphones instead of a credit or debit card.The company wants its digital wallet to ultimately replace everything from transport cards, loyalty cards and vouchers, library cards, access cards and even drivers’ licences. While BNZ and ASB customers will be able to use the service, both Westpac and ANZ have opted to develop their own independent mobile wallets, to be launched this year.

Now, I know that it is only two separate stories from separate areas of the globe but my hope is that it remains exactly that. A couple of people in the office swear that they have also read something similar based on German banks looking to block Apple Pay but couldn’t find the original source so I left that piece out of this editorial and focused on the New Zealand and Canadian sources. My professional opinion is that the Samsung Pay, Apple Pay rollout may actually be a rolling ‘snowball’ forcing merchants (and banks) to face up to contactless payments. These actions outlined above may simply be appeasements at the moment but sooner or later the snowball is going to catch up and then merchants may find that ‘opting out’ is not a retail strategy that will pay dividends. As always, time will tell…

Finally, I look forward to meeting and speaking with you at this week’s Contactless Intelligence Conference and CMA evening. I promise you it will be interesting and fun! But don’t take my word for it - come and join us!

Steve Atkins
Contactless Intelligence

PS - With next week totally taken up with the Contactless Intelligence Events and then May Day holidays, there will be no newsfeed on the 4th May. Normal service will resume on the 11th may.

A thank you from us and the Danes want to go cashless

This is my first editorial since the Contactless Intelligence Conference, the Open Standards Forum and the Mobile ID Forum - not to mention the ever entertaining Contactless & Mobile Awards. This is my big ‘thank you’ to all that helped, the sponsors, the moderators, the speakers, the panelists and those who attended, listened and took part in the conversations. You know who you are and we really, really appreciate your support. 

I want to take a moment to thank both Nick Mackie of Visa Europe and Matthew Hudson of TfL for giving the keynote sessions. Nick made the point that contactless for payment was becoming ‘standard’. What this really means is that the technology and processes now have a solid foundation to move into other areas and embrace other form factors. Things could really start to get interesting from this point onwards. Stuart McLay from First group and Dominique Descolas from Digimobee also took us through contactless in the transportation sector. My take-away from their talks? This could be the next big area for contactless, payment and verification all rolled into one.

Thanks to Arnaud Parfait, VINCI Park and Emmanuel Jamin from Orange and Lewis Zimbler from Nayax UK for their talks in the unattended sessions. Another growth area waiting to be ‘tapped’ - excuse the pun!

A real highlight in the conference agenda was the session on humanitarian aid and charity innovation. From Cancer Research (Paul Weaver) to Ram Bannerjee (Transaxiom) the audience was totally wrapped up in this topic. We even had the Penny for London charity (part of the Mayor’s Fund for London), pick up our conference Twitter thread only moments before the session started and rush over to join us. We were more than happy to see them and let them get involved. To all of you who gave to ‘Save the Children’ through the contactless donation units (courtesy of Visa Europe) - thank you. Every contribution helps.

Our final session of the day was retail and my thanks go out to Andrew Elia (Arishi Media Technologies), Stefan Gurney (Norwich BID), Dr. Neil Garner (Proxama) and to Ercan Kilic (GS1 Germany). Talking about contactless spreading into the retail ecosystem and enhancing the customer experience is something that remains interesting no matter how ‘standard’ the act of contactless payment becomes. And to - finally - see some movement not only in Germany but right in our back garden (Berlin, that is) gives us hope that there will be rapid regional expansion, too.

For chairing the working groups I want to thank Terry Heath, John Devlin, Richard Warren, Jim Birch, Kevin Farquharson and Chris Aldridge. Thanks to Ram Bannerjee for moderating and of course, to Mark Jones for MC'ing on the night.

Congratulations to our CMA winners;

• Contactless Payment Collaboration – Zapp (United Kingdom)
• Retail – Sunoco and Verifone (USA)
• Transportation and Ticketing – Transport for London (United Kingdom)
• Innovation – Clear Channel (United Kingdom)
• Customer Experience – ING Bank Śląski (Poland)
• Loyalty – S-Bank (Finland)
• Marketing Campaign – Saatchi & Saatchi (Switzerland)
• Unattended – Nayax (Israel)
• Eco-System – MSI Global (Singapore)
• Contactless ID & Security – Airside Mobile (USA)
• Gamechanger – Cubic Transportation Systems and Transport for London (United Kingdom)
• Industry Awards – SMARTLINK (Switzerland)

Congratulations also to Tami Hargreaves, Barclaycard (United Kingdom) for her win of the Visa Contactless Award for Contribution to Contactless and to Emanuele Cacciatore, Bank Pekao (Poland) for the Visa Contactless Business Leader of the Year Award.

If I’ve missed anyone - I’m sorry. It’s been a hectic few weeks but please know that we appreciate all your help and involvement in the event. In fact, you may be able to catch yourself on camera by watching our impressions video of the event. I think it’s pretty good this year (although, obviously, I’m biased!).

Before I wrap up - one little news story caught my eye this week. In the last few months the UK has been caught in election fever (or should that be doldrums?) with each party promising all kinds of incentives to stimulate the economy and move it forward. The Danish, however, are a very different story altogether. The current Danish government is outlining, as part of a pre-election package of economic measures, the creation of a completely cashless economy.

Yes, you read that correctly – a cashless economy. But the strange thing is – it’s not as far fetched as you would imagine. Nearly a third of the Danish population uses MobilePay, a smartphone application for transferring money to other phones and shops, and Sweden, Denmark and Finland lead the European Union in credit card payments per inhabitant. The Danish government said that as of next year, businesses such as clothing retailers, petrol stations and restaurants should no longer be legally bound to accept cash. The proposal is unlikely to meet much opposition in Denmark, where it is common to use debit or credit cards for the smallest of payments. Lobbyists for the move have pointed out many of the benefits that would result from such a move: security, time saved etc.

Not everyone agrees with such a  move though, the Germans – in particular – have been very vocal in their opposition: “Abolishing cash would hurt consumer sovereignty – the free choice of citizens about their payment instruments,”  said Carl-Ludwig Thiele, of the German Bundesbank. “Government agencies do not have the right to tell citizens how they should pay.” In my opinion, Herr Thiele is missing the point – no one is telling anyone how to pay – simply offering a choice on a massive scale. After all, it’s an election promise – people will have to vote on it first and if there is one thing that we have learnt in the last few days - the voting electorate can surprise the hell out of you!

Thanks for reading, normal editorial service will resume next week.

Steve Atkins
Contactless Intelligence

EXTRA: Here’s a little piece of trivia for you; the husband of the Danish Prime Minister, Helle Thorning-Schmidt is Stephen Kinnock (son of Neil Kinnock - the one time leader of the labour party 83-92)who just became a Labour MP in Aberavon, Wales in the last election. Small world, no?

Brits vs. Danes in “First to go cashless”

In last week’s editorial I mentioned the current Danish Government and its attempts to push future economic reforms in Denmark by becoming a cashless society. The first in Europe as it so happens. However, this week, not to be outdone, Payments processor Worldpay was quick to point to their 2014 insight report saying that the UK could, in fact, beat Denmark to that title. It’s probably the residual effect of election fever. One majority government later and the UK feels it can take on everyone!

Worldpay say that their latest data continues to show a trend that we at Contactless Intelligence have reported on numerous times. Namely that there is a significant shift in the way British consumers are paying for goods, with high street credit and debit card transactions rising just over 6% in 2014, following similar gains the previous year. Londoners are responsible for the single biggest year on year rise in card spending. Transaction volumes on credit and debit cards in the Capital have risen by 9.3% in the past year. Cosmopolitan Leeds is not far behind, however, with card-based payments rising by 8.9% in 2014, while Reading (8.0%), Southampton (7.9%), and Liverpool (7.7%) are also creeping towards the cashless tipping point.

Worldpay believes a migration of low value cash payments to card, alongside increasing use of contactless, is pushing the UK closer to the point where cards overtake cash as the dominant payment method on the High Street. Recent data from the British Retail Consortium suggests cash use is down by 14% over the past five years across the UK. Worldpay’s claims are backed by its data which shows a steady decline in average transaction values for credit and debit cards, from £31.51 in 2012, to £29.67 in 2014, an overall drop of 6%. In the fast-growing contactless sector meanwhile, where the number of transactions processed has risen by 150% in the last six months, transaction values have levelled out at around £7.24.

In the UK, where according to the UK Cards Association there were nearly 37 million contactless cards in circulation by the end of last year, contactless transactions rose from 11.2 million to 40.5 million, fuelled in part by the continuing rise in supporting infrastructure (there are now over 215,000 contactless terminals across the country).

Further research by the processing company on 2,000 consumers found that the majority of those questioned who were over 45 were still likely to have cash on them (including myself - *hangs head in shame*) but nearly 60% cent of 25-to-34-year-olds would prefer to never carry cash. “Shoppers don’t want to worry about having enough cash in their wallets. Whether they’re spending a leisurely day out hitting every shop on the high street or popping into a cafe for a quick latte, they just want payments to be fast, simple and convenient,” said managing director, Worldpay UK, Dave Hobday. “This is where card payments have the edge over cash, time and time again. It might not quite be curtains for cash just yet, but notes and coins are starting look like they belong to a different time.” 

Never was there a more perfect set of data structures and press release quotes aimed at making the statement - if the Danes can go cashless - so can we. I personally would have gone for “Great Britain. Probably the best cashless economy in the world.” 

Talking of money, it would be remiss of me if I didn’t mention a little story making the rounds this last week. Namely, that Visa Inc is looking to acquire (re-acquire?) Visa Europe. 

Speculation began with Bloomberg reporting that negotiations between the two payment firms are at an ‘exceptionally early and tentative stage.’ One of the potential stumbling blocks regarding the deal is the price. Advisers for both groups are visualising different estimates, with Visa rumoured to be valuing the deal at $15bn, and Visa Europe expecting a sum closer to $20bn. Despite the potential pitfalls, observers are forecasting that the negotiations are very likely to prove successful. Bloomberg says that the 3000 European banks that own Visa Europe have put in an option that would force Visa into buying back the company. This option is rumoured to expire in the next nine months. For the option to go ahead, 80 per cent of Visa Europe’s board would have to agree to the deal.

Analysts regularly ask Visa about the prospect. “It’s a consistent question,” Visa Chief Executive Officer Charlie Scharf said last month in an earnings call. “Until they get 80 percent, then it’s not going to happen. So I really don’t know.” Visa Inc. would like to fold Visa Europe into the larger company at the earliest possible time, Scharf said in March 2014 at an investor conference. “Over the long term, we absolutely would love Visa Europe to be part of the company,” Scharf said. “It just to us makes extraordinary amount of sense. Sooner is better.”

Talking of payment for company acquisition, there are reports coming out of South Korea that Samsung paid $250m for LoopPay, although there has been no real insight into the specifics of the acquisition financially. Earlier in the year, it was confirmed that Samsung acquired payments start-up LoopPay in an attempt to rival Apple and Google in the mobile payments sector, but no official figure was confirmed. ‘‘Our vision of inspiring consumers to transition from a physical wallet to a truly digital wallet will continue. I’m most excited that Samsung shares this vision and has chosen to help change how we shop and pay for goods and services,’’ said Will Graylin, CEO of LoopPay during the announcement of the sale. ‘‘This acquisition accelerates our vision to drive and lead innovation in the world of mobile commerce. Our goal has always been to build the smartest, most secure, user-friendly mobile wallet experience, and we are delighted to welcome LoopPay to take us closer to this goal,’’ stated JK Shin, president of IT and mobile division at Samsung. Since the news of the payment, both parties have remained tight lipped. 

Quite right, too. My mother always taught us it is was not the done thing to talk about money - no matter the amount. I’m not sure it counts when you need a topic for an editorial though…

Steve Atkins
Contactless Intelligence

Is Apple Pay to launch in Europe this summer?

It would appear that we have reached some form of milestone in the UK. Last weeks announcement by the UK’s Payments Council that the total number of cash payments made by consumers, businesses and financial organisations in the UK fell to 48% last year (from 52% in 2013) has created a small fission of expectation amongst the contactless payment industry. Change is coming…

Fundamentally, this is the first time that ‘non-cash’ payments have exceeded those made with cash, reflecting, says the Payment Council,  the steady trend to use automated payment methods and debit cards rather than pay by notes and coins. However, cash remains the most popular payment method by volume, followed by the debit card, which accounted for 24% of all payments last year.

The Payments Council is quick to point out that ‘despite the shift, cash remains the most popular way to pay among consumers, who used it for more than half (52%) of all their transactions in 2014. The current forecast is that this figure will drop below 50% next year (2016), but there is no prediction for cash to disappear.’ I would not really expect cash to vanish into the ether, but the fact that we are seeing parity between cash and cashless does speak for a trend developing in which the acceptance of cashless transactions is more prevalent.

Indeed, the environment for cashless transactions is not simply confined to to the UK, or to either cards or on-line payments. Last week, Auriemma Consulting Group (ACG) revealed in their bi-monthly Apple Pay Tracker, that nearly half (46%) of US iPhone 6 owners have now successfully used Apple Pay, up from 42% two months ago, and 63% of those are using the mobile payments service on a weekly basis.

The research, based on a survey of 500 iPhone 6 owners in the US, finds that 67% of those that have used Apple Pay in-store are now migrating towards merchants that accept the service and 51% say that they are using other payment methods, such as cash, less often since they began using Apple Pay. However, 45% of respondents have reported experiencing issues while setting up Apple Pay and the main complaint for the service is the lack of retailers that accept it.

Marianne Berry, managing director of ACG’s Payment Insights practice commented, “Mobile payments still comprise only a small fraction of overall payments volume. Apple Pay is the first service to garner double-digit numbers of users. As the upgrade cycle gives more consumers access to Apple Pay, and Android Pay comes to market, the long-awaited transformation of the payments industry may finally have begun. It will be interesting to see how US adoption patterns compare to those in the UK and in Canada — markets with higher penetration of NFC and contactless cards — when Apple Pay is rolled out there.”

Which could be sooner that expected if the ‘slip’ by a Belgium bank on Twitter last week is anything to go by.

Speculation is already rife that Apple Pay could be entering Europe some time after the Worldwide Developers Conference scheduled for June 8. However, Belgium-based KBC Bank may have have inadvertently disclosed Apple’s plans. A customer of the Belgium-based KBC Bank tweeted asking the bank if Apple Pay is soon coming to the network, since the bank recently added NFC support to its credit and debit card network. The Belgian bank’s reply to the tweet (when twitter translated) was: “This will be possible from this summer. Have a nice day.” Following the tweet of Apple Pay coming to Belgium this summer, KBC Bank almost instantly tweeted a rectified statement which read “Apple Pay Rectification: KBC is constantly looking for new mobile solutions. Apple Pay is currently not yet in scope. Our apologies.”

Although it is possible that it might have been an accident on the bank’s part, I would say we should expect Apple Pay in Europe this summer. Starting in Belgium perhaps? Apple is continuing its efforts to establish Apple Pay in the US and is expanding it to other countries; there has been news in the recent past of the company being in talks with banks and financial institutions in Ireland as well as Canada. The company is likely to be bracing itself for a rival payment service about to be launched by its rival, Samsung. Samsung Pay is expected to be launched in South Korea and the US this summer, with a European release reportedly scheduled for later this year.

Not everyone is so gung-ho, of course. Payments specialist CMSpi has revealed in a survey that consumer enthusiasm for mobile payments has yet to be matched at the merchant level in the UK. In its annual ‘Payments Insights’ report, the company revealed that less than 50% of merchants in the UK have explored mobile payment solutions. Merchants cited security, speed of processing and cost as the main reasons for not exploring options in this sector, while the most likely payments solutions to be deployed are contactless and Point-to-Point Encryption (P2PE).

Brendan Doyle, CEO of CMSpi, said: “Despite the hype brought about by emerging payment types such as Apple Pay and Zapp, we aren’t seeing this play out in increased merchant adoption. “The report revealed wariness when it comes to new solutions – with merchants considering implementing P2PE and contactless only now despite their five-year availability. It’s our opinion that even a mobile payment solution that is secure, cost efficient and fast will take time to gain critical mass.”

That may be, however, with Europe and especially the UK now primed for alternative payment solutions, merchants may have little choice in the matter if consumers demand such a payment option. After all, Zapp has gone on record saying that 21 million British consumers will switch banks to access mobile payments, 33% of these within a year. 44% of consumers plan to switch accounts if their current bank was unable to offer mobile payments and had no plans to do so. Consumers, revealed the Zapp survey report, say their mobile will become their preferred method of payment before the end of the decade for all kinds of purchases, including: sandwiches (51%); car fuel (52%); and travel tickets (57%). Almost half plan to use their mobile to pay for electronic products and one in five (20%) even say they would buy a house using a mobile payment.

Peter Keenan, CEO of Zapp said of the findings, “The success of early forms of mobile payment and the buzz around forthcoming launches of mass market initiatives has whetted consumers’ appetites. Anticipation levels are running high and our research suggests banks and retailers stand to gain significant competitive advantage from offering and accepting mobile payments early. I’m confident 2015 will prove a tipping point, as simple, secure mobile payments like Zapp become a reality for millions of British consumers.”

I for one am really looking forward to the release of both Samsung’s and Apple’s payment solutions in Europe. I feel that the tidal wave of change could really be here. And all we have to do is wait a few more months. 

Oh, the anticipation…

Steve Atkins
Contactless Intelligence

Another (insert brand name) Pay is about to launch…

As you are probably aware by now, Google released their updated/new(?) wallet last week called *mock shock* Android Pay. This mobile payment system will include many of the same features as Apple Pay, while the specific Google Wallet brand will continue as a peer-to-peer service. So that makes three mobile payment systems and counting, with the same(ish) name. Can’t wait for Windows Pay to launch*.

While Android Pay probably has its roots in Google wallet, its newest features — including fingerprint recognition for in-store and in-app payments — appear to be built on the foundation that Apple Pay established in October 2014. Android Pay, like Google Wallet, will work on all versions of Android operating systems back to KitKat, which launched in 2013 and enabled Host Card Emulation (HCE) technology for contactless payments.

But Google isn't bringing on every feature of Apple Pay. The Apple wallet requires access to the handset's secure element, but Google is sticking to its model of using a virtual MasterCard for point of sale purchases instead of storing account details on the phone itself. By doing this, Google say they can avoid some of the concerns raised by the inconsistent enrolment processes used by issuers to link their cards to Apple Pay.

Google is also setting the stage for a more collaborative mobile payment system. "We believe the same partnership model that fuelled Android's growth will enable Android Pay," said Dave Burke, vice president of engineering for Google, during his presentation at the Google I/O developer conference. Android Pay is an open system, Burke said, meaning it will allow developers to support in-app payments for third party applications, accessing features such as fingerprint authentication to create a consistent experience across the Android operating system. "Android Pay is cloud based, which provides the flexibility for all of the players [in mobile payments] except for Apple, which is hardware based," said Richard Crone, a payments consultant. "This will spur everybody on to develop mobile pay technology."

While Apple has been gaining market share with every new iPhone model released, Google's operating system still controls a majority of the mobile phone market in the U.S. and worldwide. Samsung is also planning its own mobile payment system for Android handsets, using an alternative technology that does not require most merchants to upgrade their point of sale hardware. We did a brief ‘Android Pay - the basics’ post late last week that you can read here.

Some commentators in the industry are claiming that with this latest release, Google and Apple have created a situation where the mobile wallet could have reached its limit, citing a number of factors. Todd Coulter, CEO/Founder at EyeBuy, Inc., in a post titled ‘Game over for M-Wallets’ makes a couple of strong points when looking at both companies. First, “they control the OS of the two most dominant phones in market today and are on every phone moving forward – all the other mobile wallets have to be downloaded and engaged and that is a major hurdle to overcome”. Secondly, “Apple and Google are deep into turning their Passbook and G-Wallet more into a "personal hub" that can consolidate and enhance the shopping experience with all roads leading into it (i.e. coupons, sharing, payment, loyalty, rewards, LBS, virtual reality etc.,)”. Coulter also takes a look at MasterCard and Visa with the comment, “Visa/MasterCard both claim to have either an m-wallet or m-wallet container but I actually don't think they really care since both of the OS payment schemes are built to keep Visa/MasterCard rails as the rule. They win either way but they also have to fight lack of direct consumer engagement with their own offerings – something that Google and Apple are very good at tackling.”

I wonder if he has a point?

I also spent a lot of time reading comments that accompanied many of the reports on the Google Android Pay release. To sum it up succinctly; the wallet is launching first in the US (again) to a decent amount of interest from the technology sector but no realistic merchant infrastructure in the real world day-to-day ecosystems. Unsurprisingly, Google is receiving scorn and impatience from those other parts of the world that already have the ecosystem in place and could bring immediate mobile wallet scale and ramp-up (e.g., UK, Australia, Canada, Asia etc). I mean come on, realistically the US is only just starting to follow EMV specifications and practises with Chip and PIN - are they really ready to scale up mobile payments? Despite the impression that these companies like to give that everything starts out there?

I am looking forward to the slew of mobile wallet releases this summer in those parts of the world that can actually do something with them immediately. I doubt I am alone in this sentiment.
 

Steve Atkins
Contactless Intelligence

* I have not heard any more than everyone else. Just a wild guess from my side…

Everyone is looking at 2020 - the cycle starts again…

Companies like to work in 5-year cycles. It’s a period of time that allows change to occur either naturally (evolution) or dramatically (revolution) and of course, 5-year plans tend to start either at the mid point of the decade or at the start/end of the decade. This week we have seen companies making predictions as to the state of the contactless industry by 2020. So what are we to expect?

Both Visa and Mastercard came out last week with predictions of how ubiquitous mobile payments will be by 2020. Speaking at Mastercard's 'Future of Payments' event in London, Mike Cowan, Head of Emerging Payments Products, explained how the firm is working towards complete contactless acceptance.The payment giant is laying down the law, demanding all new payment terminals rolled out from 2016 must support contactless transactions. By 2018 it's thought there will be 1 billion payment points in Europe supporting NFC contactless transactions, allowing customers to tap a phone or bank card to pay for goods, leading to a total adoption of the tech by 2020.

Despite the cap on contactless payments moving from 20 GBP to 30 GBP this summer, there was a little reticence about forecasting out too much. "The cap is managed at an industry level," commented Johan Lindstrom, Head of Digital Commerce, MasterCard Europe. "Lots of people have a say in it. There's pressure upwards from consumers who want more transactions to be made using contactless, but there's also pressure downwards from fraud teams want to reduce risk."

Visa Europe also put out research last week looking forward to 2020. According to Visa Europe, consumer adoption of mobile payments will grow faster than ever in the next five years, with six in ten Britons (60%) expecting to use their mobile devices for payments at least once a week by 2020.  The UK mobile payments boom will see an upsurge in the weekly value spent using mobile devices, with the market growing to an estimated £1.2bn  per week by 2020. The average shopper expects to spend £27 on mobile each week by 2020, £10 more than is spent today. In fact, nearly a quarter of respondents (24%) predict they will spend more than £50 a week using their mobile device by 2020.

Jeremy Nicholds, Executive Director for Mobile, Visa Europe said: “While we’re excited to see consumers saying they expect to triple their weekly spend using mobile payments over the next five years, we at Visa think those numbers could be rather conservative and that the actual adoption rate will be much higher. This is particularly true when you look at the growth in contactless usage, which saw European usage grow by 2x and spend grow by 3x over the last 12 months. Contactless and online commerce enhancements have been key in paving the way for the next generation of mobile payment technology. The environmental conditions are already in place to meet the demands and expectations for digital payments. It’s no longer a question of ‘if’ consumers will embrace this new way to pay – it’s when – and for us the next 12 months are when mobile payments become mainstream.”

Google has also been presenting what their Advanced Technology and Projects group (ATAP) have been up to  and what products and technical innovation we could be seeing in the next five years. Their offering? The smart jean. By that I mean textiles woven with electronics. Called Project Jacquard, it’s a group of innovations that makes it possible to weave touch and gesture capabilities into textiles and bring us closer to a future when clothing can be used as an extension of our digital lives. (So the press blurb reads). Instead of sewing or gluing an electronic patch to conventional cloth, Google’s wants to bring that technology into the fabric itself, meaning that high-tech conductive yarns could be weaved into fabric using existing industrial looms, allowing for unlimited variation and fashionable designs.

Google project’s website describes their big, fashionable idea; “Project Jacquard makes it possible to weave touch and gesture interactivity into any textile using standard, industrial looms. Everyday objects such as clothes and furniture can be transformed into interactive surfaces. This is possible thanks to new conductive yarns, created in collaboration with our industrial partners.” “We are enabling interactive textiles,” Emre Karagozler of ATAP said, “We do it by weaving conductive threads into fabric. It is stretchable; it is washable. It is just like normal fabric.”

Levi’s thinks they may be onto something, obviously, as Google has also announced it is working with the US jean maker to create a range of clothing that would utilise this techno-fabric. ”In our hyper-digital world, people constantly struggle to be physically present in their environment while maintaining a digital connection,” said Paul Dillinger, Levi Straus’s head of global product innovation. “The work that Google and Levi’s are embarking upon with Project Jacquard delivers an entirely new value to consumers with apparel that is emotional, aspirational and functional.”

All good, aspirational, 5-year cycle, innovative stuff. The only dark cloud last week was the news that Samsung Pay European launch looks to have slipped back from early this summer to September. Samsung Electronics Co Ltd said at a company event on Wednesday in Seoul that it will expand its Samsung Pay mobile payments service to markets such as China and Europe after an initial launch in South Korea and the United States later this year. Initial reports had set the time frame of a release of the payment service in Europe this summer (July) but Samsung Executive Vice President Rhee In Jong told investors that the firm is looking more at a “September time frame” for the initial launch of the mobile payments service in South Korea and the U.S., coinciding with the launch of the firm’s next flagship smartphone model.

The debut in the U.S. and South Korea for Samsung Pay will likely be in conjunction with the company’s next high-end mobile device. “The new service will likely be deployed on its next Galaxy Note device,” said Claire Kim, a Seoul-based analyst at Daishin Securities Co. “The key is how fast Samsung will be able to expand the service to lower-end devices.”

Well, that sucks! I know we’re all supposed to be mobile payment friendly by 2020 but the sooner some of these payment solutions start in Europe, the better. Come on people, only four and a half years left…

Steve Atkins
Contactless Intelligence

Apple Pay to hit the UK… Finally!

No content surprises here, I am afraid.  With last week’s Apple announcement of the upcoming UK Apple Pay launch, of course I would make it the topic of this week’s editorial. I mean, it’s not just big news - its massive news. Maybe they guys at Apple have read me whining about the endless (and often pointless) US launches, or maybe they just did the maths, i.e. contactless = UK. But yeah, we think it’s a major step. After all, we’ve been waiting for this for a number of years. How many years? No idea - I lost count (and almost lost hope, too…) but it seems as though we could be back on track for bring mobile payments to mass adoption in the UK.

The announcement was made by senior vice president of Hardware Engineering, Jennifer Bailey (who, as a sidenote, is Apple’s first female executive ever to grace the stage at the WWDC). At the launch, she told the audience, eight of the major British banks will support Apple Pay, including HSBC, Santander and Nationwide. By this autumn, Apple Pay will work with nearly 70 per cent of credit and debit cards in the UK when Halifax, Lloyds Bank and the Bank of Scotland will be among the other banks added to the list. From next month, people will be able to use their iPhones and Apple Watches to pay for items in locations such as M&S, Costa, Waitrose, the Post Office, Boots and even on the TfL network. Tourists will also be able to use their Apple Pay in London ( I guess as long as they are from the US? - the details are a little vague on that point). However, the TfL angle is pure genius. It worked with Oyster, then contactless bank cards, so now it looks as though it’s going to be the turn of the mobile. I can’t wait to see adoption, usage and more importantly, the usage figures (are you reading this, TfL?).

Another couple of points concerning Apple. First, their Passbook app is also being renamed as Wallet in iOS 9, and will now allow users to save their loyalty and rewards cards in addition to their payment cards. The Wallet app also helpfully suggests the card you need when you’re in the store. Kohl’s, JC Penney and BJ’s will be the first retailers on the platform in the US, and Walgreens and Dunkin Donuts will be bringing rewards cards to the Apple Pay platform. I imagine there will be a rush in the UK too for loyalty cards to added to the wallet app. Verifone will enable the first six US retailers to be the first to accept NFC loyalty transactions on Verifone’s MX 915 and MX 925 terminals for their consumers to redeem rewards and accrue points. “Adding loyalty to Apple Pay will open a world of opportunity for a wide range of merchants to engage consumers and grow their businesses,” said Vin D’Agostino, executive vice president of Commerce Enablement, Verifone. “We are proud to support Apple Pay in expanding contactless payments to include loyalty. This is a powerful reminder of Verifone’s expertise and expansive client relationships as we continue to simplify payments and enhance customer engagement opportunities for our merchants.”

Second is the news from Visa Europe that customers who choose to use Apple Pay in the UK will be able to use the mobile payments service to make transactions over the current contactless limit of £20 at select retail locations. MasterCard also expects to see merchants being able to accept higher-value transactions in time. Visa Europe’s Jeremy Nicholds said in a statement sent to NFC World that, “While there will be some retailers who will keep the £20 limit initially at launch (the limit is soon to rise to £30 in the autumn), not all retailers will have the limit at launch. There will be others who will choose to get rid of it altogether in time.” 

“Currently, the majority of payment terminals are set to accept contactless transactions up to the £20 spending limit, which will rise to £30 in September,” MasterCard also told NFC World. “However, with more digital devices coming to market, MasterCard is supporting merchants and acquiring banks as they update terminals so they accept authenticated transactions above this limit from digital devices.”

Third, Square has also been quick off the mark to announce its latest reader; a wireless reader that enables any business with a tablet or smartphone to accept Apple Pay and contactless payments, as well as EMV chip cards. Square is offering 250,000 of these readers free as part of its continued commitment to give local businesses (in the US) access to the smartest technology through secure and simple hardware. “Apple Pay created an easy, fast, and secure payment experience for customers,” said Jesse Dorogusker, head of Hardware at Square. “We want to make it easy for every type and size of business to accept Apple Pay with our latest Square Reader, the most powerful and affordable contactless and EMV reader on the market.” Through this partnership with Square, Apple is also taking on PayPal Here (PayPal’s own dongle-based card mPOS) with a new card reader capable of accepting Apple Pay payments. Perhaps we will also see the Square mPOS here in the UK?

Of course, the great news in all of this is breath of new life that mobile payments has received in the UK. Beyond Apple Pay, Contactless & Mobile Award 2015 award winner Zapp, unveiled their new ‘Pay by Bank app’ paymark, the universal symbol indicating to consumers that a retailer or biller can receive an instant mobile payment directly from a bank app. Peter Keenan, Chief Executive of Zapp, commented, “We’re delighted to unveil the new Pay by Bank app paymark ahead of our consumer launch. All of our consumer testing shows that it will be extremely effective in giving consumers the confidence that their mobile payment is backed by their trusted bank. Retailers and businesses will benefit from the Pay by Bank app simplicity which will deliver better conversion at a significantly lower cost, something the retail industry has been demanding for years. Zapp will continue to be our trading name and also the name we use to describe the coalition of partners backing Pay by Bank app.” Pay by Bank app will initially be offered by HSBC, first direct, Nationwide, Santander and Metro Bank. The time frame so far indicates availability to be Autumn 2015.

Finally, what I really hope to see in the UK later this year is the new Samsung smart watch. Samsung has confirmed that Samsung Pay will be incorporated in all its smartwatches later this year. Currently, the company is reportedly planning to launch a new wearable device that will be able to make mobile payments. A variety of news outlets in South Korea have reported news from anonymous sources claiming that in order To push its new Samsung Pay service to consumers, the Korean smart device supplier is coming out with another smart wearable that will especially promote the feature. The unannounced smartwatch will have NFC to allow contactless payment and is code named Orbis. Samsung has a few other smartwatch models presently available for purchase, but just like other Android Wear units, it is not doing very well especially if compared to the enthusiasm of the market towards the Apple Watch. About 720,000 units of Android Wear smart wearables were shipped in 2014, and those numbers were a summation for all brands running the OS including LG, Huawei, and Samsung.  So far, Apple Watch is the only smart wearable today that offers contactless transactions, but not a lot of people have been taking advantage of the service. This is due partly from the rarity of Apple Watches; Cupertino is yet to complete shipment of units purchased in April and May. This will, of course, change once supply catches up to demand, I guess.

It looks like it’s going to be a busy second half of the year for mobile payments in the UK and I’m looking forward to it!

Steve Atkins
Contactless Intelligence

GB does contactless right - the world could learn from it.

There is always a reason to 'diss' the UK. Food, weather, politics - you name it. But there are also certain things that the UK does right. One of them being the acceptance and implementation of contactless technology in a variety of formats, from ticketing to payment. Some countries or regions look to the UK and how it has absorbed contactless technology and try their best to learn from it. Others, well, let’s just say that they have a way to go.

Take the ‘myki’ ticketing project in the Victoria region of Australia, for example. Myki was supposed to be Melbourne’s equivalent of London’s Oyster card but the differences have been vast. The project has cost the Victorian taxpayers $1.5 billion and been plagued by problems - many that we have followed over the last few years. Not that the myki card has been the only transportation card in Australia to have suffered problems. Sydney's $1.2 billion Opal Card has not been immune from issues, with software problems overcharging some commuters. One plus for the Opal is that it takes only 60 minutes for the card's balance to be updated after being topped up online. Users of myki are advised to allow at least 24 hours for their cards to be updated. Can you imagine London commuters waiting 24 hours for a top-up? Even 60 minutes seems a lifetime!

However, things could be changing - Cubic Transportation Systems, which also operates the Opal Card in Sydney and the Go Card in southeast Queensland  as well as the all important London transportation contactless ticketing system - could be the saviour of Melbourne's ticketing system. They, along with Accenture, which has been part of the rollout of the Presto card in Toronto and was recently awarded a contract to replace the public transport ticketing system in Washington DC, have been invited to bid for the tender of the state's public transport ticketing system. Public Transport Victoria chief executive Mark Wild said the shortlisted bidders had the necessary experience to run the system and address current and emerging challenges. “While our main focus is the continuity of ticketing services, the chosen vendor must have the capability to identify and map pathways to deliver future technologies that support service improvements," Mr Wild said. He said PTV was seeking an experienced operator to run myki and deliver "maximum value for money" for Victorian taxpayers. The tender process is expected to be completed by the middle of 2016, with the successful bidder due to commence their contract at the start of 2017.

However, Public Transport Victoria are obviously trying to claw back costs wherever possible. A recent report out of Australia claims that any prospective future myki operators have had to stump up $50,000 bonds to access a secret corporate-style cache of transport data, as the state government prepares to shortlist preferred tenderers. But the data they are paying to see may not truly reflect the $1.5 billion system: the Auditor-General recently found Public Transport Victoria did not possess a complete and reliable picture of myki's operational performance. Tender documents show companies expressing interest in taking over the contract must pay the $50,000 acceptance bond to PTV, which will allow them to access a "data room" of information regarding Victoria's public transport network.

Public Transport Users Association spokesman Tony Morton said it was odd that a contract involving fare collection for a public transport system was shrouded in commercial secrecy. "It's the whole attitude to information within the state government," he said. "This idea that any information about the operation of the public transport system is a closely guarded trade secret that is so valuable it has to be kept out of the hands of the public. If anyone seeks it they have to pay $50,000 to see it." 

One group of transport operators that is far from shy in telling you their experiences about contactless payments (or anything else for that matter) is that London street fixture - the black cab drivers. News came in last week that black cabs could be legally obliged to accept contactless credit cards, as a new set of proposals are opened up to consultation. Transport for London has put forward the idea as part of a move to modernise the industry and make it easier to get around the capital. The proposal was backed at a meeting last month between TfL, the deputy mayor for transport Isabel Dedring, senior taxi trade representatives and card providers. Just to clarify - there is no intention to stop taxis accepting cash payments. “The London taxi trade has long been envied as a world-leading service,” it said. “TfL and trade representatives are working together to maintain that reputation by trying to make it as easy and convenient as possible to use.”

Helen Chapman, TfL’s general manager of Taxi and private hire, said: “Card payments have become a central part of the lives of Londoners over the past few years, something that has only increased since the introduction of contactless payment. “We are always trying to find ways we can improve the services that we offer to our customers and, with only half of taxis currently accepting card, we are keen to hear whether passengers and drivers feel that this would be a worthwhile change.”

Finally, I wanted to draw your attention to the ‘Contactless Britannia’ banner below, that is an indication of our editorial and conference direction for the 2015 - 2016 season. In this upcoming season, Contactless Intelligence is putting a focus firmly on Great Britain as an example to others. Editorial coverage, roundtables, insights into successful implementations and conference's; we are looking to cover Europe's contactless star. Great Britain has always been cool but now there’s a special something extra - it’s contactless. Contactless and cool! In the world of mobile and payment, GB has catapulted itself to the top position. Like no other EU member state, GB has introduced contactless technology as  a de-facto transaction standard for every day life.

User-centric, convenient and large-scale implementations have created an international showcase that demonstrates, quite frankly, how to do it right. The most obvious example is the nation's capital, London. Transport for London has provided its citizens and guests alike with the ultimate experience: An intelligent infrastructure that makes the best use of the technology that powers it. Beyond transport, most large retailers accept contactless and mobile payment, while charities, marketers and other sectors are utilising this technology to turn change into cash and creating real economic growth.

The exemplary use of technology is not just limited to London. An increasing number of towns are working towards the vitality of city centres and the success of businesses within them. The devolution of power from Whitehall to individual cities is a key project of the new Conservative government. Much has been made of the need for increased economic growth from out-of-town opportunities and the redevelopment of urban centres outside of the country’s capital. Increased economic expansion calls for growth through interconnected trade and transportation, local and visitor footfall and an urgent call to extend infrastructure in terms of technology and the understanding of how to successfully implement it. What is required is leadership by the the local authorities to partner with retailers, traders and transportation corporations to develop strong local and regional brands through innovative events, quick and easy payment and transportation opportunities and innovative proximity marketing campaigns.

We will be supplying further details in the coming weeks but please start by making a note in your diary of an upcoming roundtable session to be held in London on the 14th October. Two executive roundtables in which we hope to bring together UK town authorities, BID (Business Improvement Development) representatives, retail experts and technology providers. Participants will discover the needs and requirements from regional economic leaders, as well as transportation and retail executives, while also learning about successful technology implementations in different regions of the UK. We will also look to create dialogue on successful collaborations - across applications, across regions and across technologies. Technology experts will share their solutions and roadmaps for real technology implementations and the considerations that go hand-in-hand in using them to unlocking sustainable urban renewal and economic growth.

Further details be available soon but if you want to get a head start and know more about this exciting session, drop me a line and I will happily take you through it.

Until next week.

Steve Atkins
Contactless Intelligence

Contactless ‘up North… Well worth it!

Almost a year to the day, we are reporting once more on what was know in 2014 as the ‘Beech Road Experiment’ – a social engineering experiment that looked to rid one UK high street of cash and to ascertain the public’s attitude to contactless payments. 

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

One year on, it is being reported by the Payments Council that “card payments have now passed the ‘tipping point’, overtaking the use of cash in daily life and it’s the spike in lower value card transactions, particularly on contactless, that has been most noticeable over the past 12 months.” The UK’s first ever cashless street includes a deli, bakery, newsagent and cafes - exactly the type of high street businesses that have suffered most during recent years. Twelve months later and the Beech Road ‘cashless street’ retailers have all recognised a further shift towards cards from their customers - who are spending more as a result of this convenient way to pay.

Colin Richardson, owner of Richardson’s bakery on the road, commented, “Turnover has risen seven per cent in the past year and that’s down to the number of customers paying by card. Card payments have doubled in the past year in our shop - from people paying for birthday cakes to workers coming in for their lunch. We also saw an increase since we dropped the minimum spend on the card machine. Contactless payments account for just under half of our card transactions. Public habits have definitely changed and the value of card payments we take is only going to keep rising.” Not surprising, as it appears that card payments now make up 61 per cent of the total income as more and more customers opt to go cashless. Other small business owners in the street have echoed Richardson’s sentiments.

Handepay believe that the success of the Beech Road retailers in growing their businesses as a result of card payments should serve as an example to other independent businesses of the need to adapt to modern lifestyles. Mark Latham, product and innovation director of Handepay, says: “The cashless street day was all about highlighting the fact that those independent businesses who do take card payments are avoiding money walking out the door. Contactless payments in particular are driving the cashless revolution and with the spending limit rising to £30 from September 2015 and the imminent launch of Apple Pay into the UK, this will only move at a quicker rate. The future for the local high street is in making it as easy as possible for customers to continue to shop there.”

And just in case you thought that contactless payments don’t save that much time, new research has revealed that paying contactless saves consumers a great deal of time – 90 years’ worth in fact! It’s the British Banking Association (BBA) that has come to this conclusion, calculating the time based on how long contactless has been operating in the UK. On average, each contactless transaction takes just half a second to complete, compared to seven seconds with a standard chip and PIN card. Up until the end of 2014, 452,912,149 contactless purchases have taken place. According to the BBA, this amounts to a total of 93.6 years’ worth of time being saved by consumers – a statistic that it believes further confirms the convenience of the payment method.

Anthony Browne, BBA chief executive, said, “Banks’ innovative new ideas like contactless cards are helping customers – saving them time and hassle. Technology is changing all of our lives and banking is no different. Banks are investing billions, responding to the wishes of customers who want new and easier ways to pay for things and do their banking.”

So there we have it - empirical evidence that contactless payments helps high street retailers thrive and will save about 90 years on consumers as a group. Is there no end of humanitarian benefits to this magical technology?

(Sorry, but IT IS the start of the silly season - hopefully we’ll have some REAL news soon…)

Until next week.

Steve Atkins
Contactless Intelligence

‘Blink’ to pay…

If the rumours are to be believed, then tomorrow, 14th July, will see the release of Apple Pay in the UK. We haven’t heard anything to contradict that claim so let’s see what happens. What I DO surmise is that mobile payments in the UK will most definitely get a kick up the ‘proverbial’ if it does happen. Expect a mixture of confusion, delight and suspicion to follow - not to mention the whole ‘Mobile Payments - are they safe?’ Editorial-based opinions that are bound to follow (Daily Mail outrage?).

Over the years we have expounded the benefits of all types of mobile payment security aspects on Contactless Intelligence from embedded secure SIMs, to HCE, through to tokenisation. Lloyds Bank last week announced that they were trialling a new way of authenticating mobile banking registration using NFC. Lloyd’s ‘tap to bank’ scheme is largely similar to how we would use it for payment purposes today, however, there is a small (brilliant?) twist; customers will be able to use their contactless debit cards to verify their identity. 

Usually, when someone wants to complete the mobile banking registration process, they need to receive a phone call from an automated system to authenticate the user. Lloyds customers will be able to tap their cards against an NFC-enabled smartphone (android only at the moment - for obvious reasons), and immediately authenticate themselves. This means the registration process is much simpler and quicker than before, and will eventually be rolled out to other tasks, like authenticating new payments. The new process is still in the trial period using a base of only 125 users but noises are being made concerning successful results preceding a full rollout. 

“With the widespread take up of contactless cards and most new smartphones now having NFC technology, this tap to bank trial is developing enhancements to banking processes that many people could benefit from. This is one of a raft of new technologies that we’re experimenting with to help our customers,” said Marc Lien, Lloyd’s Director of Innovation and Digital Development.

And then there was that ‘other’ story doing the rounds, also strangely enough, concerning payment authentication. Stick with me. It’s not a ‘silly season’ story. It could well be the future of authentication and it concerns ‘selfies’. OK, not really selfies - biometric facial recognition to be exact, and it’s the brainchild of MasterCard. Allow me to explain.

MasterCard is testing a smartphone app that uses facial recognition to verify online purchases. Instead of having to manually enter passwords or security codes, users simply hold their phone up as though taking a selfie to approve transactions. The initiative, which was unveiled last week and includes a trial group of 500 customers in the US, will ask them during their mobile check-outs to hold up their smartphone and snap a photo of themselves.

Here’s how it works. The user downloads the MasterCard phone app to use the authentication featured. MasterCard says a pop-up will ask for your authorization after you pay for something. If you choose fingerprint, all it takes is a touch. If you go with facial recognition, you stare at the phone - blink once - and you're done. MasterCard's security researchers decided blinking is the best way to prevent a thief from just holding up a picture of you and fooling the system. The company said it doesn't actually get a picture of your finger or face. All fingerprint scans will create a code that stays on the device. The facial recognition scan will map out your face, convert it to digital data and transmit that over the internet to MasterCard.

Reviews that we found relating to this topic appear mixed. "I understand why they'd want that data, but no, I do not like it," said Robert M. Lee, co-founder of consulting firm Dragos Security. "From a privacy aspect it's awful -- but from a business perspective, I don't understand why they'd accept that risk." However, Nok Nok Labs were a little more upbeat. "They're storing an algorithm, not a picture of you. And I'm sure they're doing the appropriate stuff to guard it," said Phillip Dunkelberger, CEO of Nok Nok Labs.

I remember a while back when Google tried facial recognition on Android phones. There were a lot of problems in the early days.  For example, people realised you could take a photo of somebody, present it to the camera, and the phone would unlock. Google has openly admitted on its Nexus user site that the facial recognition option is not the most secure option out there. “You can have your device unlock when it recognises your face. After setting a trusted face, every time you turn on your device, it'll search for your face and unlock if it recognises you. IMPORTANT: This is less secure than a pattern, PIN or password. Someone who looks similar to you could unlock your phone,” warns the site.

MasterCard, however,  believe this is the way forward, and expect it to be a big hit with the younger generation. "The new generation, which is into selfies ... I think they'll find it cool. They'll embrace it," said Ajay Bhalla, president, Enterprise Safety and Security, MasterCard. Mastercard is exploring facial recognition as an alternative to SecureCode, its security software that asks online shoppers for a password to make purchases. The company said the technology was used in three billion transactions last year.

I, for one, am not impressed. I live in Berlin. A tourist-rich city. Barely a day goes by without me passing groups or individuals taking photographs of themselves. Now I could also find it happening at the check out? A little too much for me - but more dangerous for these selfie-taking individuals…

Until next time,

Steve Atkins
Contactless Intelligence

PS. I forgot to mention in the last editorial that we are issuing our News Review every two weeks over the July and August months due to annual leave and so forth. We will be moving back to a weekly release status from the 24th August onwards.

Contactless payments security drama; a storm online?

Don’t say we didn’t predict this a few weeks ago, but once more the UK media has been awash with a story concerning the state of security of contactless cards. Brought to everyone’s notice by the UK’s Daily Mirror is research that was conducted by consumer-watchdog group, Which?, that showed the card numbers and expiration dates of contactless cards can be captured through the use of a simple scanner, opening the door for millions of users to be exposed to fraud.

According to The Daily Mirror, a report of the test results stated that while the name of the cardholder and the security code were not captured during the transmission, cybercriminals are still provided with enough information to make purchases from a mainstream website. “By touching volunteers’ cards to our card reader we got enough details to go on an Internet spending spree,” the report claimed. The group’s tests proved a handheld device placed near a “tap and pay” card could easily pick up the sensitive data. Six different debit cards and four credit cards were tested and all of them showed signs of the security flaw. The stolen information was then used to successfully purchase items online.

Luckily, cooler heads are prevailing (it’s not like we haven’t seen this hysteria before), with the UK Cards Association stepping up to dismiss the findings and informing The Guardian newspaper that the methods shown were not a new discovery. “Instances of fraud on contactless cards are in fact extremely rare, with losses of less than a penny for every £100 spent on contactless – far lower even than overall card fraud,” Richard Koch, head of policy at the UK Cards Association, explained to The Guardian. He added that, in the majority of cases, a retailer requires more information, such as the security code and the cardholder’s address, to even begin processing a transaction.

Naturally, many in the contactless payments industry are a little exasperated by this type of scaremongering with most comments out there being summarised by one anonymous commentator saying, “Nothing new here but the real story should be why are there online stores still out there not mandating CV2 and checking AVS?”. Very true indeed.

While we are talking about about security in the card industry, Mastercard also put out an interesting video last week looking at their super-secret Digisec Lab, housed somewhere in the heart of rural England. This is a confidential facility that works with the payment industry – including government security agencies and academics – to research, develop, test, and importantly, break, the latest in payment security innovation to ensure payments are protected in both the physical and digital worlds. All very ‘backroom boffins-type thing’, but interesting nonetheless. A good countenance to the Which? story.

A more positive report out from Lloyds Bank Cardnet last week went as far as demonstrating how merchants taking contactless payments would invariably find themselves with more business. The new research claims that usage of contactless cards has trebled with just under half of consumers (47 per cent) expecting or preferring businesses to offer contactless payment for low-value transactions of less than £20.

Despite its relatively recent introduction, over a tenth (12 per cent) of consumers state that not enough retailers offer contactless and just under a tenth (9 per cent) suggest that the current £20 spending limit is too low. However, all is not lost for those businesses that do not hold payment terminals, as four out of ten consumers (40 per cent), say that they would still continue to shop in businesses that do not offer contactless card payment facilities.

Of those that own a contactless card, when asked what they liked most about contactless payments, a quarter (25 per cent) of respondents stated speed of transaction and a near identical number (24 per cent) said ease of transaction. The least favored element of contactless payments is security, with over a third (37 per cent) stating this as their main dislike.

So, get ready for more opportunities for contactless payments out there. Even if not everyone is happy about this new development. The online satirical website, ‘The Daily Mash’, have put out an article* claiming that “Retail staff have complained that contactless payment means they no longer get to stare intensely at customers while their card goes through”. The piece goes on to say;  

‘Nikki Hollis, who works in a garage, said, “The only good bit about this job was messing with people’s heads in that seemingly endless few seconds between PIN entry and PIN acceptance. They would look at me, I would look at them, they would look at the floor. Sometimes they would say something about the weather, which I would ignore. Then they start to shuffle uneasily, at that moment they want nothing more in the world than to take their Ginster’s product and flee into the night. About a third of the time I would pretend something was wrong with the machine, just to make them do it again. The rest of this job is shit, but for those few seconds I was a minor god.” A CBI spokesman said, “Soon your debit card will be a miniature drone which flies out of the window at night and makes aspirational purchases of Japanese denim and French horns. Look at your own payment history. Are you honestly saying we couldn’t spend it better?”’

Until next time,

Steve Atkins
Contactless Intelligence

* This section is a joke. Please don’t write to me about how wrong this part is. Please.

Contactless payments status: end of the road or the beginning of the next stage?

The news site Pymnts.com, together with analytics firm InfoScout, led a survey of 1,498 iPhone 6 users as part of their third report on Apple Pay. Their findings suggest that just 3% of US iPhone 6 owners regularly use Apple's contactless payment system to buy products in stores and that just 13.1% of them had used the Apple's payments system, down from 15.1% in March. 23% said they had used Apple Pay when they were surveyed, compared with 39.3% in March.

When asked why they didn't use Apple Pay, nearly a third of those surveyed said they were happy with their current payment method (credit and debit cards or cash). Worse, 34% said they didn't know how the new system worked. After years working and reporting on the contactless payment industry you may think that I would find these kind of results disappointing. But, funnily enough, I don’t. For a start, this is a US survey with a smallish survey number and, pardon me for saying this, but I actually consider that our American cousin may be a little behind the curve when it comes to accepting alternative payment methods.

This is not the case in Europe. Each week we are bombarded with reports concerning new areas of possible contactless payments that are being opened up. Interestingly, many of these payment areas are being pushed by central or local government or other centralised organisations. Only a few weeks ago the news was out that mobile contactless payments could be coming to market stalls on the streets of London with the launch of a £20m London Regeneration Fund to encourage new ideas. The Mayor hopes technology innovators will work with local authorities and traders to develop a new contactless payment system for market stalls.

“Our dynamic high streets are teeming with economic activity and bristling with creative minds but we need to make sure they are equipped to meet the demands of our ever-changing city. This fund will take everything that is so good about our local town centres and fuse it with ground-breaking technology and innovation to create high streets that will power our economy for years to come,” said Mayor of London Boris Johnson. To launch the campaign, the Mayor’s Office is hosting a ‘Regen Bootcamp’ with ‘open ideas’ sessions that will see designers, architects, tech innovators and social entrepreneurs collaborate with local authorities, community and business organisations to thrash out innovative ideas to support London’s high streets and places of work – including the acceptance of contactless payments for market stallholders through mPOS terminals. And why not? It makes perfect sense with the acceptance for contactless payment transactions at an all-time high.

Even new research from YouGov has found 75% of UK consumers say black taxis should accept contactless payments. Commenting on this, Dave Hobday, UK Managing Director, Worldpay, said, “The very idea of paying for transport in London with cash is a thing of the past and throughout the economy businesses that fail to offer card payments are rapidly losing out to their more savvy, technologically advanced competitors. People now expect to be able to book, track and pay for their cabs at the touch of a button. Black cabs are one of the last bastions of the cash-only economy and they need to find a way to stay relevant against increasingly popular alternatives. Digital transformation is creating huge disruption across every industry and, while accepting card payments is a step in the right direction for London’s cabbies, there may be a few bumps in the road for them yet.”

“The regeneration fund is an example of the London Mayor’s commitment to innovation following on from the successful contactless roll-out with TfL and the acceptance by consumers for contactless payments,” commented Guy Douglas, Digital High Street Consultant. “The Regeneration Fund launch was attended by all of the London regeneration experts, where there was a real interest in the online, mobile and contactless sectors and what they could do for the regeneration of Britain’s high streets.”

However, one payment area that I feel will expand over the next year may be a distant relation to contactless payments but remains contactless in the truest sense of the word. This payment area is Card on File – found in many applications that are available to the consumer today. Consumers are increasingly looking to mobile apps for their content and commerce needs. Recent research shows that app use has soared with the number of regular app users, or those who use apps between one and 16 times per day, up 25% from Q1 in 2014 to nearly 1 billion people. The number of ‘super users’, or those who access apps between 16 and 60 times per day, has jumped 34% to 590 million. With other in-app payment methods already launched or set for launch, including Android Pay and Samsung Pay, this means there’s a significant amount of app users who’ll be able to take advantage of quicker, more seamless payments via mobile (and we are not just talking about Uber!).

The scale of barriers to adoption for in-store mobile payments and in-app mobile payments can be fairly substantial. However, with smartphone penetration expanding and Wifi and 4G becoming more ubiquitous it is easy to imagine that many people will be happy to pay for their goods using their smartphone as their own personal payment point. “The real excitement with Apple Pay is that it has made payments within apps quicker and more secure, enabling consumers to get what they want, when they want it, in as little as a single touch. The future of payments is almost certainly mobile and the present is increasingly in-app,” wrote Dennis Jones, CEO of Judo Payments in a recent Payment Source article, titled, “In-App Payments Are the Real Future of Mobile”. Expect to see more on this topic in the very near future.

Finally, not so good news for the public transport travelling citizens of Manchester or, indeed, IT services firm Atos. Transport for Greater Manchester (TfGM) has terminated its contract with the company responsible for rolling out a smart ticketing system after delays. Atos was contracted in 2012 to design, build and operate the 'Get me there' scheme. However, last week, TgGM said it was "clear that Atos cannot deliver" the system and ended the deal. Smart ticketing was introduced in October on Metrolink, but only to those with concessionary travel passes.

It was set to be rolled out to tram and bus passengers this year, with hopes to extend it further to rail travel.

In a joint statement, the transport body and Atos said the development and launch of the 'Get me there' system will continue, but with alternative suppliers. A TfGM spokesman said: "Today's smart card already looks destined to be overtaken by contactless payments and mobile apps on smart phones. Given TfGM's commitment to deliver an integrated smart ticketing scheme, and with the opportunities afforded to us by the forthcoming Buses Bill, it is only right that TfGM re-thinks its approach to the 'Get me there' scheme to ensure that it is flexible and fit for the future."

And so it’s back to the drawing board with, I am sure, no shortage of candidates looking to replace Atos in the process. You know who you are, and can we talk talk to you about attending the Contactless Britannia Roundtable in October? We'll be in touch…

Until next time,

Steve Atkins
Contactless Intelligence

Is MCX being forced to deliver on its payment solution promise?

Well, perhaps ‘forced’ is too strong a word, so let’s call it ‘time to put up or shut up’. For the uninitiated, I am talking about the Merchant Customer Exchange (MCX). Some of you may remember that, about a year ago, soon after the launch of Apple Pay, both Rite Aid and CVS Health disabled the contactless payment features of its credit card terminals. “Given that we are still in the process of evaluating our mobile payment options, Rite Aid does not currently accept Apple Pay,” Ashley Flower, Rite Aid’s senior manager of public relations, said in a previous statement at the time.

This was due to an agreement with MCX partners including that they would not adopt alternative mobile-payment systems for a period of time while they worked on getting their own payment solution, called 'CurrentC', off the ground. The news that both retail chains had disabled their contactless payment acceptance on their stores’ POS caused a lot of ruffled feathers from consumers and mobile payment bodies alike. MCX acted as spokesperson on the matter and appeared to do more about-turns than an soldier on a parade drill. However, that waiting period is now up and the retailers that make up the MCX  are now free to use alternative payment solutions in the form of Apple Pay, Google Wallet and Android Pay, and Samsung Pay.

Perhaps this is what has forced MCX, three years after announcing their intention to enter the mobile payment market with CurrentC, to finally begin trials. Wal-Mart Stores, Target and Darden Restaurants will begin its first public tests of its mobile-payment application at several member retailers and restaurants in Columbus, Ohio, in the coming weeks. With MCX losing its exclusivity with its retail partners, some of the MCX partners have already announced they are looking to accept some of the alternative payment solutions out there.

Rite Aid, one of the original chains to disable contactless payment announced last week that they would start to accept Apple Pay. That means customers who use Apple Pay on the iPhone 6 will be able to use it at all of Rite Aid’s 4,600 stores across the country. Additionally, Rite Aid will begin accepting other contactless payment options, including tap-to-pay credit cards and Google’s upcoming Android Pay. “Increasingly, consumers are actively seeking out and incorporating mobile technology into many facets of their life, including their shopping and purchasing decisions,” Ken Martindale, CEO of Rite Aid Stores and president of Rite Aid Corporation, said in a statement. “By accepting mobile payments, we’re able to offer Rite Aid customers an easy and convenient checkout process, which we know is important to them.” Founding MCX partner Best Buy said it also plans to accept Apple Pay in stores later this year.

Retailers and restaurants partnered to create MCX in 2012 as a way to jump ahead of technology companies in the race for a popular mobile-payment system and to avoid credit card fees that cost retailers billions of dollars each year. But the effort has been stymied by challenges inherent in creating a new payment system without using credit cards, as well as internal conflict between the retailers on strategy, according to former employees. CurrentC relies on what some consider to be a less secure means of payment processing. CurrentC enables users to pay in-store by pointing their camera at a one-time barcode displayed on a retailer terminal to authorise payment. The payment amount is directly deducted from the user’s bank account, which is linked with CurrentC on the backend.

Let’s wait and see what results Columbus, Ohio, gives us on CurrentC. The phrase, ’a day late and a dollar short’ springs to mind, however. Over to you, Columbus, Ohio!

And finally… Since contactless payments were first accepted on London public transport a few years ago, it's become increasingly easy to get around the capital without cash or a loaded Oyster card. Whether you're equipped with a contactless card, Apple Pay or another mobile wallet, you can ride the vast majority of London transport services hassle-free. As of last week, you can now use contactless payments on the Emirates Air Line cable car, too. I know (OK, I found out last week), that it's a limited service that only travels between the Royal Docks and the Greenwich Peninsula, but if you're after some amazing views of the capital, not having cash on you will not stop you (are you listening, out-of-town tourists?). With this addition, London's transport network is almost as contactless-friendly as it can get, with Thames riverboats now the only service that still requires an old-fashioned ticket purchase. Perhaps that will change soon…

Our Contactless Britannia Roundtable (14th October) page on the Contactless Intelligence site is taking an increased number of hits as more people return from annual leave. Consequently, places are starting to be reserved for the meeting. Remember, this a one-day, two-executive roundtable sessions that will bring together local authorities, BID (Business Improvement Districts) representatives, retail experts and technology providers. We only have a limited number of seats at the table so please, in order to avoid disappointment later, talk to us now if you have an interest in bringing contactless technology to towns and cities throughout Britain. We look forward to speaking to you soon.

Until next time,

Steve Atkins
Contactless Intelligence

UK contactless payments; minimum amount drop, maximum amount rises

September in the UK will see the start of a couple of changes to contactless payment transactions as this payment method continues to find increasing acceptance, both with consumers and merchants.

The first change is that, from tomorrow, 1st September, consumers will be able to to spend up to £30 using their contactless credit or debit cards. Currently, the most one can spend in a single transaction is £20.  ‘With more customers carrying contactless cards and more shops taking contactless payments, it was felt increasing the limit to £30 would benefit shoppers and retailers. The average supermarket shop is £25, and increasing the limit from £20 to £30 will give customers more opportunities to use contactless cards to pay for their everyday purchases,’ said Richard Koch from the UK Cards Association. 

There are also plans to make contactless payment acceptance compulsory by 2020, meaning that the tap and go era will be finally embedded into everyday shoppers’ lives. This, it is hoped, will lead to the end of the dreary £5 minimum spend currently placed on card payments in some establishments. "The compulsory introduction of tap and go payments in 2020 will discourage retailers from imposing a £5 minimum spend on card payments. Pubs and convenience stores especially are less likely impose a minimum spend on contactless payments is because it helps them cut queuing time and make more sales,” added Koch.

About time, too. Last week, the latest contactless payment figures demonstrated an explosive take-up of contactless payments. Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, saw the amount consumers spent using contactless payments soar 150%, with the number of transactions rising 134%. MasterCard also reported that spending by British consumers on their contactless cards has increased more than five-fold in the last 12 months, according to their latest UK spending data. Cardholders have driven 560% year-on-year growth in the value of transactions, up from a 373% increase in the year to July 2014, showing that the adoption of contactless payments is continuing to accelerate.

The number of contactless card transactions made with MasterCard have already quadrupled since last summer (457%). At the start of 2012, the year in which the limit was raised to £20, the average contactless purchase by cardholders was for £4.52. In July this year that had increased to £7.29, a good indication of the need to raise the contactless limit to £30. Mark Barnett, President of MasterCard UK & Ireland said, “The pace of growth we are seeing in contactless is getting ever faster as we rely less and less on cash. Consumers enjoy the speed and convenience of tapping to pay. We expect this upward trend to persist with consumers continuing to migrate to contactless card payments and increasingly to mobile payments, as we work with partners such as Apple to enable more convenient ways to pay.” MasterCard’s data also shows that each year since 2012, individual cardholders have on average doubled the number of times they tap to pay, indicating more confidence among consumers and ever increasing acceptance of contactless by retailers. 

Barclaycard figures also show that almost six in ten shoppers (57%) intend to take advantage of the limit increase to £30 by upping their contactless usage, suggesting that the speed and convenience of ‘touch and go’ payments is becoming increasingly popular among consumers. Barclaycard head of contactless Tami Hargreaves said, “From the credit card to chip and Pin, to contactless and mobile payments, Brits are renowned as fast adopters of new technologies. Over the next year we expect the limit increase alongside the forthcoming launch of High Value Payments – where contactless transactions over £30 can be made using a mobile device combined with chip and Pin authorisation – to drive this growth even further.”

Looking at mobile payments, we reported that there was speculation that the 26th August was going to be launch date for Android pay. This did not happen. Instead the Android site is going on record by saying the payment technology is ‘coming soon’. How very unlike Google to take their time! Samsung Pay, on the other hand is currently being beta-tested in the U.S. For now, the beta is selectively open to device owners with credit and debit cards from US Bank and Bank of America, according to the blog Droid Life. Samsung is expected to formally launch the new payment feature on September 28, 2015.

Finally, time is drawing short on the Contactless Britannia Roundtable, taking place on October 14, 2015. We have a couple of seats at the table still open so please, if you are looking to discover how contactless technology could be making a difference in some of the major town and cities in the UK (loyalty, parking, beacons, payment, transport etc), get in touch. From the industry side we already have the likes of NXP, Creditcall, The UK Cards Association, Neology and Helixion, to name but a few of the technology representatives at the table, so if you have an interest, speak to us soon or visit the site to find out more.

Until next time,

Steve Atkins
Contactless Intelligence

S2 WENA IPSI - that’s tech for new wearables and mobile ticketing!

Last week saw the annual consumer electronics and home appliance show - IFA - take place in Berlin. Along with the annual demonstration of how much smarter the average washing machine or fridge is than the person using it, we also had a slew of smart watches and other wearables introduced. Those that weren’t unveiled at the show were unveiled on an even larger stage, globally known as Twitter.

However, first out at IFA was the Samsung Gear S2. The smartwatch, which also comes in a classic version will launch properly in the UK in October. Samsung say that when the launches occurs there will also be approximately 1,000 complimentary apps available to download as well as customisable watch faces. And, as expected, there will also be the possibility to make contactless payments with the watch. “Samsung has pioneered and led the wearables category over the last few years, bringing exciting new innovations into the market,” commented Samsung Mobile’s Vice President IT and Mobile Division, Conor Pierce. “The Samsung Gear S2 is the most exciting smartwatch to date and offers customers a completely new wearable experience. With an incredibly vibrant screen, it’s the first-ever watch with voice capability and a host of connected features like being able to make calls without the need for a smartphone. You’ll want to wear it from day to night as the ultimate fashion accessory.”

Not to be outdone, Sony also unveiled a watch that they had been working on called the Wena Wrist (not to be confused phonetically with the ‘Wiener Wrist’). The WENA also offers NFC Wallet compatibility, along with activity tracking, and LED notifications. Most of the technology is actually built into the watch strap itself but we could be waiting a while to see it on the streets. The watch is currently up for crowdfunding at Sony’s own First Flight platform in Japan (its innovation prototype platform) and is expected to ship in March-April 2016. The Sony Wena Wrist would sell for ¥34,800 ($287) for a silver edition while the three hands model will be available for up to ¥69,800 ($576) for the chronograph in black. Not quite the all-singing, all-dancing smart watches we have come to expect (thanks to Apple and Samsung), but this could be a nice compromise for those who really don’t want to wear a computer on their wrist but want an easier way to pay with contactless technology.

And, finally, in the wearable area, the Twitter sphere seems to have gone crazy over a jacket released from Lyle & Scott’s new innovation team who have attempted to create a high tech contactless payment jacket for the urban environment (my phrasing). While it looks just like any normal jacket it actually offers something a little different. That’s because the company has partnered up with bPay by Barclaycard to create the first jacket that will let you pay for anything up to £30. The small micro card fits into a special sleeve pocket in the coat that is stitched with the contactless logo so you don’t look like a prat if you forget and wave the wrong arm over the POS. The Contactless Jacket by Lyle & Scott is available now for £150 and is available in ‘admiral’ blue and ‘true’ black. ‘We are a brand that embraces our heritage however we understand that it is extremely important to stay in touch with the needs of our modern customers,’ explains innovation project manager at Lyle and Scott, Jonathan Briggs. ‘Innovation is key to realising this, and so we are proud to partner with bPay to launch the world’s first contactless payment jacket. The jacket can be used to pay at any contactless terminal for transactions up to £30, ultimately seizing the next step in satisfying the consumer’s need for flexibility and convenience.’

Picking up a thread brought up earlier, mainly IFA, Berlin and Germany as a whole, this summer saw the beginnings of a testing phase for mobile ticketing on Germany’s busses and trains. Brought to fruition by IPSI, a nationwide mobile ticket system is being put into place. First transportation systems to take advantage of this will include the Berlin Transport Authority (BVG), German Railways (DB), Hamburger Hochbahn (HHA), Cologne Transport Authority (KVB), Munich Transport Company (MVG), Rhine Main Transport Association (RMV), Stadtwerke Münster, Verkehrsverbund Rhein-Ruhr (VRR), Stuttgart tram (SSB) and the Transport and Tariff Association Stuttgart (VVS). We hope to have more information on this soon as it begins to roll out. Further information can be found in the German language only site here. Luckily for our English speakers, Google will translate the whole site for you.

Continuing the theme of contactless in Germany (a country notoriously difficult to crack in terms of contactless), this April saw the launch of a pilot in Berlin under the motto, „zahl einfach mobil“ (just pay mobile), the largest mobile payment initiative in Germany. NFC City Berlin was launched by GS1 Germany and is a joint initiative of the German mobile network operators German Telekom, Telefónica Germany and Vodafone Germany and the trading partner Galeria Kaufhof and Real (METRO Group companies), Kaiser's, Obi and Rewe and Penny, Temma and Oh Angie (company Rewe Group). There is to be a ’Mobile in Retail Conference 2015’ on September 29/30 in Berlin. Lots of familiar German faces and some international industry heavyweights are expected. Further information on the event can be found on the GS1 website here.

And finally, not to be outdone, please remember that we are also hosting a one-of-a-kind roundtable next month, aptly named Contactless Britannia. Those technology companies who are attending may want to read a couple of backgrounder pieces that highlight the need for technological change in Britain’s high streets, written by Guy Douglas - a leading speaker on the subject if there ever was one. You can read his pieces here and here and you can also find out a little more about the meeting (and how to register for those last few places) here and here. We hope to have the final agenda out in the next couple of weeks, so keep checking the site for updates.

Until next time,

Steve Atkins
Contactless Intelligence

Contactless palaver at Lollapalooza

This weekend was the debut of the Lollapalooza Festival Berlin with 90,000 attendees. It was the first time that the famous US music festival has made an appearance outside of the States. Being a Berlin resident and attempting to overcompensate for my advancing years, I took my wife and kids to it. Nothing earth-shattering about that. What was interesting (to me, at least) though is that is was one of the first time contactless payments had made their way into a major mainstream musical festival in Germany’s capital.

The message that greeted would-be festival goers on the website was; “Lollapalooza 2015 will be cashless only! Why, you ask? It’s more convenient, safer, faster and you can spend more time in front of the stages instead of waiting in line at the ATM machines. You’ll just swipe your wristband and the next beer, Handbrot or merch will be yours. You can even top up your wristband at home, avoid going to one of our cashless points and start the festival weekend right away once you enter Tempelhof. In case the credit on your wristband is running low, our cashless points will be waiting for you nearby where you can top up your wristband chip anytime.”

The festival director for the German Lollapalooza, Fruzsina Szep, works for the Hörstmann Group, which also stages the Melt! and Splash! festivals in Germany. Szep is an old hand at mass events. For eight years, the Hungarian organized the Sziget Festival, a major European festival that annually lures 400,000 visitors to an island in Budapest. A festival that pioneered cashless festival-going a few years back. with a consortium including Cellum and its partner Cardnet and introducing a system known as Festipay. The system at the time used both cards and “smart” wristbands, and was aimed at minimizing the risks and costs associated with cash payments, as well as giving the organizers a better ability to monitor payments made to concessionaires. It worked and this and other similar systems hav a growing acceptance at other large scale events around Europe.

However, to say that there is a need of a massive public education campaign to convert the German public to the benefits of contactless payments is a gross understatement if what i have been reading on the social media networks have anything to to do with it. Tweets and posts were flying thick and fast about the audacity of the organisers to even consider not taking cash on the day for concession stands - utilising the now ‘de rigeur’ contactless payment wristband that other festivals around Europe are using. Some festival goers wouldn’t be seen dead without one!

Because this is Germany and data protection is taken very seriously here, the festival organisers were keen to stress how the data would be secured and where it could be accessed and by who; “Any transaction you make – topping up your wristband or purchasing food or drinks – will show up in your festival account. That means you’re not entirely anonymous. However, you don’t have to worry about your personal data. All data saved in your festival account will be kept under wraps. We neither create movement profiles of festival goers nor do we hand over or sell data to partners or sponsors. We protect all your data according to current data protection regulations.”

Monitoring the event on social media has been quite an eye-opener when it comes to discovering feedback from those who should really constitute a target audience for contactless payments. Fundamentally this could be summed up as a lack of understanding, coupled with deep suspicion, covered with a thick layer of pessimism and confusions. 

For example, Andre (full names withheld for data protection purposes!) is concerned that any left over cash may never be recovered in case of bankruptcy: "This system didn't work at Hurricane and I can confirm that Northside in DK didn't get it to work either. Now they got rid of it.... But I don’t like that this information (cashless) was revealed only 2 1/2 weeks before the Festival. I think that Security and Data Protection Laws dictate that the financial processing is done by a regulated body. What happens if I load up as much as 300 Euro and then the festival organizers goes bust? I would lose my money. 

Carlos is less prosaic: “Damn, this sucks. I want to pay cash. So much hassle. Are staff too stupid to do simple cashier jobs or do they just want to get more data?” Desiree is less adamant, “Not nice to be told so casually about the cashless process. Let's see if it works, until now I have only heard negative things.” Eren is all for cashless, “Interesting! Germany really tries to fight against technological progress. It’s the year 2015. I am all for convenience and happy if it speeds up everything. And it’s good that you get any left-over money back afterwards.”

Marc was worried about his bank account details and doesn't realise that you can also bring cash and have it uploaded on the wristband, while Anna, Sam und Karolina were asking in a panic for drinks and food prices for calculations. Why? Because it’s a cashless event. Wouldn't they have to do the same calculating if they brought cash?

The international crowd is more relaxed. John (from the UK) commented, “This is great!” However, Jens was very suspicious, “Why do you want to know what I drink? Why do i need to wear money on my wrist? Which idiot thought of contactless? You are unprofessional and greedy.” Bit harsh, I thought…

All in all, I really believe that if these kind of comments (and trust me, we had a lot to choose from), are anything to go by, Germany really need a massive educational campaign on the benefits of contactless payment technology and the benefits behind them. Contactless payments at festivals through out the rest of Europe is now considered standard. After going through a painless top-up system and seeing it in use throughout various concession stall with almost no hiccups, I feel that the anticipation before using such payment technology is worse than the actuality. 

This technology is normal in almost all of the major festivals around Europe now and it is only the lack on contactless payment exposure in Germany that really highlights how far behind Germany has lagged in this payment area. The festival was great but the over-all score for contactless Germany: ‘could (and needs to) do better’.

Good thing about festivals though, sooner or later any gripes are forgotten as soon as the toilets malfunction. Once that happens all other news is swept under the rug! Same goes for Lollapalooza Berlin…

Until next time,

Steve Atkins
Contactless Intelligence

EMV looms in the US, are consumers ready? 

As of October 1st, payment networks including VISA and Mastercard will shift responsibility for credit card fraud onto U.S. merchants who have not adopted the EMV standard as their primary method of credit card payment, instead relying upon the old magstripe. The move to EMV cards is intended to make credit card fraud less likely. While common in Europe and other regions around the world, the technology standard is just now being adopted in the U.S.

However, July figures released by Visa show only 18% of the 720 million Visa-branded credit, debit, and prepaid cards in the U.S. contained an EMV chip. Visa’s figures also indicate that about 295,000 merchant locations were enabled for chip card acceptance at the end of July, up 19% from the 247,000 at the end of June. However, despite these gains, support for EMV cards at the US’s approximately 8 million card-accepting locations remains low. Similarly, only about 7% of the estimated 535,800 bank and retail ATMs in the U.S. can now read EMV chip cards.

While retailers in the U.S. are being made aware of the changes, it would appear that a majority of consumers are still unaware. Harbortouch, a national POS system and merchant services provider in the U.S., published the results of a large-scale national survey investigating consumer awareness and usage trends of EMV or 'chip' enabled credit cards. The survey, fielded to nearly 18,000 U.S. adults in late August, found that 56 % of consumers are unaware of what an EMV or 'chip' credit card is. Obviously, the results point to the need for more consumer education on the transition from traditional 'swipe' credit cards to EMV or 'chip' cards, which will take place nationwide in just two weeks.

"The findings of this study indicate that EMV could pose serious challenges for credit card companies and retailers as the busy holiday season approaches," said Jared Isaacman, founder and CEO of Harbortouch. "Varying rates of adoption and opinions on the benefits of 'chip' cards means more can be done by all parties to ensure a smooth transition on October 1st and beyond."

The recent Harbortouch survey also investigated a variety of EMV usage trends among U.S. consumers who did report awareness of chip cards. Respondents between the ages of 18-24, also known as Gen Z, were the least likely to use EMV credit cards (20.5%). However, Gen Z reported the highest usage of mobile payments (42.1%). Interestingly, only half of consumers believe chip cards will make them more secure - While payment networks believe in the security benefits of EMV, only 50.8% of consumers feel the technology will make transactions more secure. 

“If the October liability shift is significant for issuers and merchants in terms of fraud, it also offers a very exciting opportunity for NFC and contactless payment. Chip-and-PIN is being criticized in the US for being slower and less convenient that the current swipe-and-sign system. But for smaller value purchases it’s hard to argue that case with contactless. It’s fast, convenient and secure. And it’s been around in the US since 2005”, wrote Nicolas Raffin, President of the Smart Payment Association, last week. 

“Adoption has been slow over the past decade – unsurprisingly due to the limited supply of terminals. But this looks likely to change fast. Apple Pay, Samsung Pay and others are certainly at low volume at present, but they’re brought the ‘cool’ factor to the concept of contactless payment. That’s good news for all tap-and-go payment types – the smart card included. Which is why we think that the opportunities of contactless card payment deserves greater attention. Currently the vast majority of coverage compares chip-and-PIN and swipe-and-sign, or looks at the app payment options. But as the US transitions to EMV, it seems strange not to go straight to ubiquitous contactless payment, and not to be encouraging greater take up from merchants, and indeed consumers.”

At least Samsung is seeing the opportunity that the introduction of Samsung Pay could bring to mobile payments if it is introduced to a larger consumer audience. Samsung Electronics mentioned that they may expand their mobile payment system to budget smartphones, and expected the number of its users to grow further down the road. Samsung Pay, officially launched in South Korea last month, is currently available for only high-end smartphone models released this year, including the Galaxy S6 and the Galaxy Note 5. "It will gradually expand," said Shin Jong-kyun, who heads Samsung's mobile business, when asked if the company plans to provide the service on cheaper smartphones. "The Samsung Pay service is going well, and I think more users will be able to use it," Shin said after a meeting of Samsung Group presidents.

While Samsung's latest payment tool can reach out to a significantly larger scope of shops than other rival services, such as Android Pay and Apple Pay, on the back of its magnetic technology, it has been facing limits in expanding the number of users as it only works on pricy models. Samsung Pay's magnetic secure transmission (MST) technology allows users to make payments through traditional credit card devices. The breakthrough may well give the payment service the upper hand compared with other rivals, which only support NFC. 

Perhaps the US may provide a fertile catch-up market for Samsung during this EMV transition period from swipe to Chip & PIN? Current surveys, at least, indicate that there is tremendous opportunity if grasped quickly enough. 

Until next time,

Steve Atkins
Contactless Intelligence

Wearables. An expression of payment?

A few days ago, I was shown a little video in which a bloke, dressed as the Harry Potter character Prof. Dumbledore, got on London buses and waved his wand at the terminals to pay. No magic, of course, the clever prankster had placed one of the Oyster card chips in the tip of the wand and was using that to make a contactless payment - much to the bemusement of TfL drivers and fellow passengers. Well, he could have come straight from the catwalk, because…

Contactless payment using items other than mobile phones or cards appears to be the next (big) thing, if last week’s news features are to be believed. First there was the news of British designer Henry Holland teaming up with Visa Europe to combine fashion, wearable technology and payments. At his London Fashion Week show on 19 September, he demonstrated how an NFC chip embedded in an e-ring (as opposed to an earring *chuckle*) could be used to purchase items directly from the runway. Specially designed rings in the shape of bugs were allocated to 10 VIPs at the show, including models Alexa Chung and Daisy Lowe. The rings contained NFC chips and were pre-loaded with £500 credit. At the end of the show, the VIPs were able to walk up to one of three models and touch a giant brooch in the shape of a leaf with the bug ring, in order to purchase one of the items they were wearing. 

House of Holland worked with Visa Europe's innovation hub, Visa Europe Collab, to develop the technology as part of a 100-day "sprint". The NFC brooches were linked to virtualised payment terminals via Bluetooth Smart technology, allowing Visa to process the transactions in the background as the show went on.

Last week, Visa Europe also released three videos that demonstrated a wearable design concept; Small Change, Budgeteer and Thread. Visa Europe teamed up with world-renowned art and design institution, Central Saint Martins, and challenged five of its top design students to explore the future of wearable payments. The young designers, who are all either students or graduates of the MA Industrial Design course at the London-based university, were asked to imagine the form and functionality of contactless wearable devices by 2020. The project culminated in the presentation of three design concepts at the annual Visa Europe Technology Partner Forum in London last week. 

Speaking about the project, Nick Mackie, head of contactless at Visa Europe, said,“At Visa, we envisage that contactless technology will become a standard feature on many wearable devices by 2020; in fact, there’s no reason why the payment function on a wearable device wouldn’t become as ubiquitous as the alarm function on a digital watch.” These are all design concepts– which Mackie emphasises are intended to inspire ideas and conversation about the future of wearable payments, but not for mainstream consumption.

However, another wearable that IS being made for mass consumption is the Kerv. Developed by a London fintech start-up, this contactless payment ring is being launched on Kickstarter looking to raise £77K to move the product to mass production. Kerv wearers can make instant contactless payments of £30 or lower with a single gesture – no card, PIN, or paired smartphone required - just load it up online.

Beyond retail payments, Kerv can be used on the Transport for London network (and other global cities’ mass transit systems). Kerv also offers instant sharing of emergency, medical or contact details at the tap of an NFC-enabled phone, plus one-touch access via compatible NFC locks and security systems – which means even more pocket junk can be left at home.

Kerv founder, Philip Campbell, said, “Currently, wearable payment devices are either eye-wateringly expensive or thoroughly unattractive. But the biggest issue I have is that they’re all worn on the wrist, which has to be placed flat against the contactless reader in a way that feels extremely unnatural and awkward. With a creative background – plus eight years experience in payments – I felt we could do better. So we did, designing Kerv to be the most ergonomic, natural and convenient contactless payment method possible.”

Will we now see a plethora of augmented jewellery, hand signals (check out the Visa video for budgeteer) or dance moves designed for individual payment processes and avoidance of card clash? The future of payment looks to be quite… physical. Expect us all to look like a bunch of mimes pretending to pay for stuff in the future. 

Or Jedi Knights. *waves hand over POS* “This IS the coffee I am looking for”. Beep.

The rest of the UK may be a little more mainstream when it comes to contactless, but they are looking to London for the best use cases for contactless implementations across all kinds of applications. We at Contactless Intelligence are helping to facilitate this and have organised a roundtable - aptly names Contactless Britannia - where UK BIDs (Business Improvement Districts) as well as representatives of local authorities can exchange ideas with the top tech experts in the industry. The first of this roundtable series, taking place on October 14th, is now sold out. Experts from NXP, Creditcall, Samsung Media and other renowned companies will be present to share their visions and expertise. It looks set to be a very intense but rewarding day.

Until next time,

Steve Atkins
Contactless Intelligence