Analysts agree that mobile payment will become colossal in the coming years. The firm Gartner predicts that it will be worth US $721 billion globally by 2017. The recent launches of the iPhone 6, 6 Plus, the Apple Watch and the Apple Pay solution will no doubt further boost the outlook for mobile payment. However, the solution adopted by the Cupertino-based company is not the only one which currently exists for paying via phone. Although a wide range of commercial solutions is available, two main types of mobile payment can be identified: “card present” near-field transactions, involving interaction between the dematerialized payment card contained in the phone and a payment terminal, and transactions carried out directly from a mobile application. The source of the funds could then be a payment card registered by the user or else a bank account or prepaid account.
Proximity payment or mobile contactless payment
This is the most common payment method in industrialized countries and highly reliant on three factors for its development: NFC compatible smartphones, compatible payment terminals and a high level of user access to banking services. Japan has shown itself to be a pioneer in this field. Sony’s dominant Mobile FeliCa IC technology was rolled out there several years ago. This roll-out has taken longer in the United States and Europe. These markets are now mature, however, and everything is in place for contactless to take off, particularly since Apple is lending its considerable weight to promoting widespread use.
The iPhone 6 and 6 Plus will support the adoption of an in-house near-field payment solution called Apple Pay. Since this is compatible with standard contactless payment terminals, it should take off quickly since it also offers the advantage of being secured by the Touch ID biometric fingerprint reader.
Owners of iPhone 6/6 Plus can also use the Apple Watch, which allows contactless payments. This functionality takes contactless a step further, since customers will not even need to take their phone out of their pocket.
For a large number of players in the sector, the launch of a contactless service using a secure embedded element legitimizes the association of NFC technology with a secure physical element – a combination already adopted by Samsung. This is great news. Apple’s integration of a secure element in a cell phone shows the importance of the presence of a chip, a physical component in the handset, to establish a reliable payment system which users can trust.
Now that the iPhone has joined the ranks of the dozens of existing NFC compatible smartphones, the movement is ready to take off. As a result of NFC services, mobile phones will become a preferred everyday means of payment just like bank cards, which are already familiarizing consumers with contactless technology. In many countries – including France – banks are adding contactless functionality automatically when bank cards are renewed.
And NFC technology is not alone in using cell phones for near-field payments and enhancing the customer experience. Other procedures such as two-dimensional barcodes (QR codes) and BLE (Bluetooth Low Energy) technology also allow greater in-store interaction using mobiles.
Internet giants ready to pounce
Regarding the net actors, Google’s financial power makes it a player to watch. Although its Wallet is struggling to take off, the internet search king has shown that it is prepared to invest heavily in this field. And it has a formidable weapon up its sleeve – the Android operating system, which is now installed on almost 80% of all smartphones distributed worldwide. By introducing the HCE (Host Card Emulation) protocol, allowing mobile contactless transactions to be carried out without the use of a physical Secure Element, Google has created new possibilities for payment services providers. Finally, Amazon and PayPal also have their own strengths, with tens of millions of active accounts.
Mobile money or dematerialized cash
In so-called emerging countries, where there is a low level of banking services penetration, another option exists for allowing payment via cell phones without these transactions needing to be linked to a bank account.
In these regions, cell phone operators offer e-money accounts linked directly to a telephone number. Agents are located throughout the country with responsibility for collecting cash and topping up electronic accounts, even in the most remote locations. These services allow mobile-to-mobile money transfers, bill payments, top-up of mobile phone credit, etc. The most popular offers include M-Pesa, Orange Money, Myanmar Mobile Money, CashWay and Tigo Cash.
This type of solution is also available in economies with high levels of access to bank account services, for example for prepaid card services, gift cards as well as restaurant vouchers.
OT – at the cutting edge of mobile financial services
An expert in embedded digital security in all formats (cards, mobile devices, wearables, etc.), OT provides security wherever mobility is transforming our lives (identity, payment, transport, Internet-of-Things, etc.). OT is the only player in the industry with expertise in all the mobile payment technologies currently available, whether using a Secure Element, a TEE or the Cloud, and whatever the protocol used for transactions (NFC, BLE, QR code, SMS, USSD, etc.). All around the world, OT is working with all ecosystem players (banks, payment schemes, MNOs, OEMs, transport operators, retailers, etc.) in the fields of NFC and mobile payment in general.