NFC Mobile Payment System Design - Some Tips

Designing a perfect NFC mobile payment system is extremely difficult and complex. The failures that litter the road to success are many. So far I have not seen a successful mobile payment system implemented yet. Even those with mega-buck backing are failing as I write this.

Why is this? Let me list two reasons:

Greed; When the players want the whole basket for themselves then they will fail. Everyone in the value chain must see a real benefit from a mobile payment system or they will not play. One missing link will cause the system to struggle and eventually fail. Attempting to make a payment system exclusive to a particular bank, processor, device, chip, manufacturer or other player will bring on failure as well. It is also important to consider the greed of others and deal with that.

Not understanding human beings: All the payment systems I see in the market place are designed by engineers or payment system experts without taking enough consideration of real, live, normal, human beings and what they really want and need and will use. A payment system must be designed from the human experience, the technology must be adapted to that.

Are you building a NFC mobile transaction system? Do you have a mobile transaction system in the market that is not doing as well as you would like? Contact me. I have been designing mobile payment, ticketing and loyalty systems since 1999. Maybe I can help.

Google Introducing New Mobile Wallet for Android

Google is announcing tomorrow its new mobile phone wallet for the Nexus S NFC enabled phone. Google has paid for readers from Verifone to be installed in a number of merchant locations in New York City and San Francisco including Macy's, Subway and American Eagle Outfitters. Google has made agreements with Citi and MasterCard to handle the transactions. Only Google will have the key to the secure element in the NFC chip set.

This is exciting news for the few of us in the NFC  universe. But it is time for a reality check.

The Samsung/Google Nexus S phone has gotten some pretty bad reviews so far and is not selling well. One of the major complaints has been that the software in the Nexus S requires that you connect to Google's Cloud services for many essential operations. This is problematic for many people including me. Lest we forget, it must be a good phone first, then a good smartphone second. The NFC part is irrelevant for most users. So there are not many Nexus S phones in use in New York or San Francisco. How is Google going to provide for a real trial of NFC without a mass adoption of their NFC phone?

Maybe the mobile division engineers at Google believe the hype from Forrester researchers claiming that 40 - 50 million NFC enabled phones will be sold in 2011. For anyone who believes that figure I have a great piece of land in Siberia for a summer cottage.

Yes, RIM will probably come out with an NFC phone at the end of this year. But how many people will buy it immediately? Maybe Google engineers think that RIM will give them access to the secure element as well in Blackberry phones. Probably not. Whoever has the key to the secure element in an NFC chip set controls the wallet. This will always limit the adoption and usage of NFC phones.  If the NFC tag and secure element are in the SIM card then the mobile operator is going to control it. But NFC SIM cards and microSD cards are very problematic for numerous reasons as discussed in previous posts.

The turnover of mobile phones is about every 2 years in the US and Europe. Penetration of NFC enabled phones will take between 2-4 years for critical mass if there are at least 12 NFC phones available. By that time the Nexus S will be an antique. If companies keep creating unrealistic hype about NFC then it will lose all credibility by the time the technology is mature and ready for mass adoption and NFC chips could then become vintage as well.

As I have said so often, NFC as a transaction medium is coming and will do great things if rolled out properly without all the ridiculous hype and propaganda.

Mainstream Media Jumps Onto the NFC Hype Wagon

I love this headline from Britain's Daily Mail:

"End of the credit card? With one swipe of an iPhone you'll be able to pay for your shopping"
(There is the rumor that the iPhone 5 will have NFC. That may be true, but that was also the rumor about the iPhone 4. Whether it is true or not does not seem to matter to this writer.)

Or from CNN:

"You can already use your iPhone, Droid or BlackBerry to buy a hotdog at the ballgame, buy your Starbucks latté, or give a friend a few bucks by bumping phones. But by the end of the year you may not even think twice about reaching for your phone to pay at the register instead of fumbling for your credit card."

My goodness. You would think that NFC was already in all the phones and POS terminals and that we are weeks away from paying at the POS with NFC enabled phones. I also enjoy the American writers that claim that all of this fantastic technology is already being used here in Europe on a daily basis. I can tell you, as a European resident, it is not. Most Europeans are as clueless about contactless or NFC as are most Americans. What we do see here are Mifare cards for mass transit. There are only 2 phones available that have NFC. One is the new Google Nexus S and the other is a Nokia that is not very popular. And the NFC chip in the Nokia is not capable of working with NFC payment terminals yet.

It is very exciting to see the mobile operators and banks pushing this hype into the media. It means that they are serious about their commitment to mobile NFC payment. It is coming and it will change the way many people conduct transactions. But as I so often write, it is very important for those in the industry and investors interested in this industry to be discerning about hype vs reality.

But the dumbest comment I have read so far is this one:

"Ewan over at Mobile Industry Review says that “once Apple integrates NFC into their devices, it will be game over for every other provider in the marketplace.” He points out that it doesn’t matter if there are a good few billion people in the world who will never be able to afford an iPhone — they are outside the United States."

I do not need to repeat again my view of mobile payment reality. But I would like to add this footnote that came from a response I sent to someone just the other day.

There are a lot of companies jumping into this space.  There is a lot of money out there. There are a lot of potential customers and users out there. It is a big world. No one, two or even 50 companies are going to swallow the whole market. No one technology is going to be, ‘The One’. This is not The Highlander. There will be many winners in this market. There are golden opportunities for different technologies, different markets and different countries. Smart entrepreneurs and investors will have many opportunities to profit.

I recommend this as well:
http://www.pymnts.com/will-apple-get-us-to-wave-at-the-point-of-sale/?l&goback=%2Egmp_116917%2Egde_116917_member_41730939

Do I Really Want My Wallet In My Phone?

For as long as there have been mobile phones the mobile phone manufacturers and the mobile phone service providers, operators, have been seeking ways to increase their revenues. First it was voice, then it was SMS, then it was ringtones, then WAP and now it is data. But what would be next? Financial transactions. The dream revenue stream. Billions of transactions conducted with mobile handsets and the mobile operators taking a little piece of every one of those transactions. Wow. No longer limited to petty fees for voice, SMS and data. The handset manufacturers drooling at the prospect of selling hundreds of millions of new mobile handsets to everyone who now felt the compelling need to be able to have their wallet in their phone.

So the PR campaign began. Subtle messaging describing the convenience of having your wallet in your phone. Why carry a physical wallet, an mp3 player and your phone? How uncomfortable and inconvenient. Why not carry all of that in one smart and cool device? Little by little the push gained steam in the tech world, investment universe and the media until no one could imagine that normal people might not want their wallets in their phones. The hew and cry was heard, “I want everything in one little device”. “I only want to carry one device, my phone”.

But the question is, does everyone feel this way? Do people really want their wallet electronically in their phone? Do some people want their wallet electronically in a different device? Do some people want their wallet in their wallet?

Obviously the PR campaign will now intensify with the introduction of the Google/Samsung Android NFC enabled phone. Over the course of the next 12 months a number of new handsets with NFC will appear in the European and North American markets. Mobile operators will finally attempt to work out their differences with the card issuing banks, credit card organizations and merchants. Visa, MasterCard, First Data and a few others will introduce their feeble attempts at making existing handsets into wallets with microSD cards, shells and stickers.

But the real test will be with the public.

Will the normal person on the street want their wallet in their phone? Will they purchase a new phone to be able to do this? Are criminals just drooling over the prospect of millions of insecure phone-wallets proliferated all over the place?

The answers are this.

No, the normal person on the street doesn’t care about this at all. Many will be convinced by good advertising and a mobile operator sales person that this is going to change their lives so they will buy the new phone. Criminals are already preparing programs to hack wallet-phones and steal PIN codes. PIN code hacking programs are inexpensive and easily available for laptops so they will be quite easy to port to phones. And the payoff will be great.

Slowly but surely people will use electronic wallet-devices and within ten years they will be commonplace. But not everyone wants their wallet in their mobile phone no matter what the vested interests and their PR merchants push. Some people will want their electronic wallet in a portable multimedia player, some in a little keyfob, some in their watch and some in a dedicated little wallet device. Of course the majority of people will still want their wallet in their wallet. Certain merchants, banks and venues will want to issue their own branded electronic wallet-ticket devices. Added services, convenience and security are key to acceptance. As soon as electronic wallet-phones with PIN codes are hacked en mass there will be attempts made to secure the existing NFC handsets with optical biometrics using the phone’s camera and other exotic security methods. Some mobile operators will demand fingerprint sensors now be installed on every new electronic wallet-phone by the handset manufacturers.

The future is golden for electronic transactions. But the future is a great deal more diverse than the mobile phone handset manufacturers and mobile operators would have you believe.

Google To Introduce New Android Phone with NFC

Google CEO Eric Schmidt announced that the next Nexus One Android OS phone would include an NFC chip so that it could make mobile payments. No details about the phone were announced.

This is exciting news for the NFC payment world. At the same time, let's look at this realistically.

How many people will upgrade their phones to be able to make payments with them?

Will this NFC chip be peer to peer/read write or just a tag?

What will the phone look like and what will it's other killer functions be?

Will Google offer a new payment alternative to Visa, MasterCard and American Express?

Will this be a compelling reason for merchants to upgrade their terminals?

These and other questions will be asked for months to come and then the realities will reveal themselves after the phone is released. You can be sure that Google will do a super job of marketing this phone. You can also be certain that Google is beating up the credit card organizations, banks and processors to get great rates on fees. But if they cannot get merchants onboard with this then it will fail.

Payment has always been the 'next' step for Google. They started with Google Check Out and now will add the mobile payment feature to this. Their strongest competitor in this play will be PayPal who is already working on getting PayPal into the physical point of sale.

It will be a very interesting play to see unfold.

Mobile Transactions; What Will it Take For Success?

There have been many points in history when humanity changed the way they conducted transactions. From the trade of tangible goods as currency like goats, camels, gems, precious metals and people to precious metal coinage. Then to paper representing the promise to pay precious metals or other valuable goods. It was not long ago that plastic cards with magnetic strips or memory chips replaced  paper currency and checks for many people in many societies. The Internet has also changed the way people transact by creating electronic and virtual currencies. Banks also no longer move paper or precious metals but instead move 0’s and 1’s through electronic pipelines around the world.

We are now at another one of those transition points in our history; when plastic cards will be replaced by small devices capable of conducting electronic transactions of all flavors at physical points of sale, the Internet and between individuals.

Like all transition points in the past this one is populated by many technological differentiations. While in the past it has been different methods of transporting and exchanging things of value, now the differentiations include many means of communicating those digital euros, pounds and dollars. RIFD, NFC, Contactless, USB, SMS, WAP and more acronyms that we can keep up with. Then there are the physical forms of purses and wallets that will carry all the digital money and tickets. Of course the mobile phone operators and manufacturers of mobile handsets have spent millions convincing the press, investors and the technologically savvy that the mobile phone is the wallet of the future. That confluence is about ‘everything in your mobile phone’. Is this true or have we been fed and fallen for the company line? Are there other form factors for that future mobile electronic wallet? The fact is that there are numerous form factors that people will use as their electronic wallet device. It is extremely foolish to think that everyone in the world wants to or will use their mobile phone as their wallet. There will be dedicated electronic wallet devices, wallet watches, wallet mp3 players, wallet keyfobs, wallet cards, wallet smart keys and other wallet devices that we had not even thought of. Let’s examine the mobile phone handset though.

At the time of this writing there are very few mobile phone handsets in the world with native NFC, Near Field Communication, for conducting transactions at point of sale terminals. Also at the present time most companies and developers are focused on the attempt to turn existing mobile phones into payment devices. Many companies have been attempting to use SMS for transactions. This has not gained much traction in Europe or the US where banking is fairly secure and advanced. But it has gained quite a bit of traction in Africa. For POS transactions there are companies attempting to use Contactless tags embedded in stickers, microSD cards, SIM cards and attachments to specific mobile phones. There are software applications on mobile smart phones for online banking, payment, ticketing and loyalty. But mobile phone transactions are still off to a slow start.

There are a number of keys to making mobile transactions a success.

1.   Interactivity. Mobile transactions must include some sort of message back to the user after the transaction. The message must be something that the user deems valuable. A coupon, loyalty message, gift or personal message of some kind.

2.   Security. Users must be able to completely trust that they can conduct their transactions securely. That using their mobile device for transactions will not lead to identity theft or transaction fraud.

3.   Profitability. Mobile transactions must be profitable for every player in the ecosystem.  

4.   Compelling Reasons. There must be compelling reasons for merchants to incorporate mobile transaction technologies at their points of sale such as NFC readers at the physical POS or Java Applets at their web store. Users must have compelling reasons to use mobile transaction technologies. There must be things that they can do with a mobile device that they cannot do with cards or cash.

5.   Simplicity. Mobile transaction technologies must be incredibly simple or no one will use them.

When all of these pieces are in place in a mobile transaction system then we will see the technology explode like nuclear fission. Over the course of the past 14 years I have been involved in the mobile industry I have seen only one system accomplish this.

For more information contact Jon Shore at jshore@corporateconsulting.net or though his consulting website; http://www.corporateconsulting.net/.

Jon Shore has been involved in the mobile transaction space for the past 14 years. Among his invention accomplishments are an SMS ticketing and loyalty system and a very secure NFC transaction system for all sorts of mobile devices.

The Future of Ticketing, Payment and Electronic Customer Relations Management (eCRM)

This is the way NFC is supposed to work.

A scenario-Sometime in the near future…..

Brian and his family are preparing for a much-needed vacation. This year they are heading for Orlando, Florida to enjoy the theme parks, restaurants, events and other attractions for a week of fun in the sun. While researching their upcoming vacation at the Orlando Visitor’s Bureau website, Brian spotted an interesting link for the “Orlando Electronic Pass (ePass)”. This ePass offer included tickets, passes, discounts, audio/video tours, coupons, special offers and even a secure electronic wallet for their vacation money. For $50 per Orlando ePass, Brian and his family would receive approximately $700 worth of discounts and passes at some of their favorite places including all theme parks, all the major hotels, restaurants, cinemas, gift shops and local events. Also included in the Orlando ePass are videos of Orlando that can be viewed and listened to on the Orlando ePass since it is also an audio (mp3) and video (mp4) player. So Brian orders four Orlando ePasses and is informed that he can pick them up at the Orlando Welcome Desk at the Orlando International Airport upon arrival. 

 

When Brian and his family arrive at the Orlando Welcome Desk at the airport, Brian and his wife present their photo IDs to the hostess at the desk. Since Brian already has an Apple iPhone she gives him a little Orlando key fob with a fingerprint sensor. She gives each of the others a very cool looking little mp3/mp4 player device on an Orlando lanyard, with a fingerprint sensor and a LCD screen. She explains to them that both forms of the Orlando ePass are their portable electronic concierge and will be their electronic pass (Orlando ePass) to everything they want to do in Orlando. It will communicate with standard contactless RFID at most turnstiles and cash registers. It will communicate with handheld computers in the theme parks as well. It can also be connected to any computer by standard USB port for downloading additional tickets, cash, audio files, videos, information and coupons and is completely secure. It also plays standard mp3 music and other audio files and plays standard avi (audio-video interleave) format video/movies. Brian’s Orlando ePass key fob pairs easily to his iPhone by Bluetooth. He then downloads a meWallet® application from the iTunes™ app store that allows his iPhone to do most of the same functions as the family’s mp3 Player devices.

They can see what is in the Orlando ePass by reading the LCD screen on the front of the ePass or on the iPhone. Brian and each of the family members are quickly shown how to register their fingerprint into the ePasses. After they have registered their fingerprints, the Orlando ePass are theirs. From then on, only the person who is registered on the device can make it work. The Orlando hostess also explains to them that the Orlando ePass is equipped with Auto-Redemption™, which means that any coupons available to discount a purchase will automatically be used at the register when paying and any passes available will be utilized automatically as well. She tells them that they can see all their tickets, cash, coupons, passes and data at any time on the Orlando ePass’s screen or the iPhone’s screen and that they do not have to remember to use the coupons. This is all done for them.

The hostess asks Brian if he would like to have electronic cash loaded into the Orlando ePasses. She informs him that they will be able to pay for anything at the majority of businesses in the Orlando area with the Orlando ePass. If the Orlando ePass is lost or stolen there will still be a central record of all the data including eCash on the Orlando ePass and it can be easily replaced. Charging it to a credit card as a purchase from the Orlando Visitor’s Bureau, Brian has $350 put in his and his wife’s Orlando ePasses and $50 in each of the kid’s ePasses. At the same time Brian purchases the three-day Disney World passes, one day at Universal Studios and one day at Wet ‘n Wild. All of these eTickets are loaded into the ePasses at the Visitor Desk in seconds. Brian also sees that his reservations for the rental car and for the hotel are in the Orlando ePass as well as a complementary dinner at Boston Lobster Fest for that evening. Also included with their new Orlando ePasses is a small SD memory card with a video tour of Orlando’s ‘Best Bets’ on it. Brian can download these same video tours to his iPhone. The whole family can watch this video on their Orlando ePasses to see all the great possibilities available in the Orlando area. 

At the rental car desk, Brian merely taps his Orlando ePass at the contactless reader at the Tap and Drive kiosk and his rental car keys drop down into the tray. The location and make of the car is displayed on the LCD screen of his iPhone. Also displayed is a notice that he has been given an upgrade because of a coupon identified in his Orlando ePass during the transaction. He also sees that he has been given an additional coupon for an upgrade the next time he rents a car from this agency and a coupon for a half-price dinner at any Olive Garden restaurant. 

When Brian and his family arrive at the hotel, he taps the Orlando ePass at the NFC-RFID Tap ’n’ Check-in kiosk at the hotel. He is asked to have each member of his family tap their ePasses to the NFC-RFID reader on the kiosk as well. Now all the family’s ePasses can be used to open the door to their room. No other room keys are necessary. Additionally, during the process of making the Orlando ePass a room key, Brian’s Orlando ePass is sent 4 coupons for free Florida orange juices at the hotel restaurant and half price on a special selection of gifts at the hotel gift shop. 

After putting their bags in their rooms and changing, the family goes down to the restaurant to have some lunch before heading to Ripley’s Museum. Everyone orders orange juice to use their coupons, but they also have a full lunch. At the register, Brian holds his Orlando ePass on the Tap and Pay reader. Brian can see on the LCD screen of his meWallet™ enabled iPhone that the orange juice coupons are automatically redeemed and the remainder of the bill is paid for using Brian’s prepaid account in the ePass. An electronic receipt for the meal is sent back to the Orlando ePass as well as a coupon for a half-price hamburger next time they come to the restaurant. All data sent to Brian’s Orlando ePass is displayed on his phone.

As they are walking through the hotel lobby, they notice an Orlando Concierge Kiosk. Brian’s daughter taps her Orlando ePass on the NFC-RFID reader. The large screen on the kiosk displays a list of available coupons and promotions. She chooses Ripley’s Museum and asks for 4 coupons for their 4 ePasses. The kiosk display instructs her to hold her Orlando ePass to the reader and for each of the other group members to do the same. In less than a second, she is given a 20% off coupon for Ripley’s as well as a coupon for 10% off in the Ripley’s gift shop. Each family member follows suit and is given the same. 

At Ripley’s Museum, Brian tells the man in the ticket booth that he would like 4 tickets and that each of his family members has a coupon. The attendant in the ticket booth asks Brian if he would like interactive audio/video tour cards for their Orlando ePasses. The man explains that with this little SD card in their ePasses they will be able to tap at readers throughout the museum and then see and hear interesting facts about the different exhibits, receive special offers and enhance their museum experience.  Brian says, “Yes”, and the attendant provides each of them with a Ripley’s micro-SD memory card with a complete video tour. Each of the micro-SD cards are inserted into the SD card slot in the ePasses or downloaded as a video to Brian’s iPhone. Brian pays with his Orlando ePass and an electronic receipt and additional coupons are sent back to him. Each family member taps the reader at the register and their discount coupon is redeemed and additional coupons are sent to them. 

The next day, Brian and his family drive out to Disney World. At the turnstile, each person taps their Orlando ePass on the NFC-RFID reader. During that action, the tickets are authenticated and 5 discount coupons are sent to each ePass. By reading the electronic coupons on their LCD screens, Brian and his family can see that each person has received different coupons that relate to things that they like. Each person gets a discount coupon for a meal, each person gets a Fastpass™ coupon for a favorite ride, and 3 different discount coupons for theme gift shops. As they go through their day at the park they use their ePasses to pay for their meals and gifts and are given additional coupons during every transaction. 

Just inside the park Brian notices a video tour booth. At this booth, Brian purchases four Walt Disney World tour SD cards for their Orlando ePasses. The pre-recorded, interactive tours are activated by tapping any of the RFID readers located throughout the park. The tours can also be activated by tapping the play button on the ePass’ menu. When they hold the ePass against a RFID tap n’ tour post then can also receive, electronically, special custom Disney offers like restaurant coupons and Fastpass™ coupons. At one of the gift shops, Brian’s daughter Sophia sees a new Disney World Special Hannah Montana music SD card with the latest Hannah Montana songs and videos. Sophia purchases this using her Orlando ePass, plugs it into the micro SD card slot, plugs in her headset and off she goes happily listening to the recording.

One time while paying at a restaurant, Brian’s wife is sent a notice to her Orlando ePass that there is a very short line at Its A Small World. So they hurry over to that ride. 

During their second day at Disney, Brian’s son wanders off and they cannot find him. Fortunately he remembers to tap his Orlando ePass at a Tap n’ Tour Post or a point-of-sale (POS) terminal in the Park and the Park staff finds him immediately and re-unites him with his parents.

One evening, Brian and the family decide to go to the movies. Brian purchases the tickets at the Concierge Kiosk and receives discount coupons for popcorn for the whole family. At the cinema, Brian just taps his Orlando ePass at the turnstile as does each of the family members. The eTickets are validated and everyone gets in. Everyone is given additional coupons as well including discount coupons for the Outlet Mall. Everyone wants popcorn for the movie, so Brian purchases the popcorn and pays with his ePass. The discount coupons are automatically used and the remaining total for the popcorns is deducted from the ePass. Of course, a receipt is sent back to the ePass. 

During their week in the Orlando area, Brian and his family use their Orlando ePass extensively. They use them for everything from paying at restaurants, buying gifts, watching videos, listening to music, accessing their hotel rooms and redeeming discount coupons. They save a cumulative total of $825 by utilizing these discounts, but they did have to purchase an additional suitcase at the Outlet Mall to carry back some of the items that they had not planned to purchase. 

Once home, Brian receives an email letting him know that that their Orlando ePass is also known as ultra-secure™ meWallet^® System idPlayer™ and idFob™ smart devices (idGadget™ devices) and that they can be used at numerous websites for authentication, payment and downloading of tickets. He is also sent a list of stadiums, cinemas, venues, shopping malls, stores and restaurants that accept the meWallet^® System’s idGadget™ devices He is also informed that he can have this same technology physically integrated in a newly announced meWallet^® System enabled smart cell phone. 

Brian also learns that he can use the idFob™ device, connected to his PC via its USB port, to authenticate himself at the Tickethub or eBay website and can securely pay with his idFob™ device for the Rolling Stones tickets that he just purchased. He can also download the digital tickets electronically to his idFob™ device and iPhone and use them to get into the concert. When he downloads the Stones tickets and enters the concert venue, he is also given customized digital coupons for fan merchandise and food at the venue. After the concert he uses one of his VIP coupons to purchase a micro SD card with a video of the entire concert at a special booth in the venue for his kids.

By using his idFob™ device and iPhone™ for online single sign on authentication and transactions he no longer has to type in usernames, passwords, contact information or credit card data. His data is always secure since everything traveling between his idFob™ device and the rest of the world is encrypted at military levels. Vendors and venues are sure that their customer is who he says he is since Brian is the only person that can make his idFob™ device with iPhone function. 

Brian is also able to load his children’s allowances into their  idPlayer™ devices. He is able to set special parameters in the idPlayer™ device to control their spending and purchases online and at the shopping mall.

If one of his children’s idPlayer™ devices is lost, it is no problem. A record of everything in the idPlayer™ device is on a secure server and the idPlayer™ device can be quickly and easily replaced with exactly what was in it when it was lost. Since the registered finger print is required to activate the idPlayer™ devices, no one can use the lost devices.

When Brian and his wife go grocery shopping, they now go first to the grocery store website. Brian’s wife connects her idPlayer™ smart device to the computer and authenticates herself at the site. She is immediately offered coupons that relate to her families preferences. She can download, to the idPlayer™ device, all the coupons she wishes to use. At the grocery store all coupons are redeemed automatically at the checkout. She can also pay with her idPlayer™ device. During check out, she is also given new personalized coupons and offers from the grocery store and associated merchants. 

Next year, Brian’s children will be able to use their idPlayer™ devices at school to pay for lunches and to access special areas of the school campus.

Brian and his family use their idPlayer™ and idFob™ devices almost every day for just about all their online and off-line transactions. At work, Brian is able to securely move encrypted files from one computer to another and to access controlled areas of the company network using his idFob™. He and his wife also use their idGadget™ devices to access their eBay accounts. They can even securely download some of the money earned from their eBay business directly from their PayPal account into their idPlayer™ device. Brian’s wife chooses the DVDs to rent at the Yahoo.com website and downloads the rental codes to her idPlayer™ device. At the local Safeway, she picks up the DVDs at the Movie Kiosk by taping her Orlando ePass to the reader on the kiosk. The kiosk delivers her DVD rentals and sends her additional personalized coupons for use at the Safeway while she is there as well as offers for discounts at the Zazoo.com Shopping site. The whole family uses their idPlayer™ devices as mp3 and mp4 players as well. They can now pay for and then download mp3 music files to their idPlayer™ devices at their favorite online music vendors all with the same little device and all with complete security.

As the years go on, Brian and his family will find that they are able to use their ultra-secure™ meWallet^® System idPlayer™ and meWallet^® System enabled cell phones in more and more locations and for more purposes including a variety of loyalty programs. Their idGadget™ devices become their driver’s licenses and secure passes for the FastTrack line at airport security. 

They are able to securely and confidentially keep their medical and related insurance records on a special ultra-secure™ idPlayer™ device provided by their primary physician and sponsored by their local hospital. It eliminates the need to fill out forms throughout the health care system, helps their pharmacist to identify conflicting prescriptions and can quickly provide important information in an emergency.

Does this sound like science fiction? It’s not. Each of those examples is soon to be reality. The ultra-secure™ meWallet® System and idGadget™ smart device technology from Sentegra will be rolled out in  early 2011.

Electronic Payments - Learning From History

Berlin, 2000.
In Germany the Sparkasse Bank group invested heavily in a new payment scheme called the Geldkarte. The Money Card. This was an early smart chip card. The chip had enough memory to store money data. The user could go to a Sparkasse ATM and download electronic cash from their bank account to the Geldkarte. Then, theoretically, they could go to any merchant in Germany and pay for their purchases with their card, just like cash.

Sparkasse Bank assumed that merchants would readily upgrade their point of sale terminals to add the Geldkarte reader and software. They were wrong.

Merchants were not excited about spending 200 DM for new readers. "Why should we?" They asked. "What is in it for us?"

So merchants did not upgrade their terminals. End users had no place they could use their Geldkartes except a few large merchants where Sparkasse had subsidised the readers.

Does this sound familiar?

Without a compelling reason, merchants will not upgrade their POS terminals. Without a buy-in from merchants no payment scheme will be successful.

No matter how much money is spent on advertising by credit card organizations and banks to promote contactless, NFC and mobile payments, without merchant buy-in there will be no end user acceptance. And without compelling reasons for merchants to upgrade the POS terminals there will be no merchant buy-in.

Now the Geldkarte has gained quite a bit of tranction in Germany but it took many years and it took the market catching up to the technology. Could this have been accomplished sooner with the right strategy?

There are a number of other issues that hold up the acceptance of contactless/NFC transactions but these will be addressed in further posts.