The U.S. has become the global capital for credit card fraud. Later this year, there will be a major shake-up in who has the liability for fraud. The shift places the burden for fraudulent charges on the banks and merchants, not the individual. Hence this is going to be a banner year for mobile payment innovation with tighter security. IT companies are investing in innovation to not only provide better security, but also make it easier to pay online or in brick-and-mortar stores without credit cards or bank cards. Good news for consumers!
These mobile payment methods may also replace your wallet and by not carrying cash or cards, they reduce personal threat.
Tokenization is a method where your credit card details are substituted for meaningless and random data that are not sensitive. The data is only once and prevents your details from being stolen. From wikipedia, âWhen tokens replace live data in systems, the result is minimized exposure of sensitive data to those applications, stores, people and processes, reducing risk of compromise or accidental exposure and unauthorized access to sensitive data.â
Apple uses tokenization in its new ApplePay technology. On the iPhone, Touch ID has been introduced that uses one-touch fingerprint technology to access payment. Card details can be added through its iSight camera to Passbook, where tickets, boarding passes, coupons, and the like are already stored. Itâs as simple as taking a picture. The details are encrypted, a unique device account number is assigned, and the details are stored securely to a dedicated chip in the iPhone. If your phone is ever lost or stolen, you can use iCloudâs âFind my Phoneâ to put your phone in âlostâ mode that will suspend ApplyPay, or wipe the phoneâs data completely.
Payment details are never stored on a server. Transaction details are never saved. When you want to pay for something in a store, the iPhone uses its Near Field Communications antenna without waking your phone. Just hold your iPhone near the contactless reader with your finger on Touch ID. You can see the demo at the Apple Website. Within online stores, only a single touch of Touch ID or ApplePay button is required.
The international payment network, Visa, is expanding its tokenization network into Europe and Asia, setting the stage for ApplePay worldwide.
Google introduced Google Wallet three years ago, but it is not mainstream yet because the Near Field Communications infrastructure has not been widespread (until the liability issue). And while it uses some level of tokenization, Google Walletâs uses a cloud-based system, so consumersâ payment details are stored on a server. This introduces risk, and albeit small, it is still a security issue.
Google Wallet is similarly convenient to ApplePay, although rather than a one-touch fingerprint it requires a PIN to access payment. It has similar methods to disable payment if your phone is lost or stolen.
Google just days ago acquired Softcard technology to strengthen its mobile payment. Samsung acquired LoopPay, a mobile payment system that uses the magnetic swipe technology in credit cards. LoopPay requires the consumer to buy a special device and download a special app. LoopPay has a special case for your phone to hold ID cards. Softcard uses C-SAM and Gemalto platforms. Gemalto is a commerce platform that still employs card technology. C-SAM is owned by MasterCard and there has been little information about the platform since early 2014. It has been reported that Softcard technology is not going to help Google Wallet compete with ApplePay.
Another method, QR codes, can be generated on almost all devices and read by scanners that are already installed at merchant locations. This is the technology used to pay with Starbuckâs app. The app communicates with a network, such as PayPal, and it provides the phone and the merchant with a QR code, displayed on the deviceâs screen and scanned by the merchant, where matching codes permit the transaction.
QR code use can transcend various payment technologies, so this payment method might be processed by PayPal or Google Walletâs backend. It does not rely on a device with specific hardware and software, nor for the merchant.
Other upcoming products range from phone cases that add payment capabilities, to devices that look like traditional credit cards, but can change to present different accounts to a payment terminal.
It will be interesting to see how the technologies and competition play out by the end of the year. Do you want to get your brick-and-mortar store online? At Sinew, we can build your mobile e-Commerce store on Apple, Android and Windows platforms, as well as on desktop platforms. Give us a call.