Mobile payment enters a new phase

Shopping via smartphone could soon become part of everyday life. Mobile payment solutions are becoming increasingly popular in Switzerland. With the entry of Migros, Coop, Valora, SBB and McDonalds, mobile contactless payment is gaining momentum. For six months now, 8,500 payment terminals at Migros have allowed contactless payments - provided that the customer has a credit card with a built-in NFC chip. For amounts of up to 40 francs, the card or soon the smartphone simply has to be held up to the terminal - and that's it. Near Field Communication is an international transmission standard for the contactless exchange of data via radio technology over short distances of a few centimeters. "Various rollouts of mobile contactless payment solutions based on Near Field Communication are currently taking place around the world," says Tobias Wirth, Senior Manager Digital Products at the Aduno GroupThis development is primarily driven by mobile phone providers, banks and credit card companies. The Aduno Group offers products and services for cashless payment - from credit cards and payment terminals to personal loans. To retailers, Aduno provides terminals with contactless technology based on NFC and ensures the acceptance of debit and credit cards. Via Master Card and Visa credit cards, retailers can now accept mobile contactless payment.NFC-enabled smartphones"The technological hurdles have now been overcome," says Tobias Wirth, "the technical interaction between the systems of the mobile communications providers and the banks and credit card providers is working. By mid-2014, there will be more than one million NFC-enabled smartphones on the Swiss market. "A major hurdle that still needs to be overcome is customer acceptance," admits Wirth. "Here, it will be crucial that the solution works simply and intuitively. In addition, this solution must work the same way at all retailers when it is introduced. "Another interesting and central player in the new world of mobile services is PostfinanceThe SMS quick service makes it possible to transfer money, check account transactions, top up call credits and make payments. With the additional app for iPhone, iPad and Android, small amounts can be transferred and iTunes, Paysafecard or Nintendo credit can be purchased. All e-finance and e-trading services are also available with the app. The number of users of the app has grown considerably: 235,000 at the end of 2011, 32,700 at the end of 2012, 46,500 at the end of 2013 and 48,900 at the end of February 2014.New competitors"We launched the SMS quick service in 2009, the app in 2010," says Postfinance spokesman Johannes Möri, "Postfinance was the first financial institution to offer money transfers by cell phone." Asked about the current challenges, Möri says, "Competitors are following suit and new competitors are entering the market from the digital space." Postfinance is also challenged technologically, as the half-million app download mark is likely to be surpassed these days. "Our systems must be stable and expandable," says Möri, "and the app must be correctly displayed and function on all devices of the various manufacturers, all displays, versions and operating systems. Postfinance considers contactless payment with an NFC cell phone to be a possible future solution. For the time being, however, Johannes Möri says: "First, contactless payment with the debit card will now become established." Postfinance is involved in the topic of digital wallet to simplify secure payment in the digital world and is developing its own solutions. At the same time, the company is open to cooperation. The digital wallet is an electronic wallet that can be accessed and used via Internet-enabled devices. It is suitable for both face-to-face and distance business.Micropayment systemsInnovation drivers in online and mobile payment solutions also include PayPal. In the meantime, PayPal has over 750000 customers in Switzerland and enables easy shopping in online stores. One advantage of the micropayment system is that no bank or credit card data is passed on to the merchants. The customer gets his money back if the seller does not send the goods. The merchant, in turn, receives a payment confirmation from Paypal and can ship the goods immediately. In addition to the online payment solutions, the mobile payment solution QRShopping is also available. "Our goal is to make the entire shopping and payment process seamless and convenient. Customers no longer have to think about whether they have enough money in their wallets," says Armin Schmid, PayPal's head of Switzerland. New services such as Uber or mytaxi have integrated PayPal directly into their offerings. PayPal can also be used when buying a coffee or lunch. "Mobile payment is gaining ground as customers look for practical and convenient solutions for their purchases," Schmid says. PayPal is currently testing various application options in Oldenburg and Berlin. The aim of these tests is to determine which solutions are best accepted by customers.Worldwide differencesGlobal presence is a challenge for PayPal. "We try to create added value worldwide with technologies. But at the same time, we have to take into account the different mentalities of the people who exist these also in terms of payment," says Armin Schmid. "Our challenge is to develop a tailored payment solution for each market." But the mobile payment market is still young, he adds. As a result, he says, no one knows yet exactly which technology will ultimately prevail. But Armin Schmid believes: "There probably won't be a single solution for everyone, but several that have to meet the different market needs."Six Payment Services, a division of the Six Group, is also increasingly focusing its activities on mobile payment. The standards currently being developed for the retail sector are aligned with the card organizations. In this context, Six is supporting the market launch of Masterpass, a Mastercard solution, and V.me, a Visa solution, as soon as they are available on the Swiss market. At the same time, Six is developing the possibility for banks to adapt existing e-banking solutions into a mobile application with new functions.Online stores and mobile paymentOnline stores are following the development of mobile payment with great interest - not least those that want to be present beyond their borders. After all, apart from other major issues such as security, the different national customs represent the biggest hurdle. Marketing departments that already sense big business in emerging countries such as China, Russia or Brazil must be aware that the respective payment processes differ greatly from those in Central Europe or the USA. Eric Christensen, Head of Global Payments at the e-commerce company Digital River says: "Almost every country has its own favorites when it comes to paying for online purchases. In Brazil, for example, it is possible to pay in installments when buying almost any product - even online. It's a different story in Russia, where cash-based payments via kiosk networks or online wallets like Yandex represent the most popular payment method for the majority of online shoppers." Therefore, the e-commerce expert comes to the conclusion: "In order to compete with local companies, an internationally operating company must take into account the laws, the political and financial framework conditions, the cultural conditions and the respective working environment."Safety firstIn view of these difficulties in making mobile payment solutions available worldwide, it is not surprising that traditional approaches continue to be writ large. In addition to PayPal, the example of Paysafecard the chances of success in processing payments. Paysafecard is a European prepaid solution for paying for goods on the Internet. It is currently offered in 37 countries at 450000 points of sale and thousands of web stores accept it. The customer purchases it like a prepaid cell phone card at a kiosk or gas station and receives a printout with a 16-digit pin. When making a purchase in an online store, he then clicks on "paysafecard" and enters the pin, and the amounts paid are deducted from the credit.Asked about the advantages of the card, Paysafecard spokesman Bernhard Schmid says: "The prepaid principle offers absolute security. In addition, it can also be used for very small amounts starting at one centime. And consumers who do not want to disclose their personal bank or credit card data on the Internet for security reasons have a payment system for thousands of web stores with Paysafecard."Google talks toSuccessful micropayment systems are all well and good, but retailers are still waiting for further innovations for larger transactions. Asked about future developments, Tobias Wirth of the Aduno Group explains: "Google is taking a new approach with Google Wallet based on NFC with host card emulation. HCE is intended to make NFC-based transactions secure even without a secure element. With this method, all generated data is not stored on a hardware element, but centralized in a server environment. "The NFC Host Card Emulation technology is already standard in Android devices from version 4.4 onwards and now supports an architecture without a Secure Element and mobile radio provider, which greatly simplifies and promotes the scaling and spread of mobile contactless payment solutions based on NFC," he says.And on other trends, Tobias Wirth says: "In addition to NFC and HCE, there is currently a lot of discussion about Beacon, the new Bluetooth LE standard. This technology was introduced by Apple with iOS 7 as iBeacon. Furthermore, PayPal has already integrated the technology for mobile payment. iBeacon works like a check-in and check-out system. Customers who enter a POS with activated Bluetooth function on their smartphone are immediately recognized and can be addressed via push notification or app. However, there are still various open questions regarding security and also customer acceptance, as it is a push process."Author: Gregor Waser