Mobile payment: processes must be user-friendly and secure

Mobile payment is one of today’s main smartphone and tablet trends. However, the large number of suppliers, different technologies and options mean the market is still complex: “We still have a long way to go before mobile payments at the physical point of sale (PoS) are a normal aspect of everyday life. Naturally, it would be advantageous if the mobile payment process was the same everywhere and common technical and procedural standards are essential for this”, says Ercan Kilic, Head of the MobileCom Strategic Project, GS1 Germany.

At present, three different technical methods are in use. In addition to QR-code based versions via a payment app, they are processes using Near Field Communication (NFC) and Bluetooth. “Many m-commerce providers will be represented at this year’s M-Days Congress and Exhibition, which will make it possible to compare all relevant payment systems for the mobile business”, says Béatrice Klocke, Director M-Days, Messe Frankfurt Exhibition GmbH.

Most payment apps today use QR codes and are frequently to be found in the retail trade. The technology calls for internet access during the payment process because it is necessary to generate an ID or QR code. In many cases, these applications are capable of more than just payment transactions and offer supplementary user benefits in the form of vouchers or services, such as a shopping list.

In contrast, NFC payment methods are fully contactless. To make a payment, all the customer has to do is hold his or her smartphone close to a PoS terminal. In theory, the transaction is quick and secure. In practice, there is a problem with the dissemination of the necessary technology. For example, iPhones do not have NFC. Moreover, it has so far not been possible to reach agreement about the ‘secure element’, an additional chip containing all necessary data for a transaction, such as credit-card numbers. The chip communicates only with a special controller via defined security standards, which guarantee that no third party can read the NFC data during transmission.

“The secure element can either be fitted in the device itself or on a SIM card and this determines whether it is under the control of the device manufacturer or the mobile-telephony provider. Alternatively, devices can be retro-fitted with special micro-SD cards or NFC stickers, as offered, for example, by credit-card companies”, explains Maik Klotz, Head of New Business, Buhl Data Service GmbH. Credit-card, couponing or loyalty companies wanting to offer their customers NFC services have to store their data on the secure element. The owner of the chip is remunerated for this service and, additionally, receives all data from NFC transactions. “So far, it has been impossible to push ahead with NFC on a large scale because nobody wants to give up control of the secure element. The credit-card companies also see this problem and are now offering another solution – Host Card Emulation (HCE) – that works without the secure element”, says Maik Klotz.

Another payment option that has gained a foothold in the market recently is Bluetooth Low Energy (BLE). This is a technology that, in distinction to NFC, works with almost all smartphones because Bluetooth has been a widespread transmission standard for many years. Moreover, the technology can transmit data over a distance of approx. 30 metres whereas NFC can only manage a few centimetres. BLE can also be used to send additional data, e.g., information about loyalty programmes or targeted advertising can be sent straight to the customer’s smartphone at the PoS. Stefan Krueger, CEO, valuephone GmbH: “The consumer simply registers his or her smartphone with the system at a retail outlet or sets it to register automatically. The retailer can see whether the consumer is a regular or new customer and in which programmes this person participates. Thus, Bluetooth Low Energy has the potential to generate greater dynamism in the world of m-commerce. And, what’s more, it consumes less energy, extends the operating range compared to other technologies and permits the use of other applications.” Against BLE at present is the fact that there are hardly any payments processes that use this technology. Moreover, Bluetooth Low Energy only runs on the latest operating systems, such as Android 4.3 or iOS7.

Wallets go digital
In future, mobile payment systems will become further integrated into our everyday life and the discussion will no longer focus on the technology but emphasise user benefits. Only then will mobile payment be part of the digital wallet, which incorporates the various payment systems and offers additional functions, such as showing account balances and the integration of couponing solutions. However, it is also possible that wearables, i.e., data-processing devices worn on the body, could displace smartphones when it comes to mobile payments. Thanks to a close working relationship between technology suppliers and payment-system providers, it is already possible to pay in shops via certain wearables.

The legitimisation of payment processes also represents fertile ground for innovations. The latest generation of smartphones can already be unlocked by means of a finger print so authentication via a PIN code will soon be unnecessary when shopping. Thus, it is only a short step towards biometric identification. “The mobile business will be one of the most innovative in the coming years. Hence, I am very much looking forward to discovering the new products and innovations to be shown by exhibitors at the 9th M-Days”, says M-Days Director Klocke.

In addition to the numerous exhibitors and their new products, visitors to M-Days on 13 and 14 May can also look forward to an interesting programme of lectures. At the lecture stages, which are integrated into the trade fair, experts from the mobile and internet and telecommunications technology industry will reveal the latest m-commerce trends. Moreover, M-Days has four other core areas: strategy, enterprise, marketing and media.

Further information about M-Days can be found at www.m-days.com. The ninth M-Days will be held concurrently with Email-Expo, Trade Fair and Lecture Forum for Data Driven Marketing. As an established meeting place for the sector, the Forum offers specific and exclusive input revolving around the subjects of marketing automation, CRM, lead generation, content marketing and associated disciplines.

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