Mobile devices have become ubiquitous. However, the same can't be said about mobile payment, and despite the hype surrounding it and and its steady year-over-year growth, there are still obstacles that are slowing down its adoption and can prevent it from becoming mainstream, just as the magstripe cards that we've all come to know and love (and hate) over the years have become.
The current landscape is strewn with a confusing hodgepodge of different technologies, including Apple Pay, Android Pay, Samsung Pay, Google Wallet, Venmo, M-Pesa, LoopPay, Zelle and a slew of others.
Some of these technologies require heavy hardware and software investments on the part of the vendors. Others are not intuitive and are fundamentally different from the paying habits that customers are used to. Yet others are only regionally available and cannot be used from anywhere in the world.
And security issues are always looming on the horizon, adding to the feeling of ambivalence about the serious adoption of the medium.
A platform that can meet the current complexity, development, integration, costs and security challenges can likely give mobile payments and the possibility of real time transactions a boost in its growth and adoption.
Edward Robles, CEO at cybersecurity startup Qondado, whose project Digital Debit™ initiative is working to unify mobile payments, shared insights with me on how the challenges can be overcome.
Security concerns
In wake of huge fraud scams and data breaches such as the 40 million credit card numbers stolen from Target retail stores, it's only fair for consumers to be skeptical about any kind of technology, including mobile payments.
However, the truth is that mobile technology has gone a long way toward improving security and protecting user identity. With fingerprint scanners gradually becoming omnipresent on smartphones, as well as the integration of advanced encryption technologies and secure hardware, mobile devices are becoming more and more reliable as a means to perform sensitive transactions.
"Mobile devices allow us to apply other data factors as qualifiers to a financial transaction with little to no user friction," says Robles. "It all begins with the transaction interface, and that's where we believe the opportunity lies, in a uniform, easy to use and read transaction panel."
The specification proposed by Qondado calls for a unique PIN number to be generated and associated with each transaction. The technology also supports the addition of extra layers of protection such as mobile biometric authentication to further beef-up the security.
"This effectively means that a card number alone is useless without the dynamic PIN or added layer of authentication," Robles says. "This means a significant reduction of credit card fraud."
Ease of use and implementation
Users put simplicity above security, so no matter how secure a technology is, it won't gain traction if it isn't easy to setup and use. Therefore, while enhancing security, any mobile payment technology should be intuitive and contain elements that don't break much from the standards we're used to.
"Consumers are accustomed to being able to use a card at every retailer and bank," Robles says. "The current landscape of mobile payment does not follow this lead. Imagine if you could only use a Bank of America Visa card at certain locations and only Citi Mastercard at others. Making it more confusing is that each issuer has their own method of delivering the transaction interface. This is like having a credit card from every issuer look and work differently."
The implementation of mobile payment into applications should be streamlined as well and developers should not be required to reinvent the wheel. Robles' team of developers is working on a set of APIs and user interface components that can be easily understood and plugged into banking and financial applications. Meanwhile, they will enable companies to customise the graphical components to reflect the style and mood of their brand.
"While allowing for brand identity, we're working to bring uniformity to the interface across platforms making way for mass adoption similar to the credit card design of the 1960s," Robles explains.
Aside from providing device number and PIN for each transaction, Robles suggests the use of QR codes to allow fast input with scanners from mobile devices or wearables.
Breaking down the costs and complexity of adoption
The transition to chip-based credit cards in the U.S. was an arduous and costly process, requiring retailers to purchase hardware replacements, financial institutions to invest in new technology and issue new cards, and customers to get new cards.
The transition was painful as well. Without a sudden, nationwide switch to the new tech, consumers with new cards would be deprived from making payments at locations with legacy hardware.
Mobile payment technologies should be able to leverage existing infrastructure and hardware without requiring too much spontaneous changes and allowing for a smooth transition, facilitating the path for both consumers and vendors.
The idea, Robles explains, is to be able to integrate mobile payments into card readers, ATMs and other technologies that are already present. "Standardising around a device number and PIN with the mobile device as the dongle allows every already distributed device to interface with this standard," Robles says.
Until such a day where mobile becomes the main method of payments, Robles suggests a "transitional plastic card as an intermediary between current physical card transactions and the mobile enabled transaction instrument."
With the mobile device being the main token to authenticate and authorise payments, the design suggested by Robles will omit any sensitive information. A device number-based card can tie the transaction back to an interface, the account number is never revealed to the retailer conducting the transaction, which can prevent fraud.
"This can help form the bridge over the gap between card transaction behavior and a true, more secure mobile payment ecosystem," he says.
The future of mobile payments
Mobile is fast becoming a vital element to different aspects of life, and mobile devices can fast become the most reliable medium to perform fast and secure financial transactions. There are hurdles, but they can be overcome with a well designed platform that can unify and aggregate current efforts and achievements.