The Evolution of Mobile Payments

Here at Indue, we’ve been looking at how our clients can use contactless payment technology for a little while now.

The last few months have seen the players start to mobilise. ApplePay launched in the US in October 2014, allowing Visa cardholders to use the new iPhone 6, iPhone 6 Plus, Apple Watch or iPads to make purchases at selected merchants. As of February 2015, more than 2,000 US banks were signed up and from September this year, Americans will also be able to use Apple Pay for US federal government transactions.

George Lawson, Head of Emerging Products & Innovation, Visa Australia, New Zealand & South Pacific said to the Sydney Morning Herald in February that the company is working on an Australian rollout of a localised tokenisation service, but no date is set for its 2015 launch.

Samsung followed suit globally in March 2015, collaborating with MasterCard to reveal Samsung Pay, incorporating technology acquired from American start-up LoopPay, which is also compatible with older magnetic-stripe card terminals.

PayPal, Commonwealth Bank, Westpac, Cuscal, Optus and Samsung are among the organisations which already offer contactless mobile payment solutions in Australia.

Optus recently announced it will release a smartwatch that will enable mobile payments by year’s end. Still in proof-of-concept phase, Optus’ ‘wearable’ technology will use the telco’s contactless payment system, Cash By Optus, which gives users a special SIM card enabling them to preload cash and make payments on Visa payWave terminals.

Last week, MasterCard’s global chief, Ajay Banga said that he’s not yet seen a good reason for people to ditch their credit cards for mobile devices, and that security and privacy fears still need to be overcome.

However, the technology may be more secure than magnetic stripes because credit card data is not held by the smartphone but instead relies on tokenisation, where credit card numbers and expiry dates are replaced by unique 16-digit tokens. If the phone is stolen, the token can be cancelled and another issued, with the account number remaining intact and the token cannot be transferred to another device or computer.

To implement contactless payment technology, banks and financial institutions would need extra fields in their payment systems to accept and recognise tokens.

Speaking to The Age in February, Stephen Karpin, Group Country Manager, Visa Australia, New Zealand & South Pacific said the effort is worth it because you are actually adding another layer of security to the mobile payments process.

Indue is collaborating with a number of our clients to unlock and explore the possibilities of contactless technology, to give them a competitive edge in attracting and retaining their customers.

For more information about contactless payment technology, click here to contact a member of our expert team.

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