Abstract
Mobile payments are a battleground, not unlike … Afghanistan. It’s an area of strategic importance, where the conflict seems unending, and the battle involves both super powers and smaller actors using guerilla tactics. Some of the most powerful have failed to conquer this domain, and yet they continue to try. What are they fighting for and why is it so hard?
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Notes
- 1.
McKinzey & Company. “Global Payments 2015: A Healthy Industry Confronts Disruption.”
- 2.
Payments Cards and Mobile Card Fraud Report 2015: www.paymentscardsandmobile.com/wp-content/uploads/2015/03/PCM_Alaric_Fraud-Report_2015.pdf
- 3.
EMV stands for Europay, MasterCard and Visa, the three payment networks that defined the standard for what is referred to as “chip and PIN”.
- 4.
The card networks such as MasterCard, Visa, and American Express, have a different perspective on the value they bring to retailers. They would point out that credit cards reduce friction in the sales process and encourage customers to spend more at a retailer, that there is a “cost of cash” (counting, secure transfers, risk of theft) and that card networks insulate merchants from card fraud.
- 5.
Pulling this off isn’t a given. One of the issues with the PayPal beacon experience (as tested at Toys-R-Us) was that the system had problems distinguishing which PoS customers were paying at. The reasons for that issue are a matter for speculation, but could be due to the beacon design, beacon placement, the transmission strength, and the way their orchestration layer applied (or failed to apply) heuristics to manage any ambiguity.
- 6.
Since this was a pilot project the beacon function wasn’t integrated with the legacy PoS, which continued to operate as if the beacon system didn’t exist. A PoS integration would have taken too long to organize. Pay-by-beacon transactions were rung up as if they were being paid via a coupon on the legacy PoS so they could be tracked. Entering the transaction a second time on the iPad initiated the transfer of funds from the customer’s credit card to a holding account. The funds from the beacon system were then periodically transferred to the café, so the operator could take receipt of those funds and balance their books. If the system had gone into production, the cloud payments system would have been integrated into the legacy PoS so that double entry was no longer necessary.
- 7.
This is not exactly how the Perks system was implemented—that’s confidential—but it provides a simplified sense of how a beacon-triggered, cloud-based wallet can work.
- 8.
This includes the payment card number. The first six digits of this are the Bank Identification Number (BIN), which indicates the type of card and the bank that issued it. The rest of the payment card number is the Primary Account Number (PAN), which identifies the cardholder’s account at the bank.
- 9.
PCI DSS is the Payment Card Industry Data Security Standard defined by the card issuers and used to regulate the security of all the systems used to store, transmit, and process payments.
- 10.
The actual UUID may be obfuscated via access control.
- 11.
- 12.
Visa USA’s interchange fee schedule usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf
- 13.
Check out the videos of the fastPay and Google hands-free user experience at www.blesh.com/hands-free-payment-google-makes-its-move/
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© 2016 Stephen Statler
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Statler, S. (2016). Using Beacons in Payments. In: Beacon Technologies. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4842-1889-1_21
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DOI: https://doi.org/10.1007/978-1-4842-1889-1_21
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