A growing number of large and small payment technology companies are rolling out tools that can turn mobile phones into mobile card acceptance devices.
Some of the biggest issuers and card networks have been testing technology that can let consumers use their phones to make card payments, but the rollout has been stymied by the conflicting needs of banks, wireless carriers and phone makers. However, observers said that the business case for adding acceptance software to phones is much easier to make, and that the applications could enable millions of the nation’s smallest businesses to begin taking cards.
The relatively rapid emergence of mobile acceptance technology is in contrast to the long-running efforts of banks and card networks that have been testing the use of mobile phones as payment devices since at least 2005, using contactless near-field communications chips that are integrated into the handset. Those trials continue, but experts say wide-scale commercial deployment of the devices remain months, or possibly years, away.
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Bruce Cundiff, the director of payment research and consulting at Javelin Strategy and Research of Pleasanton, Calif., said adding near-field capabilities to phones requires the creation of a complicated ecosystem for handset manufacturers, mobile network operators and financial companies, and the various players have yet to develop a business model that satisfies all three players.
However, turning a mobile phone into a portable terminal fits easily into the existing business model, he said; entering the payment data into a phone and routing it across a wireless network to a card network expands a merchant’s capabilities, but it does not require any major changes to the current system.
“Phones Emerging as Acceptance Tools,” Mobile Banker
My Thoughts:
The example of the iPhone being a credit card terminal and the recent article in Mobile Banker are rather tragic in my opinion. While it looks slick, I think it’s more a “flash in the pan” than really progressing forward. Companies like Hypercom, NCR, Verifone and others should not worry about this, they should be more worries when the true mobile payment happens and you don’t need these terminals to process your payment. In this scenario, I still have to carry my credit card, I still have to give up my credit card number and still risk a higher chance of fraud. The iPhone also becomes a double point of failure, both as a terminal and relying on a data connection to the wireless network (think drop calls or poor signal).
The idea of mobile payments is to obviate the need to carry a credit card and expose the number and create an alternate payment mechanism that both merchant and customer can accept as Legal Tender. Closed loop systems such as transportation systems or even department store charge cards are closer to mirror alternate payment mechanism, albeit they somewhat limit the goods and services that can be consumed.
Stop fooling us with clever ads and rhetoric that claims these two examples as mobile payment. Build the real thing!
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