Never has payments been such a hot topic. Coverage in the press has been across the board in Sunday newspapers, dailies and on websites which normally stick to celebrity gossip and politics. Apple Pay, changes in legislation, adoption of EMV in the US, mobile wallets, wearable payment technology and multiple new ways to pay, not just retailers but each other, have all hit the headlines along with multiple card fraud scandals.
We round up the key stories for you with predictions on how the payment industry will be impacted in 2015 and beyond. Read on for some (well researched) crystal ball gazing.
‘Contactless’ has been cited as the buzz word of 2014 and rightly so given the progress in contactless payments over the year. A global market study by Juniper Research predicts transaction value for online, mobile and contactless to hit $4.7 trillion by 2019. In the UK, contactless payments have jumped 200% to over £100 million per month. NFC contactless payments are widely predicted to grow strongly, particularly in the US where EMV migration requires many merchants to upgrade their installed base of payment machines by October 2015 . It’s predicted that many will choose to upgrade to EMV capable machines which are also capable of accepting contactless payments, killing two birds with one stone.
Apple Pay is seen as the force which has driven contactless to the fore of the public and merchants’ minds. Press coverage on the technology has been widespread and mainstream, and as a consequence, use of existing contactless cards is increasing and mobile wallet payments have achieved a level of awareness not seen before.
Mobile wallets are still hot news and with the key players including tech giants like Google and PayPal as well as Apple, Samsung, Microsoft, Visa and Mastercard plus new players like Zapp and Softcard, this is an area which is set for big growth ahead. Apple Pay put mobile wallets into the spotlight and they’re unlikely to leave anytime soon. China Union Pay are ramping up to launch an Android biometric NFC wallet, very like Apple Pay, in China.
Mobile wallets use existing credit card systems, tokens and NFC to allow the user to tap and pay. The user adds their credit and debit cards to the wallet which then uses tokens so that the credit card information is not shared at point of payment. This makes mobile wallets more secure and less prone to fraud than a chip and signature card and arguably more secure than an EMV card. Apple Pay is the most famous of mobile wallet solutions. Most have a charge per transaction and offer higher spend limits than a contactless card payment as a mobile wallet is harder to steal and defraud.
Wearable technology for payments is not mainstream yet but as contactless becomes more prevalent, payment via wearable technology is set to become a hot topic in the future. Early adopters are already taking to watches which include contactless payment, patches with contactless payment capabilities for sticking to phones and soon we may see jewellery or clothing with similar capabilities.
Peer to Peer (Bitcoin)
Peer to peer payments like Bitcoin are unusual in that Bitcoin is a currency as well as a payment system. The aim of a digital currency is for it to be exactly like a ‘real world’ currency: if I hand you a coin it’s now yours, I can’t spend it again and you can use it to pay for something else, as you wish. There is also no permanent, traceable record of the transaction. For Bitcoin, these requirements have been met through some very clever coding called Blockchain. The growth of the currency is managed equally cleverly by ‘mining’, a process designed to emulate the way an asset like gold is ‘created’ by being mined out of the ground over time. Bitcoin is currently volatile in value and although it can be used to pay for products online and in the real world, it is not yet mainstream. However, IDC predict that 2% of all global payments will be Bitcoin transactions in the next two years.
Point to Point Encryption (P2PE)
Point to point encryption is one way for retailers to avoid some of the burden of PCI DSS by ensuring that credit card data is encrypted from ‘swipe’, reducing the burden of compliance substantially. However, adopting a P2PE solution can be costly. In the US with EMV adoption a requirement by October 2015, retailers who need to replace payment terminals anyway, may decide to bite the bullet and include contactless and P2PE in their new solution.
Person to person
Person to person payments are becoming big news with multiple apps now allowing individuals to pay each other funds, using only their mobile phone number. Users need to have the same app installed on their phone and to set it up for receiving and sending funds. Examples include Barclay’s Pingit, Venmo, PayPal and Paym. Venmo is causing a buzz as a payment app which is also a social network, where users write comments along with the payment.
Customer loyalty cards are set to become a thing of the past as mobile apps combined with Beacon technology are rolled out in retail locations across the globe with multiple providers offering similar systems. Install the app and when you enter the store you’re recognised, offers and promotions are communicated to your smart phone and your loyalty points accumulated. All without the need to worry about how many stamps you’ve collected for those cups of coffee. The retailer gains multiple benefits too, with customer data about purchases and frequency of visits, all delivered to their EPOS system.
The next step up from EMV, tokenization has the potential to give fully secure card and mobile transactions in the future. Unlike mag stripe, card data is never exposed ‘in the clear’ meaning that a tokenized transaction offers no opportunity for fraudsters to steal card data. At best, a stolen token has value for one time use only and as it bears no relation to the original card number, cannot be used to derive the Primary Account Number (PAN).
There are several benefits to tokenized transactions including the immediate removal of a desirable target for criminals and fraudsters combined with the fact that as the card holder data is never exposed, PCI requirements are greatly reduced. Combined with chip based EMV cards and Point to Point Encryption, the stealing of card data from retail locations is no longer a possibility for criminals.
Data Protection (on and off line)/Security
Keeping customer data secure is becoming a point of differentiation for retailers, not just an issue of compliance. Customers are much more aware of the vulnerability of their financial data and retailers who allow it to be stolen are likely to get a bigger backlash from the public in the future. This means that there is a greater incentive for retailers to adopt the highest levels of security like EMV and Point to Point Encryption and to have as little contact with unencrypted or de-tokenized credit card data as possible. Pressure from consumers is a new factor in the security conversation and could be highly motivational for all businesses who deal with card payments in adopting the most secure systems possible.
Biometrics have a ring of science fiction about them, yet they’re here already with a number of providers offering fingerprint identification for transactions including Eximbank in Vietnam where finger prints can be used to authorise over the counter transactions. Vein reading and scanning technologies are also being released as an alternative, for example by Swedish stat-up Quixter. Fujitsu has already launched a series of ATMs for the European market that utilise its PalmSecure biometric verification technology along with contactless and NFC transactions.
Fingerprint scanning technology is a part of the Apple iPhone and the Samsung Galaxy already. There are some concerns about the security of fingerprint scanning, but it is believed to be impossible to forge a vein scan, due to the uniqueness of vein patterns in the hands and research is already well advanced into blood vessel, cardiac rhythms and retina recognition.
Point of Sale Terminals
For the majority of the above technologies to work in a payment environment, the Point of Sale Terminal is still a vital part of the mix and analysts are predicting strong growth in sales. Part of this growth prediction is predicated on the need for mPOS and NFC enabled terminals as well as EMV compatibility, particularly in the US which currently has the highest number of payment terminals in the world, many of which will need to be replaced to meet the EMV deadline in October 2015.
For Tailwind, our FlexiPole range is set to grow over 2015 to include more bespoke solutions for a range of new payment terminals. We’ll be adding new OEM’s to the terminal manufacturers we support and we’ll also be adding completely new products to our range.
2015 will be an exciting year for the payments industry, a growth market for POS terminals and an exciting time to be at Tailwind as we strive to provide the most secure and best possible POS stands and mounting solutions to our customers.