New trends in the mobile payment revolution: Big Pay, HCE, Bitcoin, Proximity Marketing or P2P mechanisms
- Vector ITC Group offers contactless technology solutions such as Air Wallet to provide secure mobile payment.
We live in times of great change, where traditional means of payment, whether by cash or card, are evolving towards solutions associated with payment with mobile phones, virtual money, etc. This has led to the appearance of many new players in the market to revolutionise traditional means of payment.
Mobile phone use will be essential in the future as both a means of payment and way of doing business. Mobile phone payment is continuously evolving, with the debate currently being whether it could surpass traditional face-to-face means of payment, such as cash and debit/credit cards..
It is in this context that Vector ITC Group is now working to offer solutions for companies and users. Its Air Wallet solution is ideal for the new digital banking sector, but applicable to many other sectors too. “At Vector ITC Group we are aware of this new reality and provide our customers with the most advanced mobile phone payment solutions. Our Air Wallet product, with contactless technology, allows the user to make all their payments through their smartphone both securely and personally, centralising all their payment and loyalty cards on their mobile, while offering them value-added services”, says Rafael Conde, Director of Innovation, Strategy and Technological Evolution in Vector ITC Group.
Vector ITC Group has prepared a list of new mobile payment trends, highlighting the following:
The “Big Pay”
These solutions enable a customer to pay with their mobile, emulating a debit/credit card payment, without needing any App or Wallet on the mobile associated with the card issuing bank. These are free applications for customers with their only intention being to create a dependence on the mobile device where they are installed, whether Apple Pay, Samsung Pay or Android Pay (Google).
Host Card Emulation (HCE): “The solution for banking”
Mobile payment solutions are based on the existence of a secure element where data from the customer's card is stored. The secure element can reside on the SIM card, on a hardware component in the mobile or on a software component. On Android 4.4 and subsequent versions, Google includes the HCE (Host Card Emulation) service, as a software component, which enables emulation of a “smart card”.
Cloud-based payments are needed to ensure secure HCE solutions. They enable the storage and management of card data securely, and the tokenisation key, so that data from the customer's card is not sent by the networks unless a token is used instead.
There are many digital “wallet” solutions that have been developed using HCE as a means of payment and major banks that have opted for this technology. The main difference between the solution provided by banks and the “Big Pay” is that the wallets of the latter are “multi-issuer” enabling the storage and use of cards of different banks.
Bitcoin & Blockchain
New means of payment include “Bitcoin” as an electronic currency for making secure payments. But, how does bitcoin guarantee the security of transactions? For this, it uses a shared ledger system based on cryptographic trust-based tests. This system is called “Blockchain”.
Transactions are made between one Bitcoin wallet and another. Each transaction is signed and includes information on both the previous transaction and the next, forming a “transactions” chain where each link is necessary for the total verification of the system. It is based on the old glass bank concept where customers can see at all times what is going on in the bank as everything is happening transparently. This shared ledger allows the whole network to validate a transaction, ensuring its veracity.
The physical connection between the mobile and the shop will help promote a new business model. Thanks to Proximity Marketing it is possible to buy in physical shops without interacting with an assistant. Being in a shopping centre, receiving a message on your mobile with an offer from a nearby shop, entering the shop and buying the article through your mobile is now possible thanks to the use of Beacon (BLE), which is a Bluetooth-based RF (radio frequency) system, with a range of action of around 40 metres and valid for both Apple and Android.
P2P mechanisms are the most used; they are provided by the banks through traditional bank transfer using the IBAN and technology companies such as Paypal. Solutions are currently being developed for being able to pay someone else directly with your mobile, by simply associating the telephone contact with their IBAN. These types of solutions are already being developed in Europe, but at a local level in an area or country.
There is still no pan-European solution, but this is being worked on. The Retail Payments Board (ERPB) has been created, which helps to regulate these types of payments. Work is also being carried out on a “Distributed Proxy Lookup Service”, which will enable in Europe the mapping between the telephone number and an individual's IBAN account.