Where are the mobile macro payments? I am talking about the payments with a higher amount than the ones that are defined as micropayments.
Where are they? Where are the examples? Have you ever seen a demo online? Or a cards program offering higher value (say: ‘normal value’) mobile payments? Well, I haven’t found it yet, which is strange because I believe the combination of micro- and higher value transactions through one channel is awesome! It means you only need 1 device to replace all kinds of cards in your wallet.
It looks like they only wish to promote micropayments. You know: the small transactions for which cash is currently the most popular payment method. If the infrastructure is available, a ‘tap-and-go’-tool like contactless cards or mobile devices could promise a faster and more convenient payment tool than cash.
Personally I wouldn’t be easily convinced by a mobile solution if it is only used for micropayments, unless there is an automated system to recharge my account (thank your standing orders and direct debits ;)). What would interest me is a mobile solution by which I can make all kind to purchases, also the €100 ones and higher. But then I also need the guarantee that it is a safe solution and that a personal PIN is needed to authorize the transactions!
I made similar comments already a couple of times on some discussions in Innovation In Payments, and realized I haven’t seen an example of PIN-supported mobile payment solutions yet.
So I started surfing on the net, surfing on YouTube with key words like ‘mobile PIN’, ‘contactless PIN’, ‘mobile payments PIN’ etc. I only looked for about an hour, but it sure proved there is not much around on this niche topic. There are a lot of examples about the ‘tap-and-go’ principle, but the ‘tap-PIN-and-go’… no sign of it!
The only real link I found to movies or an example where a PIN is needed was a PIN code to access a certain application like the Google phone. In other words it was a PIN to access an application, like a key to unlock your wallet. I’m not saying this isn’t an important security measure, but it is not the authorization PIN for a transaction I was looking for. And in all honesty, if Google would only offer micropayments through their mobile wallet solution, than what is the use of linking it to loyalty and coupons, as most of the deals require transaction values higher then let’s say 15 dollar? So I was missing something in the business model…
After an hour I gave up searching and I took the easy way: I called up a colleague of which I was sure he would know the answer. The answer is more or less (for the MasterCard solution): ‘every PayPass-cards portfolio has a combined solution for micro- and macro payments, but it is never promoted’. He proved this with reference to the ‘PayPass M/Chip Acquirer Implementation Requirements’ on page 55. I quote the reference to the PIN (= CVM):
“PayPass terminals must use ‘No CVM (Cardholder Verification Method) ’ for transactions equal to, or under, the Terminal CVM Required Limit when performing a PayPass—M/Chip transaction. Transactions above this limit must perform CVM processing as specified in EMV 4.1 Book 3.”
The people who know me better probably can guess my next question already: ‘but why?’ and ‘how? On the demo you only see the reader most often and no option to add a PIN code?’
Well, in reality it seems that 2 devices are most often combined in this contactless dimension (and not just one like you see in the movies). At least for the open loop system like the ones supported by for example Visa and MasterCard… concretely that means that existing POS terminals often get a software upgrade and an extra device, a sort of reader of contactless cards or phones, that is connected to the POS terminal. The software upgrade can relatively easy be done and is not too expensive. I’m told that the additional reader often require a tougher investment going from €100 for the cheap reader to €300-€500 for the better quality.
The low value transaction follow a ‘tap-and-go’ principle in which the transaction can be processed EMV-compliant without a PIN code. The higher value transactions will require a PIN code for being EMV compliant. So you tap the mobile against the contactless reader and you type the PIN code on the POS terminal.
I believe this investment for low value payments only is indeed a tough call for many smaller merchants, however if also the higher value payment can be accepted that way it is already possible to spread the investment over many more transactions (and transactions that support bigger sales).
So why don’t they promote this? A wallet has cards for low value payments, debit cards, prepaid card, credit cards… so why would I only look for micropayments in my mobile wallet? I wouldn’t! Someone like me would be much easier convinced if I knew I could combine several card options in my mobile phone.
And why don’t THEY promote these higher value payments? Well, I am told that the reason is the perception of convenience. Tap-and-go is only more beneficial due to the speed of making the payment, most companies seem to think. And when a PIN must be added the mobile solution would no longer be more convenient then the card solution, at least not faster for processing the payment. Thus, they don’t talk about it.
I guess it is more a matter of how one defines ‘convenience’. My definition of convenience is at least a different one, in which the combined solution would add more value to me as more solutions could be combined on one mobile device.