A new O’Reilly/PayPal report on web-native payment platforms, “ePayments: Emerging Platforms, Embracing Mobile and Confronting Identity,” is now available for download. Among the topics covered in the report are the rise of payment platforms, the mobilization of money, and the advent of contactless payment in mobile commerce. The following excerpt looks at three early mobile payment applications and what they might mean for mobile payment’s widespread adoption.
Stop me if you’ve heard this before, but by this time next year you’ll be buying stuff with your phone. Oh, you have heard that before? Like, every year since the ’90s? Me, too. And like flying cars or 3D printers, they’re always just a little further down the road. But at the risk of being embarrassed again, I think the day is finally upon us.
You can already buy things using your smart phone, of course. On an iPhone, for example, you can buy digital goods like music or movies at the iTunes store. You can add an Amazon app and buy just about any kind of real good they sell and it’ll show up at your door. But it’s still rare to use your phone like a credit card in the physical world, waving or tapping it at a register and having the payment processed through the cloud.
In the past year or so, we’ve seen several experiments that signal the real deal is not far off. One involved PayPal and Bling Nation, a startup that offered RFID tags that mobile phone users could stick onto their phones for use at 150 or so merchants in the Silicon Valley area. Users could pay for services at the participating merchants by tapping the tag on a piece of hardware (called a Blinger) at the point of sale. Bling subtracted the purchase amount from a prepaid account or could bill it to the user’s PayPal account. It then texted a receipt and any relevant balance information to the user’s phone. A key feature of Bling’s system was the follow-up with future offers (for example, coupons on subsequent purchases) and rewards.
To protect against fraud, Bling’s technology used the equivalent of a one-time password, which was updated after each tap transaction to prevent replay attacks. The system had the potential to include real-time risk analysis that could trigger the request of a PIN for a transaction that falls outside of normal parameters. If the customer exceeds a predetermined rate of transactions, purchases an expensive item, or if Bling Nation notices a lot of geographic variability over a short period of time, when a consumer taps a BlingTag, she could be asked to supply a PIN. In this way, Bling Nation adapted from single-factor to multi-factor authentication based on a series of real-time risk analysis algorithms. (In the months since then, Bling Nation’s business model appears to have shifted from the technology to the rewards platform. )
While Bling Nation’s RFID and the upcoming near field communication, or NFC, technology we’re likely to see from Apple and Android rely on a close-range wireless system, Bump Technologies’ system works through the cloud, making the connection based on the proximity and similarity of “bump” of two devices. Bump’s system allows two mobile phones (iPhone, Android, or Blackberry) to exchange data when tapped together. That data, which travels through the network rather than via radio waves between the two devices, could be photos, contact information, or payment. PayPal’s mobile app relies on Bump technology to let two phone users tap payment from one phone to the other.
Stop me if you’ve heard this before, but by this time next year you’ll be buying stuff with your phone. Oh, you have heard that before? Like, every year since the ’90s? Me, too. And like flying cars or 3D printers, they’re always just a little further down the road. But at the risk of being embarrassed again, I think the day is finally upon us.You can already buy things using your smart phone, of course. On an iPhone, for example, you can buy digital goods like music or movies at the iTunes store. You can add an Amazon app and buy just about any kind of real good they sell and it’ll show up at your door. But it’s still rare to use your phone like a credit card in the physical world, waving or tapping it at a register and having the payment processed through the cloud.
In the past year or so, we’ve seen several experiments that signal the real deal is not far off. One involved PayPal and Bling Nation, a startup that offered RFID tags that mobile phone users could stick onto their phones for use at 150 or so merchants in the Silicon Valley area. Users could pay for services at the participating merchants by tapping the tag on a piece of hardware (called a Blinger) at the point of sale. Bling subtracted the purchase amount from a prepaid account or could bill it to the user’s PayPal account. It then texted a receipt and any relevant balance information to the user’s phone. A key feature of Bling’s system was the follow-up with future offers (for example, coupons on subsequent purchases) and rewards.
To protect against fraud, Bling’s technology used the equivalent of a one-time password, which was updated after each tap transaction to prevent replay attacks. The system had the potential to include real-time risk analysis that could trigger the request of a PIN for a transaction that falls outside of normal parameters. If the customer exceeds a predetermined rate of transactions, purchases an expensive item, or if Bling Nation notices a lot of geographic variability over a short period of time, when a consumer taps a BlingTag, she could be asked to supply a PIN. In this way, Bling Nation adapted from single-factor to multi-factor authentication based on a series of real-time risk analysis algorithms. (In the months since then, Bling Nation’s business model appears to have shifted from the technology to the rewards platform. )
While Bling Nation’s RFID and the upcoming near field communication, or NFC, technology we’re likely to see from Apple and Android rely on a close-range wireless system, Bump Technologies’ system works through the cloud, making the connection based on the proximity and similarity of “bump” of two devices. Bump’s system allows two mobile phones (iPhone, Android, or Blackberry) to exchange data when tapped together. That data, which travels through the network rather than via radio waves between the two devices, could be photos, contact information, or payment. PayPal’s mobile app relies on Bump technology to let two phone users tap payment from one phone to the other.
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