NFC Mobile Payment Trend

After ApplePay’s deployment in October 2015, NFC mobile payment adoption is taking off in the USA. I am curious about how people perceive this technology (NFC) and its application (ApplePay & mobile payment). Therefore I did a Google Trends comparison between Mobile Payment, NFC and ApplePay today. To my surprise, the trend indicates there has been an increase in people searching NFC comparing to searching “mobile payment” and “ApplePay” (see attachment below).

Asia seems to be the continent that is more into the technology. The interested regions are as follows:

Google Wallet, the first NFC mobile payment app, was released in 2012. There is no surprised that such an innovation came from a company that embraces creativity. Shortly after, to Google’s surprise, the telecoms, who were developing their own NFC-based mobile payment app, blocked Google Wallet. This challenge forced Google to look into an alternative way to implement NFC mobile payment. Thus, the HCE (Host Card Emulation) approach was created in order to bypass telecom’s control on Secure Element.

Softcard (formally, ISIS), a joint venture between AT&T, Verizon and TMobile started a trial in late 2013 and was launched in 2014. To promote and educate people on the NFC mobile payment technology, one million complimentary Jamba Juices were given away to Softcard users. Despite these efforts, the adoption rate of Softcard was not good enough to sustain the business; especially facing competition with ApplePay and its trademark simple user experience.

Last month, Softcard was bought by Google. I wonder what the agreement is between Google and telecoms? Will this be another walled garden business model? Is the NFC mobile payment market a war between Apple and Google now?

It’s interesting to watch the evolution of these NFC applications; especially in the mobile payment market. Various challenges continue to stimulate more innovations. After all, a vision has to be either supported by a market demand or inspiring enough to create a new market entirely.

About the Author:

Hsuan-hua Chang has over 20 years of experience in wireless technology, holding many corporate positions ranging from software engineer, technical architect to product marketing manager. She is the author of “Everyday NFC Second Edition: Near Field Communication Explained”

NFC Mobile Payment options: HCE vs SE

When Google made Hosted Card Emulation (HCE) available for its mobile payment in order to bypass telecoms’ control, the debate of HCE and Secure Element (SE) continues.

A webinar “Evaluating NFC security strategies: The role of the secure element in the evolving landscape” was hosted by NFC World on January 20, 2015.

A few highlights of the webinar is as follows:

  • The NFC adoption rate is increasing rapidly based on the stats of NFC SIM shipped; 16M shipped in 2011, 30M in 2012, and 72M in 2013.
  • Geographic stats show the demand in different regions. In 2013, 37M was shipped to Japan/Korea, 24M to North America and 14M to Europe.
  • The pros and cons analysis of HCE and SE technology.
  • A SIMalliance recommended deployment model based on security and market reach, application and technology requirements.
  • A case study on Canada’s success as the #1 mobile payment country in the world. Some stats are as follows: All of Canada’s major MNOs now offer SE based NFC payment capability to their customer; 2/3 of the phones are Android and BlackBerry; 5 of Canada’s “Big Six” Financial Institutions do the same; over 84% major retail merchants have contactless EMV terminals

SIMalliance anticipates a future where SE and HCE will continue to co-exist and in many cases converge. This will be the basis of an optimally efficient and secure NFC ecosystem.

To watch the free seminar, click the link.

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Using Apple Pay the First Time

On 10/20/2014, Apple Pay, Apple’s mobile wallet,  became available on iPhone 6 and 6+. I couldn’t wait to give it a try.

To use Apple Pay, iPhone consumer needs to do two things:

  • Add a credit card / debit card into the Passbook
  • Download iOS 8.1

Apple Pay is integrated into the Passbook through iOS 8.1; there is no need to download an app. When you add your card to Passbook, a unique Device Account Number (DAN) is assigned to it. DAN is encrypted and stored in the Secure Element (SE), a dedicated chip in iPhone. DAN is used in payment process instead of your actual card number.

When you are ready to use Apple Pay:

  1. Place your finger on Touch ID

  2. Point your iPhone6 at the contactless reader

NFC (Near Field Communication) enables this contactless payment. The Device Account Number, along with a transaction-specific dynamic security code, is used to process the payment. Your actual card number is not shared by Apple with merchants or transmitted during the payment. Apple doesn’t store any of the details of the transaction. This security protects the consumer.

The steps I took to use Apple Pay were as follows:

  • Downloaded iOS 8.1 by going to Settings, General, Software Update.

  • Configured my iPhone 6 as instructed after downloading was completed.

  • Clicked on the Passbook app.

  • Clicked on the + sign on the top right corner to add my business VISA from Alaska Airlines.

  • Used camera to read my card and typed in Expiration data & security code. iPhone 6 showed “Verifying Card” a few seconds and returned “Your Issuer Doesn’t Not Yet Offer Support for This Card”.

  • Added my America Express Card successfully and saw the recent purchase history at Costco since September. That surprised me.

  • Added my personal VISA from Alaska Airlines successfully.

  • Went to Wholefoods and used Apple Pay for my purchase. Since Touch ID had trouble reading my fingerprint; the passcode screen was displayed that enabled me to enter my passcode.

  • Apparently VISA from Alaska Airlines is my default card. The purchase history at Wholefoods is accessible from the phone (see attached picture) and Bank of America also sent me notification of the purchase.

  • Removed my America Express from the Passbook and was sent a notification that read: “Your Default Card Has Been Changed to “BofA Visa Credit”. That is a minor bug since BofA Visa was my default card, wasn’t it?

In general, Apple Pay is easy to use. I think NFC will be promoted through Apple Pay’s good user experience and tapping will become a habit soon. Job well done! Apple.


How to Use Your Mobile Wallet

Last week, two of my friends asked me “What is Mobile Wallet?”. I realized that I need to put aside my excitement over NFC-enabled iPhone6 and just explain the basics in plain English.

A mobile wallet enables you to use your mobile phone for making payments while shopping. Your credit card information is entered and saved in your mobile phone. To simplify the story, I will only focus on two NFC Mobile Wallets: Softcard and Apple Pay.

A mobile wallet is composed of a few components: a mobile application (app), payment options (credit cards), an authentication method for user identification, and an option for wireless transmission.

  • Mobile app: You can download Softcard (formally ISIS Mobile Wallet) from the Google Play Store if you have an NFC-enabled Android phone. If you have an iPhone 6, iPhone 6 plus or iWatch, you can download Apple Pay app from the Apple Store on October 20th, 2014.
  • Payment options: The mobile app allows you add credit card information into a mobile wallet.
  • Authentication: Softcard requires you to enter a 4-digit pin upon payment. Apple Pay uses Touch ID, a finger print identity sensor.
  • Wireless Transmission: NFC (Near Field Communication) is used for both Softcard and Apple Pay. Any NFC-enabled phones such as most of the Android phones and the iPhone 6, can tap an NFC-enabled reader to activate wireless communication between a mobile phone and a cash register that is NFC-enabled.

To Use Softcard (formally ISIS) Mobile Wallet on an Android Phone

  1. Make sure that the NFC functionality is enabled on the device.
  2. Ensure your device is equipped with the required Enhanced NFC SIM card with Secure Element.
  3. Download Softcard Mobile Wallet app from Google Play Store.
  4. Set up an access PIN.
  5. Add the method of payment.
  6. Use the NFC device to pay your bill at stores that have NFC readers.
  • Open the Softcard Mobile Wallet app and enter your PIN.
  • Select a payment card to use.
  • Hold the back of your phone over the contactless symbol on the terminal at checkout.

To Use Apple Pay Mobile Wallet on an iPhone6

  1. If you don’t have Passbook setup, add the credit or debit card from your iTunes account to Passbook by simply entering the card security code.
  2. Add a new card, use your iSight camera to instantly capture your card information or simply type it in manually.
  3. The first card you add automatically becomes your default card.
  4. Download iOS 8.1
  5. Use iPhone to pay your bill at stores that have NFC readers

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With NFC mobile wallet, you don’t need to carry your credit cards around anymore. It is a safer approach since every transaction has a unique transaction ID and it’s authenticated. Apple Pay seems providing a simpler user experience based on Apple’s website. “One touch to pay with Touch ID. Now paying in stores happens in one natural motion — there’s no need to open an app or even wake your display thanks to the innovative Near Field Communication antenna in iPhone 6. To pay, just hold your iPhone near the contactless reader with your finger on Touch ID. You don’t even have to look at the screen to know your payment information was successfully sent. A subtle vibration and beep lets you know.”

Another note about iPhone6 and iPhone6+, they are really more of an NFC-enabled mobile payment device rather than an NFC-enabled device. All other NFC functionalities besides Apple Pay, have been disabled by Apple.

See more details in my newly released book “Everyday NFC Second Edition”. http://amzn.to/O76fQY

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NFC HCE and Payment Trends

On April 17th, David Marcus, President at PayPal said, “I’ve been looking at three technologies that might truly change the retail experience as we know it.”

One of the technologies David is looking at is NFC HCE (Host Card Emulation). It is an alternative way of using SE (Secure Element) to implement security mechanisms for NFC technology. In my previous blog, I explained why Google has chosen HCE. David Marcus said, “I’m moving from being a massive skeptic of NFC, to being cautiously optimistic on NFC HCE take-up in very specific shopping use cases.”

He envisions two scenarios that would popularize NFC. One is the credit card EMV movement, which would lead to more NFC-enabled terminals at points of sale, and the other is Visa embracing the HCE approach.

I understand David’s point coming from the payment industry leader he is. At the same time, I believe that NFC will take off regardless of payment trends. From my personal experience advocating NFC to business owners, the technology is received with excitement. Entrepreneurs are inspired by the possibilities presented through the integration of NFC tags and chips for enhancing and marketing their products and services. They also wonder why they haven’t heard about the technology sooner.

AT&T, T-Mobile and Verizon spent a huge amount of money on ISIS mobile payment implementation based on NFC, yet they are not promoting the technology proactively or effectively. Not many subscribers know about NFC or ISIS.  What is the missing link?

 

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EMV and NFC Adoption

Are you a victim of the recent Target credit card breaches? Today, most US credit cards use a magnetic stripe to read and record account data and signatures for verification. This mechanism became vulnerable to fraud when technology emerged to enable the illicit reading, writing, and subsequent cloning of these magnetic stripes. Recent data breaches at Target and Neiman Marcus demonstrated these vulnerabilities.

EMV (Europay, Master card and Visa) standards were created to reduce counterfeit such as this. They have been specifying interoperability between EMV-compliant chip cards and card payment terminals throughout the world for over a decade. Banks in many countries adopted the technology and started to use chip cards. Chip cards have a microchip embedded in them. The majority of the implementations of EMV cards and terminals confirm the identity of the cardholder by requiring a PIN (Personal Identification Number).

In spring 2009, Canada Trust announced the adoption of EMV standards and explained what a chip card was in an article titled “Payment Card progress: what it means to your business”. The article stated that one of the new fraud prevention technologies that may have the most immediate impact on how merchants do business is the chip card. The chip card is a contactless card with a microchip and a radio antenna embedded inside. It can be simply waved in front of a secure, contactless reader for a secure way to pay.” These chip cards used by Canada Trust use RFID technology.

As the world is moving to a more secure way to implement credit card purchasing, one might wonder why the USA adoption of this technology is delayed, and what the impact of this delay is.

To me, two big potential impacts might be:

  • More credit fraud will happen in the US since the rest of the world is using more secured cards.
  • NFC mobile payments are a less attractive option for consumers since NFC technology might take a while to be adopted.

What is your thought about this?

See more information about EMV here.

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NFC in 2013

NFC had a good run in 2013. Every month, we heard exciting news about NFC products or trials being launched. These launches have extended far beyond the “mobile payment” category to include product/service marketing, toys, games, furniture, printing, utilities, machine-to-machine (M2M) communication, quality control, inventory management, service automation, and more.

ABI research pointed out that smartphones will continue to account for the majority of NFC shipments in 2013 as volumes jump by 129%. However, from 2014 onwards, computing products, peripherals and automotive will have greater adoption of NFC, and consequently, smartphones will decline from a peak of 80% of all NFC device shipments in 2013 to less than 60% in 2017.

NFC and other connectivity enablers are greatly expanding an “Internet of Things (IoT)”. It’s obvious that we are becoming increasingly connected through wireless technology, and M2M communication is on its rise. A good example is that Google and Apple are about to expand their battle to a new front: the automobile. This was reported by the WSJ a couple of days ago.

Big data is a buzz word nowadays. NFC, RFID, QR Code, and Bluetooth Low Energy (BLE) are all types of sensors that contribute to the big data scenario. Big data analytics are going to produce valuable information about consumers and merchandise. It’s also going to change the retail store shopping and mobile phone experience.

One of the usages of NFC is mobile payment. Recently, AT&T, Verizon and T-Mobile launched ISIS – NFC mobile payment using a SIM-based secure element that manages payment credentials. It will take a while before the consumer market adopts this technology since NFC is not yet a familiar technology, and mobile payment is not a yet a common practice.

In addition, a different approach to implement mobile wallet emerged. Google Wallet led the way to adopt the Host Card Emulation (HCE) approach in order to implement NFC secure app independently from telecom’s control of SIMs. Tim Horton’s, a North American coffee chain, has also launched an NFC mobile payment service using HCE at 3,500 locations in Canada and 800 in the United States. It will be interesting to watch the battle between various NFC mobile payment implementations and adoptions.

2014 should be an exciting year as NFC products and services continue to grow in availability and usage.

ISIS – Not an Option for my Galaxy 3

Yesterday, I was at the AT&T Store to get an ISIS SIM card in order to use ISIS mobile payment. The rep was very excited since this was the first time she has activated an ISIS SIM card. The store manager Chris was next to us assisting her. He was very pleasant and introduced Digital Life products to me while we were waiting for ISIS to work.

After trying two ISIS SIM cards, three reboots of the phone,  four technical support calls and 1.5 hours waiting, my Samsung Galaxy 3 kept on returning with an error message that read “ISIS requires a new SIM card with a Secure Element”.  Tech support was transferred from AT&T to ISIS and the problem remained. So ISIS tech support suggested to transfer back to AT&T tech support. Finally, we decided that ISIS was not going to be an option for my phone.

I looked at the Google Play store and found similar dissatisfied comments made by other consumers. Carriers have some work to do to fix these problems.

ISIS Mobile payment started its trial last fall in Austin and Salt Lake City. It uses NFC technology for data exchange and secure element in the SIM card to save credit card information. Since a SIM card is hard to hack, a SIM based secure element is a more secure solution. Secure element will also be used for storing credentials for building access; for example hotel room locks or office building access.

The transportation market segment is also planning to store credentials to SIM based secure element so that mobile phones can be used to pay transit fare. Since the carriers’ infrastructures are not ready, the transportation market may get impatient and give up on secure element.

I hope the future secure element based NFC applications will work well so that consumers can really enjoy NFC technology and pick up the technology as Asia and Europe have. A good news is that ISIS has introduced ISIS Alliance Program to support the ecosystem. We shall keep an eye on its development.

NFC Mobile Payment and ISIS

Seattle Technical Forum held its monthly meeting on November 13th. I was invited to speak on NFC (Near Field Communication). Most of the audience was not familiar with the technology. As an introduction, I did a demonstration by tapping an NFC-enabled phone to a tag pasted on my business card. The audience was surprised to see my Amazon author page show up on the phone as a result. This demonstrated how NFC tags can be used to distribute information.

In my 15 minute presentation, I explained basic NFC technology, shared some current NFC applications, compared QR code with NFC tag usage and shared my vision of NFC’s potential. Karl J. Weaver, another NFC presenter, explained NFC secure mode in detail and focused on the mobile payment landscape. His speech was uploaded to YouTube. Drawing on his working experience in China, Taiwan and Hong Kong for Gemalto over the last five years, he offered a lot of insights on NFC mobile wallet.

In the Q/A session, the majority of the questions asked were on NFC security. People were curious about the adoption rate of the ISIS mobile wallet and the compatibility between chipset Secure Element used in Europe vs. SIM-based Secure Element used in ISIS.

ISIS, launched today, is a joint venture of T-Mobile, AT&T and Verizon. It’s an NFC mobile wallet implementation that allows NFC-enabled mobile phones to serve as a wallet. This is a link to AT&T’s announcement, which includes steps that need to be taken in order to enable NFC mobile wallet. NFC World also shows video clips on how to use ISIS.

Currently, ISIS only works with Android devices and there are limited merchants. Since telecoms haven’t promoted NFC-enabled phones despite their rapid release last year,  it will be interesting to watch how consumers adopt ISIS.

It was a pleasure to present in the Seattle Technology Forum. Other speakers, Roy Leban (Why Mobile Doesn’t Matter), Arvind Krishnan (Negotiating the Mobile First Challenge) and Jeremy Foster (Mobile UX Paradigms) all had awesome presentations and invoked lively discussion with the audience.