Mobile Payment: Launch of the Smart Card Alliance Mobile and NFC Council

With the increasing number of NFC-enabled smartphones and new NFC applications the Smart Card Alliance will now focus more on contactless and mobile technology. The Smart Card Alliance announces the formation of the Mobile and NFC Council to provide a platform for bringing together the NFC technologies and the industry. The Smart Card Alliance is a multi-industry association working to advance use and adoption of smart card (a card with an embedded microchip) technology. Read more about the Mobile and NFC Council

Alternative Payment: GameStop will sell Steam Wallet cards in U.S. stores

Video game retailer GameStop is partnering with its digital rival Valve to sell Steam Wallet cards in all U.S. GamesStop locations. Valve’s Steam is an online platform for the delivery and management of PC games. The Steam Wallet cards enable customers that don’t have access to credit cards (or don’t want to use them for online purchases) to purchase games online via the Steam platform. Source

Cards: Ingenico brings EMV and NFC-enabled POS terminals to the U.S.

Ingenico, a provider of payment solutions and devices, partners with distributor POS Portal to bring the latest NFC and EMV-ready Telium series point-of-sale POS devices into the United States. Joe Villamil, VP of Business Development at POS Portal commented: “The migration to EMV presents complex challenges for our customers. We are confident that Ingenico and its new Telium range of POS products will be a perfect fit for our company.” More…

Online Payment

• Online payment company Dwolla wins a Best of Show Award at FinovateSpring, a conference about innovative financial and banking technology. Dwolla is a web based payment platform that allows users to send, receive, and request money from other users. The service is free for micro-transactions, for transactions above $10 Dwolla charges a flat fee of $0.25. The company received the award for their new FISync technology that enables users to integrate their bank accounts directly with the Dwolla platform.

Mobile Payment

• Mobile wallet service ISIS, a joint venture between the U.S. carriers AT&T, T-Mobile and Verizon, add support for American Express cards. ISIS is a mobile wallet payment service based on NFC technology. Read more
• MasterCard starts its new PayPass Wallet service. Customers can store their payment credentials in the digital wallet and use the service to pay online and in stores. Tap-and-go in-store payments can be made using a NFC-enabled smartphone and the PayPass Wallet app. Read more

Cards

• Citi Ventures, Citi’s venture arm, invests $3.3M in online payment and ID verification company Jumio. Jumio’s Netswipe solution turns a webcam into a credit card scanner. The camera analyzes and verifies the physical credit card in real time. Card holders only have to approve the transaction by entering the security code number and the additional security and authentication mechanism 3-D Secure of Visa and MasterCard. The service supports Visa, MasterCard, JCB, Diners Club and American Express credit cards. Read more

MasterCard’s “PayPass Adoption Study” shows that within one year of their first contactless transaction, adopter accounts spent almost 30% more using their PayPass-enabled card. The study analyses the changes in U.S. account transactions after adopting contactless payment solutions using MasterCard transaction data. Furthermore the researchers found a clear correlation between contactless adoption and preference for a particular card.

MasterCard PayPass is a contactless payment method based on Near Field Communication (NFC) technology. The service lets consumers make purchases by tapping a credit card or other payment device instead of swiping or inserting a card. “The research shows that even after cardholders use contactless only once, there is a clear halo effect. Contactless should be considered by any issuer seeking to capture share today while establishing a platform for the future migration to mobile commerce,” commented Mark Barnett, Group Executive, Consulting Services for MasterCard Advisors.

MasterCard PayPass Infographic

Infographic source

The latest mobile point of sale (POS) payment solutions allow retail merchants to accept credit card or debit card payments directly via their smartphone or tablet. These services enable small business owners and individuals to process card payments without buying expensive additional hardware.

Here is how those mobile POS services work: At the time of a purchase, the customer’s credit card is swiped by a small reader that is attached to the mobile device of the merchant. The signature is collected directly on the screen of the mobile device.

There are several companies fighting for the mobile POS – most recently online payment veteran PayPal presented its own mobile POS solution PayPal Here.

The table below provides a brief overview on the existing mobile POS solutions:

Online payment service provider PayLane has created the infographic below visualizing the number of credit cards issued:  (more…)

While Klarna enables online merchants to offer the option to pay by invoice to their customers, another payment startup from Sweden focusses on innovative mobile payments. Stockholm-based iZettle provides a mobile payment service that allows businesses and individuals to accept credit and debit card payments using their iPhone, iPad or iPod Touch.

The company was founded in April 2010 by Jacob de Geer and Magnus Nilsson and recently received €8.2 million in funding led by Index Ventures.

Availability

Since its launch in Sweden last summer, iZettle has attracted 25,000 active users and has grown the point of sale market in Sweden by roughly 15%. The service is also available in Denmark, Finland and Norway with more to come in 2012.

How it works

iZettle’s service combines a small card reader and a smartphone application. The card reader, which is attached to the bottom of the device, allows users to take payments from chip-enabled credit or debit cards. The service is compliant with the Payment Card Industry Data Security Standard (PCI-DSS). No sensitive data is stored on the mobile device or the card reader, and all data traffic is encrypted. Unlike Square or PayPal Here iZettle is also EMV (Europay, MasterCard and VISA) approved and supports chip-enabled cards, which are very popular in Europe.

Pricing

iZettle has no set up fee or monthly fee. For each transaction iZettle charges 2.75% of the transaction volume plus €0.15 (including bank fees).

In a nutshell

iZettle provides an innovative solution for accepting credit and debit cards on the go. Unfortunately the service is only available in the Nordics so far.

Check out the video to see how iZettle works:

Bill Ready, CEO of Braintree

Have you wondered why so many web 2.0 companies such as OpenTable, Fab.com, and Airbnb choose Braintree to process their payments? We caught up with Braintree’s CEO Bill Ready and asked him this question.

Bill Ready has joined the company as CEO in October last year. He came from Accel Partners, where he was an executive in residence focusing on payments and financial technology.

Braintree provides an online payments platform that allows online businesses to process credit card payments. The company has recently released a set of tools for mobile app developers that enable merchants to accept payments within an app.

Payment Observer: Can you give us some background information and numbers on Braintree?

Bill Ready: Braintree helps online and mobile businesses process credit card payments by providing a merchant account, payment gateway, recurring billing and credit card storage. The company is disrupting the payments industry by providing elegant tools for developers coupled with white-glove support. Founded in 2007, Braintree works with the world’s most discerning online merchants, including LivingSocial, Airbnb, Uber, Hotel Tonight, 37signals, OpenTable and GitHub. The company is processing more than $4 billion in annual credit card volume from more than 2,000 merchants. Braintree was profitably bootstrapped for four years before accepting a $34 million investment from Accel Partners in 2011. Braintree ranked 47th in the 2011 Inc. 500.

Payment Observer: Why do so many web2.0 companies use Braintree?

Bill Ready: Our solutions are designed specifically for Web 2.0 and mobile companies to take the pain out of payment processing. Braintree’s focus has always been to make payment processing easy for developers so they can focus on their core business, not payments. Historically, developers were dissatisfied with PayPal, Authorize.net and other payment processing options. These solutions were dated and were not designed for developers. The industry had also been known for unscrupulous business practices, including hidden fees and holding merchants’ data hostage if they attempted to switch providers. With Braintree’s solutions, developers can integrate in minutes rather than months using Braintree’s client libraries in 7 different programming languages and 3 different mobile platforms.  They also have confidence that the solution will scale with their business, and the peace of mind that if they are ever less than satisfied they can easily take their data to another provider.

Payment Observer: What’s your opinion on m-commerce and mobile payments?

Braintree's Transparent Redirect API

Bill Ready: Mobile commerce growth will continue to outpace that of online as mobile usage has already exceeded online usage. Because mobile is becoming such an important channel for growth, it will be increasingly important for companies to focus on continually improving the user experience in completing a purchase on a mobile device. Companies can realize higher purchase volumes if they provide an easy checkout process that doesn’t require consumers to re-enter credit card information on a mobile device or leave the mobile site.

Braintree handles millions of dollars of mobile payments volume every month, and we recently released three new mobile client libraries that enable e-commerce merchants to easily and securely accept payments within a mobile app, rather than through a web browser. We wanted to help solve a problem for mobile app developers who want to provide a simple, elegant purchasing experience for their customers while remaining PCI compliant.

Payment Observer: How are mobile payments different from online payments?

Bill Ready: There are certainly similarities between the two, however, there are also important differences.  User experience is much more important in the mobile environment since the form factor makes it more difficult to enter card information.  If you can create cross-channel integration where the user’s card is already on file from their last visit to your website, you can significantly improve ease of use. The speed of the transaction also matters as bandwidth may be more limited, an issue exacerbated by some payment providers that rely on multiple trips across the mobile network to achieve a payment. Finally, security takes on new implications in the mobile environment.  Encrypting card data directly on the mobile device is important in order to deal with the additional data security risks inherent with mobile devices.  For these reasons, it is important to choose a payments provider that has tailored solutions specifically for the mobile environment.

Payment processor Global Payments today confirmed that up to 1.5 million credit card numbers may have been stolen in the security breach that was reported on Friday. Global Payments identified and reported unauthorized access into a part of its processing system in early March. The forensic investigation revealed that “Track 2” (account number, expiry date) data from all major card brands may have been accessed but not cardholder names and addresses. The stolen data could be used to counterfeit new cards.

Global Payments is one of the largest merchant acquirer in the U.S., handling 2.44 billion purchase transactions last year alone. The Atlanta-based company enables merchants to accept credit and debit card payments. Companies in the payment-processing chain are often attacked by hackers because they handle a large amount of sensitive financial information. For this reason credit companies emphasize advanced security through EMV chip technology to minimize the impact of data compromises. Visa has already issued more than one million Visa EMV chip-enabled credit cards in the U.S.

American Express has created a nice infographic (based on this study) on how US customers choose to pay for everyday things and how they feel about new forms of payment. Enjoy!

PayPal has revealed its new mobile payment solution for small business PayPal Here. Just like Jack Dorsey’s Square, PayPal Here enables small merchants to accept card payments. The service includes an app and a small card reader for smartphones and brings the online payments giant into local stores.

It is no surprise that PayPal is entering the mobile point of sale segment, the success of Square, Intuit GoPayment, and iZettle prove the increasing demand for such services. PayPal Here is part of PayPal’s multichannel strategy; the company is trying to provide payment solutions for online, offline and mobile business.

How does it work?

PayPal Here includes a small triangular card reader and a free app for iOS and Android devices, allowing merchants to accept payments by swiping cards. The card reader is full encrypted and PCI-compliant. The card information can also be manually entered into the app. Unlike its competitors PayPal Here also allows users to scan cards and checks using their phone cameras – a service provided by mobile payment startup card.io.

After signing up and downloading the PayPal Here app, merchants can immediately start accepting payments and receive funds directly into their PayPal account. Merchants pay a fee of 2.7% for each transaction. They will also receive a business debit card with 1 percent cash-back on eligible purchases, cutting the effective fees down to 1.7%. For comparison: Square’s merchant fee is 2.75% for each swiped transaction.

The PayPal Here card reader and merchant app will roll out in United States, Canada, Australia and Hong Kong within the next month (more countries to be announced soon).

Check out the embedded video to see how PayPal Here works: