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The Latest News, Industry Insights and Research Findings on Global Payment Markets


G&D Presents NFC-enabled Sticker for Mobile Payment

By Gary Merrett

Germany-based technology provider for the banking industry Giesecke & Devrient (G&D) has developed a sticker for mobile phones, enabling contactless payment even if the device itself is not NFC-enabled. The Deutsche Genossenschafts-Verlag is supplying the new technology to the banks as part of a trial conducted by the cooperative financial group.

The sticker was developed for the German market. It runs on the Secure Chip Card Operating System (SECCOS), and fully meets the specifications of the German banking industry. G&D’s payment sticker is certified for MasterCard PayPass, allowing users to use the existing contactless payment infrastructure with more than 350,000 PayPass Terminals in 37 countries worldwide. Depending on the requirements of the issuing bank, the stickers can be configured as prepaid, debit, or credit cards.


MasterCard and Deutsche Telekom to Launch NFC-based Mobile Payment Service in Europe

By Martin Schuppelius

Today, MasterCard and Deutsche Telekom announced a strategic partnership to bring NFC-based mobile payment services to Deutsche Telekom’s 93 million mobile subscribers in Europe. The first product to launch is a mobile wallet app called MyWallet for customers of Deutsche Telekom in Poland this summer. The digital wallet will support various local banks and financial institutions and enable customers to pay contactless at every retail store where MasterCard PayPass is accepted. In Germany Deutsche Telekom will first trial mobile payment with mobile phone tags and NFC-enabled credit cards in order to prepare for the launch of MyWallet in early next year. Other than for example Google Wallet the payment credentials are stored on the users SIM card rather than on the phone itself.

Deutsche Telekom will also extend into financial services and become a credit card issuer for MasterCard. The telco giant will issue NFC-enabled MasterCard credit cards in Europe via its subsidiary company ClickandBuy, the owner of an e-money license.

A MasterCard credit card issued by Deutsche Telekom

Thomas Kiessling, Chief Product and Innovation Officer for Deutsche Telekom commented, “This is a huge step on our way to increase mobile payments. With MasterCard we have a well-known and experienced partner generating growth in this important market segment. We want to build a comprehensive ecosystem around mobile payment, helping Telekom to realize its strategy of being the first choice for customers regarding connected life and work”.

Check out the promo video to see how MyWallet works:


Payment News – June 6, 2012: Braintree, Facebook Mobile Payment, LBBW payWave

By Martin Schuppelius

Online Payment: Braintree Goes Global

Online and mobile payment service provider Braintree is expanding its payment platform into new countries, including the UK, European Union, Australia, and Canada. Braintree is processing over $4 billion in annual credit card volume (including almost $1 billion in mobile payments). The company works with many web2.0 online merchants, including LivingSocial, Airbnb, and Recently we had the chance to talk to Braintree’s CEO bill Ready: Read the Interview. Braintree will first offer access to its international payment services in a beta trial. The commercial launch is planned for Q3 this year. Read more…

Mobile Payment: Facebook Rolls out Improved In-App Mobile Payment Flow

Facebook has launched a simplified and improved payment flow for mobile payments. Carrier billing (or operator billing) has established as one way for game and app developers to monetize their apps. The usual carrier billing payment takes up to seven steps and requires SMS verification. Facebook’s new two-step (1:open payment dialog 2: confirm) mobile payment flow is now available to customers in the U.S. and the United Kingdom. Read more…

Facebook’s new mobile payment flow

Cards: German LBBW Provides German Olympians with Contactless Payment Visa Cards

Landesbank Baden-Württemberg (LBBW), a commercial bank in Germany, is launching one of the first Visa payWave credit cards in Germany. In cooperation with loyalty card scheme Payback the Olympic Games card will be issued to the Germany Olympic athletes. The card is produced by Giesecke & Devrient (G&D) and supports contactless and contact payment. Athletes can use the card pay contactless at thousands of NFC-enabled terminals in London. Read more…


3 Reasons Why NFC-based Payment is Overhyped

By Martin Schuppelius
The official NFC-Logo

Without a doubt, there is a huge buzz around NFC in the mobile commerce ecosystem these days. Near Field Communication (NFC) is a standard for transferring information between two devices via radio communication at a very short range. The technology can be used for a wide range of services; one of the most talked about applications is mobile payment. NFC-based contactless payments are expected to supplement or even replace existing payment methods.

How NFC works (graphic by G+)

Today, NFC-based payment is still far from being mainstream and there is reason to believe that NFC will not be successful in the near future. Here is why:

Lack of adoption

The biggest problem of NFC is the low penetration rate of NFC-enabled devices and POS (point of sale) terminals. On the one hand, only very few consumers already own a NFC-enabled device and only a minority of new devices will support NFC. On the other hand, merchants need a motive for investing into new technology and replacing their existing POS systems. It’s a chicken-and-egg dilemma. Most of the new POS terminals can be upgraded to support NFC or to include NFC. But still, merchants (especially smaller ones) won’t invest into a technology their customers can’t use.

Security issues

Security is certainly one of the most important topics when it comes to payments. NFC as contactless transaction technology has to be proven to be secure before customers will adopt it for payments. NFC is just an extra layer to existing payment methods that adds possible security issues. Just recently two major security issues have been revealed that certainly will not help to increase the trust in NFC-based payment services:

Business case

It is important to keep in mind that NFC is just a technology, not a payment method. Adding NFC as contactless transmission technology does not automatically create additional value for customers or merchants. Companies have to invest in a NFC-payment ecosystem (POS terminals, end-user devices, software, fraud detection, customer service) to break the chicken-and-egg dilemma. Firms that have created an NFC ecosystem will then try to keep their “chickens” and protect their business case. The problem is that there are different solutions how to build this NFC ecosystem that are not necessarily compatible with each other. There is a high risk that different incompatible solutions arise that each will not reach the critical user base.

NFC is certainly a powerful technology for mobile payments. There are some promising trials and solutions that create value like for example Google Wallet that combines NFC payments and couponing. This makes it attractive to customers because they don’t have to carry their coupons and loyalty cards anymore.

For NFC payments be successful the obstacles described above have to be solved. In theory NFC solutions could break through immediately as the technology is available. In practice this will not happen in the near future, certainly not in the next two years.


Infographic: The Mobile Payment Market

By Martin Schuppelius

Community service company G+ (not to be confused with Google’s social network Google+) has put together a nice infographic on the growing mobile payments market.


Google Wallet Stops Provisioning of Prepaid Cards After Security Flaw

By Martin Schuppelius

Google is suspending the provision of prepaid credit cards to its mobile wallet app after a security flaw was exposed last week. Osama Bedier, Vice President of Google Wallet and Payments said in a post on Google’s commerce blog: “…to address an issue that could have allowed unauthorized use of an existing prepaid card balance if someone recovered a lost phone without a screen lock, tonight we temporarily disabled provisioning of prepaid cards.”

Over the last week two potential vulnerabilities of Google Wallet have been exposed. First, security firm Zvelo found that the PIN for Google Wallet wasn’t stored in the secure element of the phone and thus could be revealed by a brute force attack on phones that are rooted (the user has system-level access). The second security issue is even more serious as it seems to be a flaw in the wallet’s design: after clearing all data and reconfiguring the Google Wallet app a unauthorized user can get access to the previously stored prepaid card balance.

The security flaws have received widespread coverage around the world and will certainly not help to increase the general adoption of NFC-based payment methods. Google addresses both issues, pointing out that “Google Wallet offers advantages over the plastic cards and folded wallets in use today”. Until the issues are fixed, the company discourages its users of rooting their phone and disables provisioning of prepaid cards.


Mobile Payment: The Big Picture

By Martin Schuppelius
The official NFC-Logo

Although they idea to pay with a mobile phone has been hyped since the late 1990s, only a few countries have successfully implemented such services. Over the last few years, some major players have entered the mobile payment space. Currently the focus of the buzz is on Near Field Communication (NFC)-based services that support close proximity mobile payment.

Mobile payment is being adopted all over the world in different ways. In this article we provide a brief overview on the mobile payments.

Broadly speaking, mobile payment refers to all kinds of financial transactions performed from or via a mobile device. There are four main types of mobile payment: carrier billing, mobile wallets, mobile point of sale and mobile banking. In addition, there are a couple of other mobile payment solutions such as the SMS-based p2p money transfer service M-Pesa in Africa and Starbuck’s proprietary mobile loyalty and payment app. Also there is a lot of talking these days how mobile wallets will replace physical wallets and mobile banking is going to change the way we bank.

Carrier billing

Carrier Billing Paymet Flow using the example of Cashlog

One of the easiest methods of paying using a mobile phone is payment via a mobile phone bill. It is a very competitive market and many companies such as Boku, Zong and Atlas offer worldwide mobile carrier billing services. In detail, carrier billing can be realized via different schemes: premium SMS text, premium rate numbers, mobile web (WAP) billing and direct carrier billing. Today, carrier billing is mostly used for micropayments and purchasing digital goods such as ringtones, wallpapers or virtual items in online games.

Mobile digital wallets

A digital wallet works much like a physical wallet. It is a service that allows the user to store and use electronic money or shopping information. Recently there has been a big hype about implementing digital wallets on smartphones and tablets. Mobile wallets, such as Google Wallet or the mobile PayPal app usually feature contactless technologies such as NFC, QR-codes or location based services. Using those mobile digital wallets, the user can use his smartphone to pay both online and at retail stores.

Mobile point of sale

Mobile Card Reader and App using the example of Intuit GoPayment

Mobile POS solutions such as Square in the US and iZettle in Sweden allow retail merchants to process card payments via their smartphone or tablet. Usually the combination of a small card reader that connects to the mobile device and an installed application enable the merchant to receive payments without the need to buy an additional device.

Mobile banking

Mobile banking provides banking and financial services including the initiation of transactions or balance checking just like online banking services. This includes the use of mobile web pages as well as dedicated smartphone applications. In addition, some mobile banking solutions can also be used to make micro-transactions or contactless payments directly via the mobile phone.


Visa Certifies New Smartphones for NFC Payment

By Gary Merrett

Visa has approved six new smartphones for the use with payWave, Visa’s mobile app for NFC-based payments at the point of sale. The credit card giant has certified four BlackBerry phones, the Samsung Galaxy S II and the LG Optimus NET as payWave compatible devices available for commercial deployment.

Visa payWave is a payment feature available on Visa cards and certain NFC-enabled mobile phones allowing customers to make transactions by using contactless Near Field Communication (NFC) technology. Instead of swiping consumers wave their card or phone in front of a compatible reader at the point of sale. For most transactions under $25, there is no need to sign a receipt, entering the PIN, or handing the card to the cashier. The transaction processing doesn’t change; the purchase is authorized, processed, and billed the same way it is with traditional purchase methods. The new certified devices host the Visa payWave application on a secure SIM card and feature NFC technology. They have been tested by Visa to ensure secure transactions which are compatible with the global standard for chip-enabled payments.

This is an important step for Visa as its rival MasterCard is also moving into mobile payments with its PayPass service. Certifying new smartphones will help Visa to increase its user base and gain traction in the emerging market of NFC-based transactions.


German Bank LBB Launches Mobile Payment Trial with Visa payWave for iPhone

By Martin Schuppelius

German bank Landesbank Berlin (LBB), in cooperation with Swiss Post Solutions, started a pilot project to provide contactless iPhone payments via Visa payWave in Germany. Berlin-based LBB is the largest credit card issuer in Germany (with over 2.2 million cards issued). The bank plans to implement contactless payments via mobile phones nationwide by the end of this year.

As the iPhone doesn’t support Near Field Communication (NFC), LBB is issuing an iCaisse phone case which holds a microSD-card and a NFC-antenna. The credit card information necessary for the authentication of a transaction is stored securely on the microSD-card. The payment is triggered by an iPhone-App. The customer can choose between two different methods: on automatic mode, amounts of less than 25 Euros are authorized without password entry, on manual mode, the previously defined password has to be entered for each payment.

Dr. Tilo Schürer, head of direct marketing Landesbank Berlin AG commented: “Our customers can test the new payment method and can see the benefits themselves. Due to the increasing proliferation of smartphones they will be used quite naturally for payments in the future – this saves our customers valuable time and enables them to use their credit and prepaid cards even easier.”


Interview with Holger Spielberg of PayPal Germany on the Latest Developments in Mobile Payment

By Martin Schuppelius

Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany

We talked to Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany, about the latest developments in mobile payment and PayPal’s vision of future shopping. Holger has been with PayPal since January 2011. He has more than fifteen years of experience in leading positions across a number of industries, from telematics and telecommunications to mobile services. He is also involved in startups, as founder, executive, angel and advisor.

Payment Observer: Can you give us some details on the mobile payment background of PayPal?

Holger Spielberg: PayPal is the leading electronic payment method and is mostly known for its activities in the e-commerce world. But PayPal was actually founded to transfer money between Palm Pilot PDAs back in 1998. When the founders recognized that they were really visionary with their idea they started to focus on the emerging market of electronic commerce on the internet. As you know, PayPal was acquired by eBay, and that helped to further the growth and to gain knowledge in how to operate a global payment system. PayPal’s DNA is mobile. Over the last 10 years the company learned how to process mobile payments, how do deal with customers. Now we are coming back to our own DNA, and have the possibility to offer mobile payments based on the operational excellence from online payments. As I always say: If you want to offer mobile payments you have to know payments first.

Payment Observer: Mobile payment is one of the hot topics these days. A lot of companies such as Visa, Google or ISIS are starting mobile payment and digital wallet services. How do you see the market?

Holger Spielberg: We see that the lines between e-commerce and commerce are blurring, at the end of the day it all becomes commerce. The channel through which the purchase is made becomes less and less a distinguishing factor.

With regard to mobile payments, we have to differ mainly two areas: one is payments through mobile web or mobile apps – in that area PayPal is definitely a leading player when it comes to number of transactions and transaction volume. The other area is payment at the point of sale featuring proximity technology (such as NFC, QR-Codes or Audio). This area is not fully evolved yet, there is no clear leader at this point. There are a number of big players trying to enter that market because it holds enormous potential and is ripe for innovation. Banks are playing a role, carriers are playing a role and obviously credit card companies have been a player in that space for a number of years. And, PayPal is clearly on a path also to be integrated at the point of sale.

Payment Observer: Is mobile payment a “must have” feature or just “nice to have”?

Holger Spielberg: I am convinced that for merchants it’s a must have to start dealing with mobile payments today. In the near future, the number of mobile devices will outstrip the number of PCs. We believe that half of the transactions in electronic commerce will be happening trough a mobile device in about 5 years. Merchants will have to deal with mobile payments because the number of mobile devices will be so significant they can’t deny it.

On the consumer side, I believe mobile payments are currently more a nice to have feature. But as more and more merchants are providing mobile payment options the ubiquity and availability will be much bigger. In a few years mobile payments will be a must have for consumers if they want to be able to make use of offers and deals only possible at specific times or locations.

Payment Observer: Can you give us some details on the role of mobile in PayPal’s vision of future shopping?

Holger Spielberg: Our vision is to enable payments anytime anyplace by any means. We see mobile payments as a catalyst for innovation. The broad features of mobile devices allow us to change the way people are shopping and how merchants interact with consumers. Our vision includes picking up the customers really early in the shopping experience by empowering them to find product information or deals, and providing them the flexibility to choose different payment methods.

Mobile payments is not only an additional payment channel but rather connecting different worlds. We see mobile payments as a combining catalyst of storefront, online, mobile and even purchasing on the go. We provide payment options and flexibility for merchants and consumers through all channels. We believe the combination of being a bank and an internet player provides us the flexibility to think innovative along the entire shopping process. Our aim is not just to exchange the POS terminal, but to change the whole end-to-end shopping experience.

Payment Observer: Can you give a real-world example of how mobile devices can be integrated into the shopping experience?

Holger Spielberg: Just recently, PayPal Germany announced the availability of the PayPal QR shopping solution. As a consumer, if you are interested in an item you scan the QR code and add it to a virtual shopping basket and in the end pay directly with PayPal. Merchants are starting to include QR codes on advertising and in stores. Some retailers also want to enable the purchase of items trough the shopping window. Basically they can enlarge their store virtually to create more revenues per floor space. PayPal is the enabler of such multi-channel solutions by providing a secure end-to-end platform.

Payment Observer: Is PayPal relying on QR solutions only or are you also looking at other technologies such as NFC?

Holger Spielberg: PayPal is agnostic towards technology, we include everything which makes sense to us to provide a secure and stable transaction service today. We are looking at any technology including NFC, we just believe it will take a while before market readiness. We bring out our solutions based on existing technologies, whenever it makes sense to us to add another technology we will certainly do that. I would predict that NFC is moving closer into focus in the year to come.

Payment Observer: Will PayPal continue to focus on processing transactions or will it venture into other services?

Holger Spielberg: We really believe in extending the value chain and also includes special offerings, deals and coupons. The pressure on the transaction price in retail is significant, and will even grow. PayPal clearly sees additional revenue potential beyond transactions in value added services such as couponing, deals, inventory availability and product information.

Payment Observer: Can you give us some numbers on how many mobile transactions have been processed by PayPal so far?

Holger Spielberg: Aggregated over the time period between March and November 2011 we processed $165 Million in Germany. In markets with higher penetration of smartphones the percentage is even higher, about 6-9% in the UK and above 10% in Australia. A significant part of our transaction volume already comes through mobile means and mobile payments. We expect these numbers to increase significantly over the next two to three years.