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Mobile Wallets for Major Scheme Cards

Mobile payment is THE hot topic in the card payments industry. The main focus is certainly around the major card schemes like Visa and MasterCard and how to put their cards into a mobile phone. Once this has been achieved, the functionality of the cards can be enriched like never before. From on-device cardholder verification to loyalty and much more, there is a lot of room for innovation.

With Google allowing HCE and more recently Apple Pay, there are technical solutions that allow creation of applications and business cases around mobile wallets.

I do not doubt that HCE and Apple Pay will be adopted in one form or another, sooner or later. Apple Pay has launched just at the right time – before the U.S. shopping season – and while some doubt its long term success (Why Apple Pay Is Fizzling and What It Means for the Future of Mobile Payments) others think that’s exactly where it is heading (Is Apple Pay Fizzling? No Way Man, It’s Sizzling!).

Considerations on mobile wallets and loyalty programs

However the whole topic of loyalty is still a major issue as it requires integration with a merchant system. For a merchant, the following points are at least questionable when considering mobile wallets and loyalty programs:

  • People paying with phones are only a small fraction of the people paying with cards, who are in general again only a part of all business. Therefore, in general, merchants are not willing to invest in customized POS solutions enabling only one specific wallet. Wallets must use the “existing rails”, POS terminals.
    As a side note, yes I do believe that iBeacons have a place in the market. Currently, I think they are about targeted ads more than about payment. The future will look different, maybe like this, but not yet.
  • There is an abundance of wallet providers and wallet providers-to-be out there. Merchants will most likely not choose a certain wallet exclusively, for fear of losing business from other wallets. There are of course exceptions to that, but if they launch and then succeed, that is still an open question.
  • The fundamental difference between Google’s HCE approach and Apple Pay increases the complexity. Apple most likely will not allow anything else to become an NFC payment app, resulting in no other IOS wallets than Apple Pay that can be used with POS terminals.

Considering the above issues it is understandable that merchants will wait and see. Maybe they will run a trial here and there and learn the technology. There will be several HCE wallets for the big scheme cards, and there will be Apple Pay. Merchants will have NFC terminals and not lose any business. Loyalty will be subject to support by these apps and solutions.

But what if a merchant can have its own app, with its own merchant-specific payment and loyalty functionality that is using the existing POS?

I will write about that in the next post. Sign up if you wish to be informed of when it will be published. And of course leave your comments, we appreciate it.

Martin Gloor

Martin is responsible for our Test Automation Product Department and Abrantix in the APAC region. He is a payment industry specialist with a high knowledge of the business and in-depth technical skills.

Comment by Lungic |

This patent pending concept, which combines 3D Secure, HCE/NFC and EMVCo Tokenization in one example of a very innovative idea is the living proof that mobile has the future

Comment by Martin Gloor |

Hi Andrew. Thanks for sharing. Yes indeed, there are many apps out there. I personally don’t know the EE app, but it seams to involve the telco to provision the card onto the SIM. This concept was one of the first thought out for wallets, as the telcos tried to get a share of this business. I personally believe though that telcos will have less and less influence in this area. We will see.

Comment by Martin Gloor |

Hi Lungic. Thanks for sharing. Looks interesting. Who is that concept by?

Comment by Lungic |

Well I did come up with this idea myself and protected it with the provisional patent so that I can publicize it and talk about it … I am currently looking for ways to push it forward with an interested issuer or maybe even payment scheme and implement it

In Canada and UK for example (fully NFC enabled markets) there are respectively 2 million and 4 million youngsters aged 15-19 which are the target of this type of service

Comment by Lungic |

Issuer and payment scheme support is required for this to be accepted and endorsed … but since I am in the industry I know who I would partner with to putting together the
a) HCE / NFC app,
b) EMVCo Tokenization Vault slightly extended with ‘virtual credit limit’ and ‘max number of txns’ checking (beside regular token expiry, usage context, Token Assurance Data, etc)
c) VTSC instant Issuing portal

No technical showstoppers, all known technologies, just innovative way of putting it together in a product bundle which at least on paper benefits everybody : consumers (convenience and cash avoidance), payment schemes (new tokenization service revenue) and issuers (new txn interchange revenue)

Comment by Martin Gloor |

Interesting. It is certainly one way on how provisioning can be done. I could not find you on LinkedIn. Feel free to connect if you wish.

Comment by Lungic |

Hi Martin
I need your email address to be able to connect with you, otherwise it won;t let me

Comment by Martin Gloor |

Please choose that we did business together and it should let you send a request..

Comment by Mobile Payment Platform |

Wallets for the big scheme cards are really helpful for making transactions for major platforms like Apple Pay and others.

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