And So it Begins. The Payment Systems War of 2015

And So it Begins. The Payment Systems War of 2015


Last week my sister in law lost her phone. She had the phone in one of those cases where you can keep your cards too, which she also lost — credit and debit cards.

So they cancelled all her cards. Anyone would do the same thing in the same situation.
Here’s where things get frustrating. She found her phone the next day. It was at the playgroup centre she’d been at with her kid the day before.

So she got the phone back and all the cards. The phone wasn’t ‘lost’ per-se. It was just misplaced. But all the cards were already cancelled.

This is a frustrating situation because it will take at least a week, maybe more, to get new cards. Until then she has no way of taking out money or paying for things.

There’s one problem with this situation. And it’s not what you think. The only reason for this inconvenience isn’t the misplacing of the phone and cards. It’s that cards are inherently insecure.

If the debit and credit cards weren’t so insecure then there wouldn’t be any stress.

Let’s imagine someone had stolen the phone and wallet. The phone would be useless as it was pin locked and any banking app was two-factor authentication secure. The cards, on the other hand, would be a free for all.

Considering both have PayPass on them, a simple tap of the card would mean a shopping spree for the thieves. Or even a swipe and sign of the credit card and its happy days for the crafty crooks.

Perhaps if the crooks were a little more high-tech, they could ‘skim’ the card. Then easily enough use the info to create a cloned card and rack up the charges. Or they could just sell the card info online.

But all this could be averted with biometric payments. Imagine you no longer have any payment cards at all. Imagine a world where you have ‘virtual cards’ that you store on your phone.

Now you might say, ‘hang on a second, what if you lose your phone?’

Good question. The easy answer is you log in to your operating system remotely and suspend your payments accounts.

Biometric Payments set to rule the gameTake for instance Apple’s Apple Pay system. If you lose your phone, with ‘Find My iPhone’ you can remotely suspend your account. Or you can wipe the device completely.

But even if you can’t do that, your Apple Pay will only work with your biometrics. More specifically, it’s your fingerprint biometrics.

That makes your phone and accounts useless to anyone else (unless they cut off your finger).

And all the unique info is stored on a tamper proof chip on the phone. So hackers could hack Apple and never recover your payment info. But ultimate worst case you can call your bank to get them to disable Apple Pay on your device.

With Apple’s Touch ID on the iPhone, you hold your finger on the fingerprint reader and tap-to-pay. It won’t work without your biometrics.

Furthermore, Apple Pay will never share your card number with merchants. According to Apple, ‘When you add your card, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element, a dedicated chip in iPhone, iPad, and Apple Watch.’

With this you never need to carry your cards. You don’t need to worry about card skimmers either. And when you change phones, you can wipe your old phone and add your cards to the new one.

But right now there’s a problem. What to do if you need to withdraw cash? I think over the next few years we’ll transition to a system where we’ll never need to carry cash again. Everything will be capable of mobile payments. But in the meantime, cash still exists.

Apple Pay isn’t the only player in town.

I got a Wocket in my pocket and it’ll only listen to me

Wocket is a ‘smart wallet’. It operates on a similar principle to Apple Pay, but with one key difference. Wocket does still have a card, but like Apple Pay, the fundamental security relies on biometrics.

For example, you can load all your cards into the Wocket. Debit, credit, store and loyalty cards. To unlock Wocket you can use a pin code and voice recognition.

On the Wocket you then select the card you want to use. You take the specially designed card out of the Wocket and use it as normal.

That means you can also use it in an ATM to withdraw cash from your account. That’s a big plus over any other system right now.

In terms of security, the card is useless without your biometrics. And after every use, the card wipes itself clean and becomes useless until the next time you select a card. Wocket also doesn’t rely on your smartphone. It’s 100% independent from any ‘smart’ device.

home_wocket-768x432That’s a win, particularly with the inherent vulnerability of mobile devices. Wocket isn’t yet compatible with Chip & Pin tech. But a representative from Wocket said they might incorporate it in future generations.

I like the idea of Wocket. Particularly as a stopgap between full acceptance of mobile payment systems and where we are now.

But just when you thought that was it, Google decides to join the party. The rumour doing the round is that Android Pay will come to the world at Google’s I/O conference in May.

We won’t know the specifics for another couple of months. But when we do there’s no doubt in my mind we’ll have a ‘hum-dinger’ of a payments battle on our hands.

Between Apple’s iOS and Google’s Android, they control more than 97% of the smartphone operating system market. And with over 1.3 billion smartphones shipped in 2014, that’s a two-horse race if I’ve ever seen one.

I’ve said it for some time, and it looks like its finally happening. The plastic card is a dying commodity. Cash too is on its last legs. The new era of mobile payments is properly here. It’s not a pipedream. It’s not pie in the sky thinking. It’s reality.

Mark 2015 in the history books as the year the battle began. Sure the tech has been around for a while. But this year is the year when it goes from concept to reality. And soon enough you’ll forget what it was like without Apple and Android Pay.

Sam Volkering +
Editor, Tech Insider

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