Black Friday, Cyber Christmas, and a Contact-Free New Year

paper bags near wall

For most of us 2020 isn’t going to be a year to linger fondly in the memory. It’s been a monumental slog in the face of grim news and little cheer but from a payments perspective we’ve seen an unsurprising surge in interest in all things payment related.

People have moved from cash to electronic payments – contactless transaction numbers have soared. People moved from face to face purchases to online. And, there’s been a ton of stress on payment systems as people have demanded refunds for holidays and flights they couldn’t take due to various travel restrictions. It’s been a year like never before.

We can expect this to be exacerbated over what will likely be an extended Black Friday and Christmas holiday shopping period. Online payments are expected to grow even though economies are in recession. For us in Europe it’s the last hurrah before PSD2 requirements on strong customer authentication come into force on January 1st. Merchants and payment companies will be well staffed on News Year Eve as they wait and see how the systems will hold up, and what sort of abandonment figures they’ll see as puzzled customers are presented with confusing authentication screens. We can probably expect a flood of concerned calls about phishing which are actually Strong Customer Authentication requests.

Contact-free public transport (Part 3)

person holding smartphone

This is the third of three blogs about technologies to support contact-free use of public transport.

The radio again – I hear that the Transport Minister for England had just reported that there have been fewer than 400 fines for people failed to wear face covering on public transport. More than 115,000 travellers have been stopped and reminded that face coverings are mandatory, and 9,500 people prevented from travelling.

Contact-free public transport (Part 2)

photo of a bus

This is the second of three blogs about technologies to support contact-free use of public transport.

Public transport operators have been making great efforts to make public transport safe during the pandemic. TfL recently launched a new app that makes it easier for passengers to plan their travel and avoid routes where they might come close to large numbers of people. There are claims that the rate of uptake of contactless by passengers has increased significantly since the pandemic and the demand for contact-free transactions on public transport. Visa recently offered a graph relating to global public transport contactless transactions. However, it is not clear what the actual contactless usage is since they are hidden behind month-on-month percentage increases which look enormous when the previous months had fallen off the proverbial cliff.

Contact-free public transport (Part 1)

buildings city clock downtown

This is the first of three blogs about technologies to support contact-free use of public transport.

I heard on the radio that, despite ministers encouraging people in England back to work in their offices, most are staying at home. Commuter trains are about one-third full and buses are about 40% full. During the COVID-19 pandemic, demand for public transport fell off a cliff as governments told their people to stay at home.  A major part of encouraging travellers to use public transport is the provision of systems that allow social distancing of passengers from staff, ideally eliminating the need to exchange physical tickets, cash and paper receipts.

Payment card issuance errors leave you vulnerable to fraud

Major payment cards

As Consult Hyperion, and as many other analysts, predicted, Covid-19 has driven the adoption and use of contact-free technology at the point of service. A recent survey funded by the National Retail Foundation, found that no-touch payments have increased for 69 percent of US retailers surveyed, since January 2020. In May, Mastercard reported that 78% of all their transactions across Europe were contactless.

Fraudsters are always looking for ways to take advantage of potential weaknesses or even inexperience in new payment devices. A recent news story promoted a man in the middle attack in which two phones are used to transfer and manipulate the transaction message between a stolen contactless card and the point of sale terminal.

Contact-free and App Clips in Apple’s iOS 14

pexels-photo-887751.jpeg

The Use of Contact-free is Accelerating

At Consult Hyperion, we have already seen the pandemic accelerate the adoption of contact-free payments in the face to face environment as customers have become wary of catching COVID by touching shared devices, such as self-service terminals and PIN pads.  The use of personal devices for payments is hardly new but the attraction of an in-app/in-store version of mobile payments, whereby the consumer uses an app on their own device to interact with the retailer or service provider and pay for services, has just increased dramatically. Solutions for parking (RingGo) and for restaurants (like the Wahaca app, powered by Judopay) were already demonstrating the benefits of such an approach for customers and businesses before COVID struck.

Leveraging the payment networks for immunity passports

COVID-19

As if lockdown were not bad enough, many of us are now faced with spending the next year with children unable to spend their Gap Year travelling the more exotic parts of the world. The traditional jobs within the entertainment and leisure sectors that could keep them busy, and paid for their travel, are no longer available. The opportunity to spend time with elderly relatives depends on the results of their last COVID-19 test.

I recognize that we are a lucky family to have such ‘problems’. However, they are representative of the issues we all face as we work hard to bring our families, companies and organizations out of lockdown. When can we open up our facilities to our employees, customers and visitors? What protection should we offer those employees that must or choose to work away from home? What is the impact of the CEO travelling abroad to meet new employees or customers, sign that large deal or deliver the keynote at that trade fair in Las Vegas?

Give the public what they want

Well, this is interesting. On the very day of Consult Hyperion’s 20th (yes, 20th) annual Tomorrow’s Transactions Forum to discuss the future of secure electronic transactions and much besides what should fall through the internet tubes but the fifth annual “ING International Survey Mobile Banking 2017 – Cashless Society“, which surveyed nearly 15,000 people across 15 countries, and found that one in five (21%) people in Europe now rarely carries physical notes and coins, and a third (34%) would go completely cashless if given the choice.

Gin and contactless, one of my very favourite combinations

Gin and contactless is my second favourite cocktail (after the Moscow Mule).

Like those 34%, I’d like to be given the choice, but there are still places that won’t accept cards (such as the Real Ale bar in Wembley Stadium) which is why I went to the gin bar instead (as shown above). But these are becoming fewer and farther between, and not only in London.

“Dr Michael Collins, assistant professor of Social Policy at the University College of Dublin, tried to live without cash during one month to see if Ireland could become cashless in a near future and follow the example of its Scandinavian neighbour. His investigation demonstrated that almost all transactions can be done without banknotes and coins, except for some small value transactions, such as a coffee in a train.”

Cash is not replaceable

Ha! Even on Southwest Trains you can pay using contactless cards or Apple Pay and, when the new Chinese owners take over later this year, I imagine that Alipay and WeChat will be on the menu too. When do we get to wave goodbye to cash in Woking then? Well, sadly no time soon because while the trains have contactless, the ticket machines don’t (and I shouldn’t have to go to ticket machines anyway, but that’s a different point). But in ten years? 20 years?

“Gala Casino used linear regression on cash usage data from 2004 to 2014, which saw a drop from 71% to 53%, and Payments UK predictions for 2024, to arrive at its guesstimate that 2043 will be the year in which the number of cash transactions reaches zero per cent.”

Britain to go cashless in 2043?

I would imagine the graph turns out to be show cash asymptotic to zero rather than zero, but while I’m not sure that the number of “cash” transactions will ever reach zero, because some people will always want to use some form of immediate and anonymous payment system, I am sure (as I told the BBC’s “Wake up to Money” chap when he called to invite me on this morning) that William Gibson’s words in “Count Zero” are prescient: “He had his cash money, but you couldn’t pay for food with that. It wasn’t actually illegal to have the stuff, it was just that nobody ever did anything legitimate with it”. By 2043? Sure. But rather than just let it happen, we really need to set a national policy about it.

“Reducing cash doesn’t mean big savings, but removing cash does, and without an actual national policy on this, the benefits will go to the middle classes at the expense of the poor. “

via There you go bringing class into it again | Consult Hyperion

Therefore another vision for 2043 might be that cash becomes a class issue, where the middle classes never see cash from one week’s end to the next (except for the purpose of aiding and abetting tax evasion by paying the builder in £50s) but the underclass, trapped in cash, are excluded from the world of bank accounts and cards. This will be a good topic for discussion at this afternoon’s excellent expert panel on inclusion chaired by our CEO Neil McEvoy with Katie Evans (Money and Mental Health), Susie Lonie (who has years of experience in emerging markets), Elizabeth Duke from Carta Worldwide (who build pre-paid schemes for the unbanked) and our very own Paul Makin (the man who did the original feasibility study for M-PESA). Great stuff.

NFC isn’t the real reason for Apple Pay

As I am sure many of you will remember, the thing I was most wrong about – ever – on the Tomorrow’s Transactions blog was that I was convinced that Apple would not bother with an NFC interface for the iPhone. Luckily, my blog is not a blockchain, so I could go back and delete this post if I wanted to. But I am gentleman and man of integrity and I cannot do sufficient violence to my conscience to rewrite history in this fundamentally misleading way. Hence my error stands as testimony to my integrity. My reasoning at the time of this broadcast error was that since “app and pay” would eventually come to dominate “tap and pay”, I thought that Apple would focus on the big picture and ignore the age-old card/POS interface. I assumed that they would use Bluetooth, wifi and mobile to link the customer and merchant and eventually dispense with the card in the middle, whether using stripes, chips or NFC. At that time, we had already built an HCE-over-BLE app for a project that we were involved in, so I knew that we could easily obtain better-than-chip-and-PIN security without having to tap anything, and I thought Apple would just ignore it: what did they care, I reasoned, if you can’t use your iPhone to ride the bus* in London?

Well, I was wrong. Apple implemented their own sort-of-NFC (they did not implement the full NFC standard) and they locked down the interface so that third-parties could not gain access. They implemented just enough to get the banks to spend gazillions on the tokenisation infrastructure that was needed to bring that better-than-chip-and-PIN security to online and mobile commerce. Well, it worked. They have created a secure and convenient payment platform. As I wrote before…

Select Apple Pay, thumbprint, done. Why isn’t all in-app purchasing like this. Come to that, why isn’t all purchasing like this. Actually, it soon will be…

From Don’t judge mobile payments by the way they work now | Consult Hyperion

This indeed where Apple is heading, and I’m not the only one who thinks that perhaps people who were focused on the NFC interface at retail POS (and complaining that not enough retailers take it and therefore Apple Pay is a bit of a flop) were missing the bigger picture.

He says Apple Pay is appealing, but he wouldn’t switch banks just to access that one feature. “Not over that. There’s too much work involved just for tap-and-go,”

From Early days, but Apple Pay struggles outside U.S. | Reuters

You can see the point. If you already have a contactless card that works everywhere, it’s not that exciting to be able to tap your phone instead of the card. So people don’t. They already had a perfectly good solution to the card payments problem: a contactless card (or, in my case, a contactless sticker). But the fact that it’s not exciting to tap the phone just does not matter. It’s not the play. There are reasons why I love Apple Pay (especially because I have on more than one occasion forgotten my wallet when going to the office) but when I dropped my iPhone in the toilet and was on an old phone for a couple of days, it didn’t really matter that much because of my contactless Curve card in my back pocket.

The thing is: paying with a plastic credit card isn’t really that difficult. With Apple Pay, the bigger point is that it’s also a way of paying for stuff online.

From Who Cares About the New iPhone Camera? The Real Change Is Apple Pay | WIRED

Brian Rommele, who I always take very seriously about this kind of thing, says that it is already clear that Apple Pay in the browser will be a very big deal indeed. I already find it frustrating when I go to pay in-app and I have to enter a CVV against a card-on-file just as if it were 1996 all over again (I’m talking about you RingGo) instead of just thumbing it so I can see that the in-app and online experience will be transformed.

In my early testing I can confirm that the checkout abandonment rate for websites that use Apple Pay Safari will be reduced significantly.

From The Apple Pay Safari Vs. PayPal Battle For Web Transactions Is An Invalid Argument. — Medium

Who won’t use this? For Apple Pay, Android Pay, Samsung Pay and every other pay, #appandpay is way more important than #tapandpay and way, way more disruptive. Note also that it is a very short step from Apple Pay to Apple ID, where revocable identification tokens are loaded into the tamper-resistant hardware alongside the revocable EMV payment tokens…

* I use my iPhone to ride on London underground, buses and Dockland Light Railway all time. All the time. 

 

 

A funny thing happened on the way to the Forum

The Tomorrow’s Transactions Forum, that is. I arrived in good time (it’s always best to add on a few minutes to give yourself time to buy a ticket) for the 7.39 Flying Glacier to Waterloo via Misery and Degradation. 

 

Of course, Woking station has changed a lot since this picture was taken. There’s a Flying Coffee Bean on Platform 2 now.

Hurrah! When I got into the ticket hall I discovered that they have installed machines to allow you to pick up a ticket that you have purchased online. Great. I have the excellent The Trainline app on my iPhone and it is integrated beautifully with Apple Pay. So you look up the tickets you want, hit “Pay with Apple Pay”, thumb it and away you go. When you get to the station you just thumb it again and tap your iPhone on the machine, it shows you the list of tickets you have purchased, you choose the ones you want and hey presto your tickets pop out.

Brilliant.

Except it isn’t. The machines don’t work this way. You have to take a payment card with you and insert it into a slot and then type in a confirmation number that you were sent by e-mail. It’s actually quicker just to go to one of the other machines and buy your ticket in the usual way.

Joined Up Thinking (Not)

The new machine on the block.

I don’t get it. Surely the Apple Pay token used to buy the ticket can be matched to the Apple Pay token presented at the machine? You should only need to put the card in if you’re forgotten your phone or it is out of battery (and even then they should do it by implementing PARs properly).

Surely South West Trains, when they were planning these machines a few years ago, had at least heard about mobile phones even if they hadn’t actually seen any. And surely they had noticed that something was going with contactless technology? Perhaps one of the South West Train’s Executive Board had overhead their servants talking about “tapping” cards to ride the bus in London and never asked what they meant? Or did they just take it be a some new lingo below stairs, a slang term for writing out a cheque?

They must just have thought that contactless was something happening to other people.

This left me wondering if other train-like options are adopting contactless. I thought I’d give it a try at Heathrow, so I downloaded the Heathrow Express and tried a couple of times to buy a ticket to see if I could use Apple Pay, but the app asked me to scan in my credit card (presumably for some hello-1996 card-not-present transaction) then crashed, so I never to got to see it in action.

So much for joined-up thinking. The whole world is moving to contactless and mobile and the most up-to-date technology on the newest machines installed (I see they got rid of the machine for connecting by video link to customer service) is the decade-old chip and PIN reader. Come on.

Queue at Woking

OK, so sometimes there’s a bit of queue.

Why can’t we buy our tickets on our phones while riding the bus on the way and then just tap and collect when we get to the station?

The only improvement in the ticket purchasing experience at Woking station since it opened on 21st May 1838 — you still stand in line, they still take cash, they still give paper tickets — is that you no longer have to fill out a “reason to travel” form, and I wouldn’t put it past Theresa May to have these re-introduced in time for the next election.


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