Who’s square? Jesse is

Some people don’t really understand the big picture around innovation, and how it takes inventions and turns them into sustainable new value-adding processes. Here’s one example.

Last Friday, Congressman Jesse Jackson Jr. (D-IL) took to the floor of the House of Representatives to decry the iPad as a job killer, as people are using the device to read books rather than buy them from bookstores.

[From Lesson to Congress: iPad Doesn’t Kill Jobs, Government Does – Gary Shapiro – The Comeback: Innovation Economy – Forbes]

But wait a minute: surely books were destroying jobs in the scribe industry. Jesse’s job creation scheme ought to be banning books, not praising them. Anyway, many popular books are written by non-Americans — why should American’s hard earned dollars flow to J. K. Rowling’s UK bank account? Hold on though — scribes were destroying jobs in the storytelling industry. Jesse needs to attack the problem at source: we need to stop people from reading and writing. Unless we’re going to do that, we should instead welcome and encourage innovation because we need an economy that adds more value. I’m not smart enough to know what that means for individual companies, although I am lucky enough to have a job that means I can experience many different organisations approaches and learn from them.

In 1994, the dominant global provider of mobile handsets was Motorola: its shares were trading at an all-time high and it was seen as an outstanding innovator and even described by a senior consultant at A. T. Kearney as “the best-managed company in the world”

[From Why Nokia’s Collapse Should Scare Apple – Patrick Barwise and Seán Meehan – The Conversation – Harvard Business Review]

That’s the thing about technology-based innovation: it doesn’t follow the smooth distribution of best practice that is the realm of management consultants. It didn’t matter if you were the best urine trampler in the land, when a German chemist synthesised urea you were on the scrapheap. It doesn’t matter how good your printing company is when e-book sales exceed printed book sales.

Motorola missed most of these market trends, was slow to invest in digital (it was a classic victim of the innovator’s dilemma),

[From Why Nokia’s Collapse Should Scare Apple – Patrick Barwise and Seán Meehan – The Conversation – Harvard Business Review]

This “innovator’s dilemma” analysis, which says that it’s just too hard for companies to invest in their own disruptors, suggests that it may be difficult for the incumbents in the payments world to innovate in the right direction. The case study that everyone is focused on right now is mobile.

Bill Gajda, Visa’s head of mobile innovation, is confident that Visa and the other card networks, in conjunction with banks, will be at the center of mobile payments in the future.

[From Leading Mobile Payments | Visa’s Blog – Visa Viewpoints]

I understand where Bill is coming from, but have to admit that I can see other scenarios as well, where Visa interconnects non-bank, sector-specific, mobile-centric payment accounts rather than only bank accounts. It must be said though that Visa have made a number of substantial investments in the mobile payments space and have been actively developing products and services. Not all observers think that this strategy is optimal.

Visa for you to execute in this space, spin out Bill Gajda and team to build a new network. You certainly have the capital and intellectual horsepower to do it.. Don’t think of mobile as a service on VisaN

[From FinVentures]

In the medium term, the existing players (by which I mean banks, the international schemes and processors) will find it more and more difficult to compete with IP-based alternatives because their cost base is just too high. Therefore, it might make sense for a company like Visa to start building one of these, but use their experience to build a better one. Alternatively, they could look for someone else who is building one, and then invest in it. This is what they have done recently with Square (Visa invested an unspecified amount in Square in April 2011). Square is much in the news at the moment, but what is actually interesting about it? As I wrote before, it is not the stripe reader, it’s the niche…

So where is Square seeing the most traction? Without a doubt, small businesses, independent workers and merchants comprise most of Square’s rapidly growing user base.

[From Square Now Processing Millions Of Dollars In Mobile Transactions Every Week | TechGoo]

In a way, this real-world PSP is a small but interesting niche play in a large acquiring market, and as we’ve advised our clients for many years that the mobile-phone-as-POS meme will be more revolutionary than the mobile-phone-as-card meme, it’s an existence proof of new opportunity.

While merchants have to qualify for the app, Square’s qualification rules are more relaxed than those of standard credit card processors.

[From Square Now Processing Millions Of Dollars In Mobile Transactions Every Week | TechGoo]

Never in a million years would I consider signing up as a merchant with my bank. Yet I went into an Apple Store in the US last time I was there and bought a Square (actually, we bought eight of them to play with). It took a couple of minutes to sign up on the web and I accepted my first payment (in Stuart Fiske’s iPad) a minute later!


Pretty cool, although naturally I was outraged when I got off the plane in the UK and discovered that my lovely Square only works in the US. Anyway, Square were making me think about innovation again yesterday. They just announced their wallet product, Card Case. Once you’ve paid with your card at a retailer once, Square’s server stores the card details, so from then on the merchant has only to identify you. They can even do this without you having a card or phone, because they can look up your picture (although I have good reasons for thinking that this won’t scale).

The obvious idea is to make payments “frictionless” — easier and faster for the user and merchant. (Assuming that the app is fast enough that it is actually more convenient to pay this way than just to have your card swiped. Wireless data networks aren’t always reliable, etc.)

[From Jack Dorsey’s Square Starts Its Bid To Kill The Credit Card]

Indeed, they’re not. But imagine what this will look like with NFC in place: you have an iPhone, the merchant has an iPad, you place your iPhone on the iPad, they beep, done. And it’s a card present transaction. Now, we all know that Square Card Case isn’t the only wallet game in town, because anyone with any sense is already developing a wallet proposition since that’s what the merchants want. Right now we are helping clients in the financial sector and the telecommunications sector with ideas in this space. Visa, being smart, are of course already in the game.

Fourteen US and Canadian banks have signed up for the launch later this year of a multi-platform digital wallet that can be used for e-commerce, m-commerce and mobile contactless transactions and includes mobile payment, NFC and coupon capabilities.

[From Visa unveils mobile wallet plans • NFC World]

But now continue the Square-related thought experiment. Suppose that Square are successful at signing up lots of people, so that people don’t want an AT&T wallet or a Citi wallet or a Visa wallet? If all of the transactions are now between the secure element in a mobile phone, via Card Case, to the secure element in another phone, via the Square app, then aren’t Square at some point going to get rid of intermediaries and just move the money from one bank account to another, in a retailer-centric decoupled debit proposition (which won’t be called debit, because of Durbin) that is proactively marketed by the retailers? That really would be disruptive.

just as the iTunes store completely upended the sale and distribution of digital media, Square just might upend the entire real-world payments industry–whether it meant to or not.

[From How Jack Dorsey’s Square Is Accidentally Disrupting The Entire Payments Industry | Fast Company]

So, in response to the e-mails I’ve had over the last couple of days, let me say that the Square trajectory confirms the strategic advice that we gave our clients some years ago (which is great!) and that is it not a “rival” to NFC but an exploiter of it. Square might be a niche in the payments business, but it shows a really interesting innovation path that sees payment cards going the way of books, and probably without Jesse Jackson Jr. to plead their case. That doesn’t mean that Square will succeed, but if they don’t, them someone else following that same path will.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Day zero

Today is rather an interesting day in our tiny corner of the digital money universe. Today, the first NFC mobile phone with a contactless EMV application on the SIM goes on sale in the UK. It’s the Samsung Tocco Quick Tap, a version of the best-selling Samsung Tacco Lite with NFC, a product developed by Orange and Barclaycard.

Before I go any further let me make an explicit declaration of interest. Consult Hyperion has provided paid professional services to companies mentioned in this post in connection with the development of the products and services discussed in this post. As you may well remember…

…the public launch of a product that Consult Hyperion has been working on for some time for Barclays: Mobile operator Orange UK and credit card company Barclaycard have announced a long-term strategic partnership to develop m-payments technology including mobile wallet handsets.

[From Digital Money: Some real mobile, nfc and payment stuff in the UK]

Back to the story. Today, (well, yesterday, actually) I used one of these phones to buy a cup of coffee in Eat. And it worked. Perfectly. You might not think that’s amazing, but I do, because I know how much work has gone in to implementing a standard contactless EMV application in a standard mobile handset with a standard SIM for use in a standard terminal on a standard network. And it’s for use by normal people, not geeks like me.

The phone has a J2ME “Orange Wallet” that is connected via JSR177 to a Barclaycard MasterCard pre-paid EMV card application on the SIM. The application uses SWP to access the NFC interface. You can either connect this prepaid card to one of your existing Barclaycards or an Orange Credit Card that you apply for on the spot. There’s no “untethered” version that you could not link to an existing card but simply top-up online or in store. It works as you would imagine: for payments under £15 you just tap and go. The wallet contains the basic services you would expect: you can look at transactions, top up the card (I have my phone linked to my Barclaycard OnePulse with the built-in Oyster card) in a simple one-button plus PIN action

MMP_6301 logoNO EAT_pay_scr

Though I say so myself (as a big fan of stickers!!) the integration is nice. The phone implements the usual NFC tag reading, so you can tap things and have URLs or phone numbers pushed on to the phone (the phone comes with a bunch of tags for you to try it out on) and I’m sure that people will find fun things to do with these. I suppose like a lot of people I’d rather have my Orange Wallet running on my iPhone, but this is a great first step and, most importantly, it actually works, it’s not just some Powerpoint at a conference. It will be spreading to smartphones soon and the knowledge and experience gained by Orange and Barclaycard ought to stand them in good stead.

Last week Google confirmed that Android 2.3 will support Near Field Communication, as will Nokia and RIM smartphones, starting next year. And judging from Apple’s recent hiring of an NFC expert , and patent filings for a probably-NFC-powered iTravel app, the iPhone 5 will boast NFC too.

[From I Have Seen The Future, And It Looks A Lot Like Bump (Without The Bump)]

When I took the phone home last night and showed it to a statistically-invalid sample group of four teenagers, I was quite surprised as to how much they liked it. They were familiar with the handset and they like prepaid instruments and all wanted to try it out.

According to the recently released results of a survey from MasterCard; it looks like the public, especially the younger generation, are willing to embrace NFC if it ever becomes the standard method of payment in the future… From their findings, 63% of the US population aged 18-34 would be at ease with using mobile phones to make payments, while in the 35 or older age group, only 37% are comfortable with the idea.

[From MasterCard says NFC will be embraced by the younger generation in the US | Ubergizmo]

All in all I had rather an exciting day of contactless activity, because I popped into Tesco Express to buy a cold drink and noticed that they had installed contactless terminals. But more importantly, they’ve installed them properly. What I mean by this is that when you buy something, the checkout operators scans it and then contactless terminal lights up automatically. You tap and go. Or you tap and wait for a receipt to print out, and go. I was so shocked to see contactless payments implemented so well that I made a video:

Put these two things together: contactless rails and the mobile carriage and you finally have a genuinely new and attractive customer experience. No-one is mad enough to believe that people are so wild about payments that they will buy these phones just because of the on-board Barclays MasterCard (the mass market needs a portfolio of interactive services), but it’s a super first step. Today was a good day and naturally I’d like to share the excitement. I happen to have on my desk a spare pay-as-you-go Samsung Tocco Quick Tap, so if you’d like to dip your toe into the ocean of future payments, all you have to is be the first person to respond to this post telling me what the acronym SWP — used above — stands for. (Hint: it’s not the Socialist Workers Party).

In the traditional fashion, this competition is open to all except for employees of Consult Hyperion and members of my immediate family, is void where prohibited and has a new and improved formula. The prize must be claimed within three months. Oh, and no-one can win more than one of the Digital Money Blog prizes per calendar year.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

I see your 14443 and raise you 18092

A couple of people asked yesterday about the comments from Google concerning “card emulation” in Android phones. The twitterverse had noticed these remarks from Nick Pelly, the Android lead for NFC, concerning the lack of API support for NFC card emulation.

The problem is that the hardware out there today, you know, if you buy an NFC controller, it typically is only going to be able to emulate one of those RF-level technologies. So as an application developer, you don’t know which — when it’s getting deployed to a phone, which one is on the phone. So I guess until we see the industry standardize around maybe one RF-level technology or until we see NFC controllers able to support multiple of those

[From Google raises concerns over the viability of NFC card emulation mode for mobile payments • NFC World]

At first I just thought… wow, that’s smart. If Android phones won’t allow ISO 14443 card emulation (which is part of the NFC standard) then that means that Visa and MasterCard won’t be able to use them for payments, thus locking them out of the POS terminals that Google is developing for retailers. As I thought about it, however, and actually read what Nick had said, I realised that I couldn’t understand his comments, since phones are perfectly capable of dispatching to different applications depending on which card they read, so I thought I’d go and ask a couple of the world’s leading experts on implementing secure NFC applications in mobile phones. Fortunately Stuart Fiske and Neil Livingston both work for Consult Hyperion, so it was easy to find them. They told me…

We know that NXP and Inside Secure NFC controller devices support A, B, B’ and Mifare, all on the same chipset. GP provides mechanisms to manage protocol conflicts, etc., when multiple applets relying on incompatible protocols are trying to be active on the interface at the same time.

I thought this must be true, since I had in my office a Nokia handset with NFC that supports both contactless EMV transactions and contactless Oyster (ie, MiFare) transactions and it worked perfectly. I read a little further, and once again became confused. Due to my lack of experience, I was unable to determine what this means:

Typically, the hardware is set up to do card emulation through the secure element. Right now, we don’t have any APIs to talk to the secure element. And we think that we probably won’t be getting APIs to do that anytime in the near future in the SDK.

There are a bunch of different reasons. Again, the secure element is a very limited resource. It can’t hold a large amount of data in there. And if we open it up to any third-party application, there’s going to be a huge resource contention over the secure element.

Additionally, to talk to the secure elements, even from applications on the phone, you need to authenticate yourself properly.

And if you improperly authenticate yourself a certain number of times, there are secure elements out there that will physically destroy themselves and can never be recovered. So that’s something that we really think would be a bad experience for users

[From Google raises concerns over the viability of NFC card emulation mode for mobile payments • NFC World]

I have absolutely no idea what he’s talking about. I have never heard of a handset secure element (SE) that will physically destroy itself if authentication fails. I’ve checked the SmartMX data sheet this morning and I can’t see any such logic.

Screen shot 2011-05-12 at 11.03.45.png

If I put the wrong PIN into an EMV application in the secure element three times, it will lock and then require an over-the-air PIN unlock from the application issuer, but that’s a good thing. It’s certainly true that there’s a problem with secure applications controlling the screen and keyboard during authentication, but that’s because the Nexus doesn’t have any form of trusted execution mode and this is a well-known and well-understood (at least it’s well-known and well-understood by Consult Hyperion) constraint that feeds into the kind of risk analysis that we do for organisations who are thinking about developing transactional applications. The authentication itself is done within the SE, naturally, but you may have a virus that’s capturing the PIN, for example.

Meanwhile, I was thinking about the SE more. If I buy a Nexus S, how would an application provider request a Security Domain (SD) from Google? How would it be provisioned? Is Google building a Trusted Service Manager (TSM) to sell such a service? I haven’t got a clue. The guys told me (these are edited highlights, by the way)…

In J2ME, it’s typically the SE issuer (ie, Google, in this instance) that decides who can access the SE from apps in the phone, and sets up the access conditions on the SE to manage this (the ACF file). Essentially, what we need the Android stack to do is deliver what J2ME (and it’s JSRs) have been doing for several years now. That is, include APIs that provide the app with a mechanism to access an applet in the SE, and for Android to interact with the SE to manage access condition verification. You can’t block the SE if you can’t access it!…

…These comments from Google make it sound like Google won’t be doing anything with card emulation any time soon. If that’s the case, then what’s with all these stories about Google trialling contactless card payments in SF with MasterCard and Citibank, uing Verifone and Ingenico POS terminals? These POS terminals implement 14443 to read contactless cards, and I doubt that Google are going to develop custom terminals that implement P2P ISO 18000 instead. But who knows – it would be cool if they did…

…Perhaps the Android stack doesn’t need to implement card emulation mode if the underlying hardware implements it, i.e. if the NFC controller and SE together support 14443 and card emulation mode, then they can talk to the reader via the antenna independent of the Android stack. The stack needs to provide an access API to allow phone apps to access applets over the contact interface (if there is one, e.g. SIM), or the wired interface for embedded, or via the SD interface….

…So perhaps there is no need for a card emulation stack in Android after all? But we still need ot be able to switch the PN544 into card emulation mode and an SE access API supporting a decent access control mechanism…

That’s the actual problem, then. Developers can get to the SE interface but they can’t do anything with it (eg, load a payment card into it).

As of the 2.3.3 release of Gingerbread the Secure Element functionality has been enabled (but the API Hidden). You can confirm that there is a Secure Element (SmartMX) in the Nexus S just by looking at the debug log using adb logcat and switching on NFC via settings… That said I’m assuming that the keys etc are controlled by Google so actually doing anything with the embedded SE will be difficult/impossible at the moment.

[From Secure Element – SmartMX – seek-for-android | Google Groups]

What has happened is that Google used an NXP NFC stack when building the Android operating system image for the Nexus S, but switched off the card emulation using compiler switches. (There’s nothing to stop you, by the way, from recompiling the stack with those switches set to allow card emulation.) My interim conclusion is, then, that I have no idea what is going on. I don’t understand what Google mean and I don’t see how they can stop anyone from accessing secure elements. Sure, they can stop you for doing anything with the embedded SE (theirs) by not giving out any keys, but if there’s a UICC SE (from the operator) you can access that and if there’s an external SE (eg, a DeviceFidelity SD card) you can access that. If there’s no Google Android API elements for any of these, someone else can simply add their own.

After all, Google ordered the Nexus S with embedded secure chips, the PN65 from NXP Semiconductors, which can store applications. The NFC controllers in the phones also support applications for card emulation on SIM cards.

[From Card Emulation Expected Soon Despite Doubts from Google Engineers | NFC Times – Near Field Communication and all contactless technology.]

Indeed. So why the fuss? What does it matter whether Google want to provide card emulation APIs or not? The things is that Google’s opinions about NFC have taken on more and more significance recently as it has become clear that whatever mobile operators and banks may think about NFC, Google thinks that it is important and will drive it into the marketplace.

Google has obviously made a decision that NFC is an opening into something more interesting and lucrative than transforming a phone into a payment card– advertising and marketing opportunities at the point of sale – the physical point of sale. And, it has done a deal with VeriFone that takes the economic sting away from the merchants who need to buy into their vision to make it work – and who have by and large turned their noses up at NFC up to this point. Layer on top of that their Google Checkout asset and their newly launched One-Pass wallet application and you have the makings of an interesting new payments player.

[From Google Takes on NFC, Will They Crack the Code? at The Catalyst Code]

Karen is, as usual, spot on with this analysis. But I’m not so sure about this…

What’s amazing is that Google was the first to connect all of these dots

[From Google Takes on NFC, Will They Crack the Code? at The Catalyst Code]

This doesn’t seem amazing to me, because I’ve been involved in numerous attempts to develop mobile proximity payments for banks and operators. A month before the Google announcement, I wrote on Quora that “I’m sure [loyalty and rewards] will be Google’s strategy too. Payments are not an interesting enough application to persuade people to go out an get an NFC phone.” Years ago, I made a presentation (I think at NFC World but I can’t find it!) in which I said that no consumers will go into retail outlets and buy an NFC phone because of payments. They will buy the NFC phone so that they can read tags, swap Facebook profiles or (now, it seems) play proximity Angry Birds. But once they have that handset, then we need to make it easy and attractive for them to use it for payments.

Incidentally, Dean Bubley, who is in my opinion one of the very best analysts out there, called these non-payment applications “valueless” in a twitter exchange. He’s referring to things like “0-click” checkins and similar.

Starting tomorrow, just tap your NFC-enabled phone (most newer Android devices have it) against the poster, it’ll check you in with foursquare

[From Experimenting with NFC check-ins for Google I/O | Foursquare Blog]

I’m convinced that valueless is the wrong word. If Google (or Apple) or whoever track where you are via mobile location and then send you special offers, it’s creepy. But if you reach out tap when you enter the shop, or restaurant, or hotel, or office, that’s what advertising folk label “a call to action” that gives them permission to send you things, to steer you, to deliver added value. That’s what retailers will pay for — they’ll get the payments part for free — and that’s why the ecosystem will deliver real value.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Some observations on Japan

Someone interrupted one of my rants against cash the other day by pointing out that in the last resort, cash is the only payment mechanism that society can depend on. Their trump card was reference to the aftermath of the recent Japanese cataclysm, where following a magnitude 9 earthquake and a tsunami, the nuclear reactors didn’t melt down but the payment system did.

I think this is wrong lesson to draw from it. Yes, there were some temporary problems with the card networks because of the disruption, but it’s important to note that this did not impact all cards: Japan has quite a rich retail payment landscape, as shown in this diagram (which I drew a couple of years ago, so it’s a bit dated, but you get the point).

Japan Landscape

I saw Nobuhiko Sugiura, Associate Dean of Chuo University Business School, give a good overview of the current situation at last year’s E-Money, Cards and Payments conference in Moscow. He said that e-money usage in Japan is growing rapidly but still a small fraction of total consumer spending (¥1 trillion out of a total of ¥300 trillion, a 300% increase in the last three years). A third of the population use e-money and half of them (ie, one sixth of the population) use it in their phones. It’s a competitive market, centred on non-banks because the Japanese banks have no real interest in handling small payments because or their cost base. The non-banks, as I’ve often noted on this blog, have different business models, not based on transaction fees. The railways, for example, don’t expect to earn anything from their e-money system, it’s about reducing their costs. In comparison, convenience stores want to issue e-money to reduce their cash float. The bottom line is that the of cash at POS in Japan is “already falling” because of e-money.

After the earthquake and tsunami, the offline electronic money systems (such as Edy and nanoco) carried on working so long as there was power and the backup battery systems or generators were working, so you could still pop round to 7-Eleven and buy your staples. In fact, it was people who kept their money in cash who suffered greatly.

In Japan, lots of people — especially older people — keep their life savings in cash in their homes. (The country’s banks pay very low interest rates, so the incentive to deposit that money into bank accounts is lower than in other countries.) This is all well and good, until a tsunami destroys your home and washes your money out to sea.

[From Schneier on Security: Unanticipated Security Risk of Keeping Your Money in a Home Safe]

That’s not to say that people didn’t want cash after the event.

The tragedy playing out in Japan this past week highlighted that in times of crisis, there’s nothing like cash in hand as the universal method of payment. By all accounts the banking system in Japan survived and is functioning well after the earthquake and tsunami – such is the level of disaster preparedness.  But Mizuho, Japan’s second largest bank, reported outages in its payments and ATM networks – coincidentally as demand for cash surged.

[From The end of cash for payments? Not so fast! – Microsoft Perspectives on Payments and Core Banking in Financial Services – Site Home – MSDN Blogs]

So they wanted cash, but did they need it? In this kind of catastrophe, where the online POS network goes down but the ATM network stays up and the ATMs remain stocked with notes, you could see people going and withdrawing cash. But suppose there are no ATMs?

Imagine that there was a magnitude 9 earthquake and a tsunami in Woking (unlikely – our last natural disaster was an ice age in 18,000 BCE) and when I go round to Waitrose to buy some bottled water and rice my John Lewis MasterCard proves useless because the acquiring network is down and the ATM proves useless because the ATM has no power. The store manager at Waitrose can leave the food to rot on the shelves or he can accept a signed IOU. He could accept no sale because of flaws in the electronic payments or he could develop a rational fall-back strategy. We discussed this a couple of years ago, with reference to the famous case study of the Irish bank strike.

The owners of shops and pubs knew their customers very well and so were perfectly capable of deciding whether to accept cheques (or just IOUs) from those customers. And since the customers also knew each other very well, they too could make sensible decisions about which paper to accept.

[From Digital Money: Payments without banks]

If I was the manager of Waitrose after the Woking earthquake, then I would simply accept payment by writing down card numbers, or photocopying driving licences, or taking pictures of customers, or whatever. The core of the issue is identification and trust, not the payment instrument. As many media commentators noted, society in Japan did not collapse. My conclusion: natural disasters are not a convincing argument for cash.


By the way, I case anyone was wondering about the origami cranes that I was giving out in Chicago this morning… My wife is a teaching assistant in a primary school in Surrey. The seven year old brother of one of the boys who was in her class (they boys have a Japanese mother) has been spending two hours every day for the last month making these (they are a symbol of peace in Japan) to raise money for the British Red Cross appeal for Japanese tsunami victims. Consult Hyperion have purchased a hundred of these beautiful and special cranes, so if you come to our office anytime over the next couple of weeks, please feel free to pick one up with our compliments.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Contactless in chaos

When I was in Singapore a few days ago I went to Starbucks in the conference centre where the Cards Asia and NFC World Asia events were being held, accompanied by senior executive from major international financial services organisation (SEXMIF) to get a coffee. When we got there, I noticed a contactless terminal, proudly advertising that it preferred Citibank cards. We ordered a couple of coffees and the delightful young clerk smiled and cheerfully asked for $8.40 or whatever it was. After a theatrical flourish of my splendid contactless Visa card I triumphantly tapped it against the reader. Nothing. I tapped it again. Nothing. I told the attendant that I wanted to pay with contactless. Ah, he pointed out, you can’t because it’s not a Citibank card. I politely explained that it was a Visa card, and there was a Visa logo prominently displayed on the reader. He went off to get his supervisor.


The super appeared to see the problem. Ah, he pointed out, the terminal isn’t ready. He proceeded to re-key the transaction into another POS terminal (they had three: two for cards, as far as I could see, and one for NETS, the domestic contactless purse.)


Nothing. The terminal still didn’t display the invitation to tap and go, although the blue light was on. He told me to tap the card. I told him that it would be pointless, because the terminal wasn’t in the correct state. He insisted. I tapped. Nothing happened. SEXMIF, who was videoing all of this on his phone, presumably so that he could show his management the future of consumer payments, was having trouble keeping the camera still while laughing at me.

We cancelled the transaction out and tried again. It still didn’t work. I rummaged for my trusty Travelex pre-paid MasterCard and paid by swipe. Remember, I do this so you don’t have to.

Not only was using contactless not quicker than paying with cash, it was not quicker than paying with a cheque. Nor, for the matter, was it quicker than walking across the mall to an ATM, drawing out the cash, walking back and paying with a S$50 bill and getting the change in 5-cent coins. What a joke. It’s almost as if a double-agent from the cash-in-transit (CIT) industry has gone under deep cover and is now working for the banks, sabotaging the deployment of contactless from the very heart of the industry. After all, what consumer is going to try tapping their phone on this terminal after they’ve had these experiences with contactless cards?

The next day, on my own, and refusing to accept that contactless deployment had been damaged beyond repair by the combined actions of the acquirers and merchants, I went into another Starbucks to try again. I asked for a Latte (with an extra shot this time) and then asked if I could pay by contactless. The guy told me I needed a “white card” (I think this is what he said). I wasn’t sure what he meant, so I confidently pointed to the Visa logo on my UK Barclays debit card and, expressing full confidence in the global brand promise that has made Visa what it is today, I prepared to tap. He rekeyed the transaction, and, ta da!, the terminal lit up. I tapped! The light went amber, then green! He handed me a receipt that confirmed an offline EMV no-CVM debit transaction, and I wheeled away in triumph.


But the clerk called me back. He told me that they have to swipe the card, even when the customer has paid by contactless. I was incredulous. But he was insistent. I asked him why. He said that they had to. I told him I was sure that wasn’t the case, but he insisted, and by now my use of contactless had caused a queue to build up. I didn’t want to embarrass him — it’s not his fault — but I was really curious what they needed the swipe for. So I handed over my Travelex MasterCard, and he swiped that. It charged me for the coffee again. I looked at both receipts, astonished. Then I gave him back the Travelex card and had him unwind the transaction, then gave him my debit card and he swiped that, for a reason that wasn’t clear to me. When I got home, I logged in to both accounts to see what had transpired. Nothing had been posted to the Barclays account three days after this, and when I tried to log in to Travelex it said “site down for maintenance”. Oh well.

For reference, this is what should happen in the retail environment if a retailer wants to cut cash handling, speed up serving times and increase the average spend: I ask for a coffee, the guy rings up S$6.40 and the terminal lights up, clearly displaying “6.40” and then I tap it with my card/phone and the light goes green and that’s it done. End of transaction.

Licensed operators

France has been in the forefront of the NFC revolution, with an early commitment to cross-industry co-operation, considerable work on standards and models and an aggressive timetable for getting phones into the market. Remember this?

A dozen French cities plan to launch wide-scale contactless payment and information service on mobile phones with the backing of the ministry of industry, reports Les Echos. The city projects approved under the initiative will receive state assistance for consultancy and engineering, but no other subsidies are planned at this stage.

[From Aid from French Ministry of Industry for mobile contactless cities. « Contactless & NFC City League]

You will undoubtedly recall that a few months later, the French mobile operators decided to get together with a processor and form a mobile payments proposition to launch a serious assault on the banks’ retail payment franchise.

Orange, SFR, Bouygues Telecom et Atos Origin créent une société commune pour proposer une plate-forme unique de paiement en ligne, sécurisée par le mobile.


Well they’ve made their first assault on the enemy positions and have been granted a PI licence. Why would they bother, you might wonder, when polls show that the majority of consumers don’t want to use mobile payments?

The 59% of consumers who were against the idea, meanwhile, gave their reasons as: Security (79%)

[From Most French consumers not in favour of mobile payments • NFC World]

The answer is, of course, that consumers don’t know what they are talking about and it’s a waste of time asking them about anything new. Whatever they might say a priori, in all of the pilots and trials that we have been involved in, they really, really, liked mobile proximity.

But there are some real issues, and we need to address them.

Dead phone batteries. Wrong merchant terminals. Terminals turned off. Terminals unrepaired. No terminals at all.

These and other, less obvious glitches suggest contactless technology may not be the mobile payments panacea for tattered magnetic stripes and other problems with plastic cards.

[From Mobile Payments Inheriting the Problems of Contactless – American Banker Article]

Well, yes and no. (I am a consultant, after all). Let’s have a look at these

Dead phone batteries. NFC is interoperable with the existing contactless payments and ticketing systems. As you may have noticed, your Oyster card doesn’t have a battery in it: that’s because it is powered through the electromagnetic field of the terminal you touch it to, and the same is true for the NFC interfaces in phones: if the phone has no battery you may not be able to access your m-wallet to check your transactions, redeem coupons and so on, but you will be able to to use it pay in a shop and ride the subway.

Wrong merchant terminals. I don’t think this will an issue. Right now there are some problems with some cards not being accepted in some terminals, but this is the result of standards problems three or four years ago. The contactless EMV standard should interoperate seamlessly. Some of the terminals are certainly “wrong” from the point of view of consumer experience, but that’s a different thing.

Terminals turned off. Fair enough, I do see this from time-to-time. But it’s a teething problem. There is a problem with terminals being turned off after the merchant has rung up the purchase and then having press some more buttons to turn it on, but that’s an implementation issue.

Terminals unrepaired. I don’t think this is a long term problem. Contactless terminals (since they have no slot or contacts) are considerable more reliable in practice than contact or stripe terminals. Experience from other sectors suggests to me tha tthe cost of maintaining an estate of contactless terminals is less than half the cost of maintaining an estate of conventional terminals.

No terminals at all. This, I think, is the real problem. When I was last in the US, I saw contactless terminals in places where they didn’t really have much impact, like in CVS. But in the places where contactless would have really helped and speeded things up — BART machines, airport carts, Coke machines and so on — nothing.

The point is, that those are real issues that do need dealing with, whereas what the public says are their concerns, such as about the security are, in my opinion, not real issues and it should be handled through marketing communications. Oh, wait…

85% of users said they considered the protocols for operating with the NFC system to be sufficiently secure.

[From Sitges trial results: Consumers pay more often and spend more with NFC phones than with cards • NFC World]

This must be a translation from Spanish, because I’m not sure that “protocols for operating with the NFC system” translates properly in English, but it’s good news all the same. I’m not saying that everything is perfect in the NFC world. Even in France, where progress has been slow despite the commitment of major banks and operators. It’s still a new technology.

The problems are one of the main reasons bank Crédit Mutuel-CIC has held back on launching its m-payment service, according to Patrice Hertzog, payment systems manager for Crédit Mutuel-CIC. He said it has been difficult for the bank’s trusted service manager, Gemalto, to set up and manage the bank’s PayPass application on SIM cards produced by other vendors, such as Oberthur Technologies.

The problems have occurred despite much standards work by the French Association Française du Sans Contact Mobile, or AFSCM, and prior trials involving multiple French banks, mobile operators and vendors.

[From ‘Open’ Battles Break Out Among NFC Vendors Over Android | NFC Times – Near Field Communication and all contactless technology.]

To be honest, this suggests that vendors are not building TSMs from scratch based on the new standards but are putting wrappers around their existing card personalisation systems. That sort of thing is, to me, more of a real issue than incorrectly worrying about what the public think, but whatever. Things are moving. Even in the US, the new technology is getting a foothold and there will soon be TSMs there too.

The joint venture formed by U.S. mobile carriers to launch NFC-based mobile payment… has selected France-based Gemalto to download and manage payment and other secure applications on NFC phones to be used in pilots expected to be held in three to four cities during the second half of 2011

[From U.S. Carrier Joint Venture Chooses a Trusted Service Manager | NFC Times – Near Field Communication and all contactless technology.]

There’s plenty of activity in the US as elsewhere, and since I’ve been looking at the US for clients recently I was interested to read about the work done by the Federal Reserve Banks of Atlanta and Boston. This work suggests that the success factors for the US will rest on the evolution of an open eco system for NFC.

The mobile infrastructure would likely be based on Near Field Communications (NFC) contactless technology resident in a smart phone and merchant terminals.

Ubiquitous platforms for mobile should leverage existing rails, including the ACH network for non-card payments, and support new payment types that meet emerging needs.
Some form of dynamic data authentication would be at the heart of a layered mobile payments security and fraud mitigation program.

Standards would be designed, adopted, and complied with through an industry certification program to ensure both domestic and global interoperability, including a standard to ensure that devices used to facilitate mobile payments do not create any electronic interference problems.

A better understanding of a regulatory oversight model should be developed in concert with bank and non-bank regulators early in the effort to clarify compliance responsibilities.

Trusted Service Managers should oversee the provision of interoperable and shared security elements used in the mobile phone.

[From Mobile Payments in the United States Mapping Out the Road Ahead – Boston Fed]

On that final point, things are already moving.

The joint venture formed by U.S. mobile carriers to launch NFC-based mobile payment… has selected France-based Gemalto to download and manage payment and other secure applications on NFC phones to be used in pilots expected to be held in three to four cities during the second half of 2011

[From U.S. Carrier Joint Venture Chooses a Trusted Service Manager | NFC Times – Near Field Communication and all contactless technology.]

So there’s plenty of activity in the US as elsewhere and plenty of organisations are looking at how the move to mobile proximity may impact their businesses.

A white paper that outlines the survey findings, including how the most forward-thinking financial institutions are building a business case for mobile payments, is available at http://www.fiserv.com/mobilestrategy.

[From Forward-Looking Financial Institutions Focused on Mobile Payments Business Case, Says Fiserv Survey – pymnts.com]

I couldn’t help but think, as I read this, that the very act of building a business case for something like this is fundamentally backward-looking, trying to shoehorn something that is the basis of a new value network into the existing business models. The report says that the factors that the FIs evaluated across these business lines included customer retention and profitability, cost reduction, revenue generation and retention, increased customer engagement and competitive parity. When I looked at the revenue generation part of it, though, it only referred to revenue generation in terms of debit card transactions and keeping the connection to the DDA. This isn’t how forward-looking organisations are thinking about revenue generation from mobile payments, they are thinking about delivering entirely new products and services that are simply not possible in conventional (ie, card) environments, generating revenue from things that banks don’t do.

Google is to run tests of mobile payments at stores in New York and San Francisco in the summer, according to anonymous sources cited by Bloomberg. The search engine giant will pay for installation of thousands of NFC cash-register systems from VeriFone Systems at merchant locations, one source told the wire.

[From Finextra: Google to run commercial trials of NFC at the POS – Bloomberg]

Well, well. So while financial institutions are agonising over the business case, Google is giving out the terminals for free. It’s not hard to see why: they don’t care about the miniscule margins on the payment transaction and arguing about how to slide and dice the merchant fee, they care about building new business around knowing who is buying what and where. So leadership in the NFC space is may well shift away from the payment incumbents. Perhaps the answer to the age-old question about whether banks or operators would control the mobile payments space is… neither.

“We already have a perfectly fine way to make non-cash payments”

On “Slate” there was an article entitled “Paying With Your Phone Is Awesome, Because … Because” with a sub-headline

We already have a perfectly fine way to make non-cash payments.

[From Paying by phone is insecure and unnecessary. – By Farhad Manjoo – Slate Magazine]

Really? That didn’t seem to be the case in my household this morning when my wife was hunting for the chequebook because she needed to pay for a school trip and settle a dentist bill. I wanted to pay my son’s school £20 on Thursday morning because he was going on a school trip, and I turned the house upside down looking for the chequebook, which I couldn’t find. I couldn’t pay them with a debit card, or cash (I didn’t have £20), or credit card, or bank transfer or any of the other “perfectly fine” ways to make the payment. Which boring tale illustrates the real point, that is, not that…

We already have a perfectly fine way to make non-cash payments.

[From Paying by phone is insecure and unnecessary. – By Farhad Manjoo – Slate Magazine]

…but that we don’t have a perfectly fine way to take non-cash payments. Mobile payments will be a disruptive force because the devices will serve both roles. Richard Johnson of Monitise made this point very well at the Intellect Payments Workstream meeting that I chaired last week. But it isn’t only the cheque that is set for extinction because of mobile. Anthony Jenkins, the chief executive of Barclaycard (Britain’s biggest card issuer), said that

“In 50 or maybe even 10 years’ time, we will still be using cash but I don’t think we’ll have plastic. It is comparable to the move from CDs to MP3 music files,” he said. “If I had said 10 years ago that you couldn’t pay with a cheque at the supermarket, you wouldn’t have believed me. That is now the reality, and we see plastic cards going the same way.”

[From End of the road for flexible friend as Barclaycard goes ‘contactless’ – Telegraph]

Now this seems a little far-fetched on first reading. But perhaps, once mobile payments cross the cusp into the mainstream (at, I would guess, around a 25% penetration in the consumer market), the move away from plastic could take place in a generation, much as the move into plastic did from the introduction of the magnetic stripe in the early 1970s.

Coins, paper money and plastic cards are going to be the next casualties. Don’t believe me? Then visit Korea. The only people who own a plastic credit card there are the ones who travel abroad; everyone else uses their mobile phone.

[From Peter Cochrane’s Blog: Near-field tech edges closer | CIO Insights | silicon.com]

The combination of mobile and contactless seems to accelerate the transition: individually they are great, but together they are something special. Mobile payments by themselves have been around forever and have made little impact in the physical world (except for special niches like car parking). I still can’t use my mobile to buy a bottle of cold water from a machine in the Tube.

The first case of a mobile phone being able to be used to handle a payment was in 1998 as an experiment in Espoo Finland just outside of Helsinki, where two Coca Cola vending machines were installed with a mechanism to accept payment by SMS text messaging

[From Communities Dominate Brands: End of Cash? First blog in a series examining the pending doom of minted coins and printed banknotes]

Adding contactless transforms the proposition from fiddling about sending text messages to a quick tap. As far as I can tell, from the pilots that we have been involved in, customers are not a barrier. They like it. So why doesn’t my phone have NFC in it right now, and why doesn’t the drinks vending machine on the Tube have a reader?

Why is it taking so long? As with Faster Payments, the problem lies with the marketing teams in the major banks.

[From The innovative world of UK payments]

I disagree. I’m no fan of marketing departments, but the problem with mobile payments is different. Banks have never had to deal with payments in this way before: they can control ATMs and POS terminals, EMV cards and FPS. But they don’t control mobile, and in particular they don’t control the Secure Element (SE), the tamper-resistant hardware that transforms mobile phones from being content devices to transaction devices. There are different ways of dealing with this, but I think it is fair to reflect that the specific tension between banks and mobile operators remains problematic. In some countries they are joining forces, in others they are forging bilateral agreements, in others they are going their own.

while credit card companies might need the carriers to get into mobile payments, they might soon learn that the carriers don’t need them.

[From In mobile payments, credit card companies might be a third wheel | Econsultancy]

Indeed they don’t, but that has no relevance to the Isis initiative that is the subject of that post because

Verizon, T-Mobile and AT&T are entering into an agreement to let customers pay for products with their smartphones… they are not working with Visa, MasterCard, or American Express on this venture. They’re not working alone either, instead partnering with Discover and Barclays on this venture.

[From In mobile payments, credit card companies might be a third wheel | Econsultancy]

Hhmmm. So in this particular case, the carriers are partnering with a credit card company and a bank. So do they have somewhere to go? Well, let’s return to the point. We don’t have a perfectly fine way of taking non-cash payments, but soon we will because of mobile phones. And there are some dynamic go-ahead organisations that have already recognised this.

the local Girl Scout group there has teamed up with Intuit to accept credit cards using the company’s GoPayment app (and accompanying card reader) for iOS and Android


Back in the 1980s, there were people who said that mobile phones would never sell because there were payphones everywhere (eg, McKinsey). The POS terminal of 2011 is the payphone of 1981.

NFC in the real world

Nick Holland from Yankee Group made a good point in their recent webinar on “NFC Not Just for Cards“. I’m probably only saying it’s a good point because it’s a point that I make too, but nevertheless the addition of an NFC interface to a mobile does change the relationship between the real and virtual worlds.

Put the two things together, in the form of near-field communication (NFC) handsets, and you have something special… Over the coming decade, the mobile phone will shift from being a network end-point to being a pivot between local and global environments, an indispensable and personal security token that bridges physical and virtual commerce.

[From Digital Money: Ten more years of technology]

Nick talked about this “hyperlinking” to the physical world and made the sensible point that while dull persons such as myself are obsessed with payments, the use of NFC will be far wider. This is perfectly correct, and I happened to see an excellent illustration of this general point in NFC World this very morn.

Some 35,000 households in Haiti are receiving ‘clean water’ buckets — which consist of a chlorine solution and an RFID-tagged five-gallon bucket to treat and store water — from the charity Deep Springs International (DSI). On each bucket is an RFID tag which is read during regular visits by community-based health workers who carry NFC-equipped Nokia 6212 phones. Just holding the phone up to the bucket reads the tag and records the visit, then they measure the amount of chlorine in the water and key it in to the handset

[From NFC phones help provide clean water to Haiti earthquake victims • NFC World]

In fact we have consistently advised clients that payments will be a niche. Anyway, Nick is correct, and on the Digital Identity Blog I’ve repeatedly made the point that the use of NFC to support digital identity applications will, in the long run, be far more important than digital money applications. A big step forward in assembling this infrastructure went almost unnoticed last year when the NFC specifications were extended to include the digital signing of data.

The Signature RTD candidate technical specification helps users verify the authenticity and integrity of data within NDEF messages by specifying the format to be used when signing single or multiple NDEF records. It defines the required and optional signature RTD fields, and also provides a list of suitable signature algorithms and certificate types that can be used to create the signature

[From NFC Forum : NFC Forum Announces Specifications to Support Peer-to-Peer Device Communication and Verify Data Authenticity ]

This is important, because if you want to go round touching real world things and have them connect to virtual world things, you need to be sure that they are what you think they are and they are part of the right infrastructure. When I tap on the poster in the restaurant window, I want to be sure that it is a legitimate hyperlink that will take me to a menu and not to a porn site. With this infrastructure in place, all sorts of new businesses become possible (and desirable). It means that someone if going to have organise how exactly the key, certificates and signatures are going to work and interoperate and that someone probably won’t be the mobile operators but a new entrant.

These “pivot” functions, that link the local and remote environment will, I firmly predict, lead to some incredible new applications. Fortunately, some of them will involve payments, which will be really good news for some of our clients.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Free parking

I’ve often mentioned that car parking represents, to me, the prosaic benchmark for e-money. Car parks are a straightforward and daily example of an environment where cash is a pain and e-money would be a better alternative. This is why I made a big deal of the fact that contactless payments never made it to my local car park, where cards have now been supplanted entirely by mobile payments. This is not true everywhere. I think I’ve mentioned before that on-street car parking is an obvious place to start contactless acquiring: no keyboard, no slot, low-maintenance, simple. Westminster started doing this last year.

From January and over a three-month period, 20 pay and display machines in the West End will be retrofitted with wave-and-pay card readers, so motorists will be able to pay car parking charges by waving a credit or debit card at a meter. According to the local authority, the project is intended to eliminate the need to carry cash around or enter chip and pin details to pay to park.

[From Westminster Council introduces contactless parking payments – 28 Oct 2009 – Computing]

I’m going to try find out what customers think about this approach. Franky, I’m sure they would rather use their Oyster cards, and here’s one reason why…

The machines also incorporate a security function that requires cardholders to confirm their identification with a chip and pin transaction on a regular basis.

[From Westminster Council introduces contactless parking payments – 28 Oct 2009 – Computing]

Hhmmm. This means having to having both a slot and a keypad, which raises costs significantly, and annoys customers when the contactless transaction fails and they are asked to insert the card and enter the PIN. I’ll put in a call to see how this went when I’m back in the office sometime. Meanwhile, the alternative apporach, of using mobiles, continues to gain ground, and it’s not only in Woking that the mobile has trumped the card.

North Devon Council has replaced its Smart card facility with a more modern, pay over the phone system called ‘RingGo’.

[From North Devon Gazette – Council winds up pre-pay parking Smart cards scheme]

It’s not favouritism, although I have mentioned RingGo here before, but I can’t help but notice that when I first went to see them (to interview them for a podcast) I thought that they were a company to watch. I’m actually one of their customers, because they operate the mobile parking at Woking station.

Councils, rail operators and other car park providers across the UK are ditching smartcard and scratchcard parking schemes in favour of streamlined, paperless RingGo.

[From RingGo Proves the Power of Paperless Parking]

I think I’ll try and get some of these guys along to the Digital Money Forum 2012, as it will be useful to learn some of the experiences from the front line. Meanwhile, I can’t help noticing that not everyone wants to remove cash from the car park. Take, for example, Wokingham council. It car park machines (according to The Daily Telegraph of 26th February 2011, p.4) took in £982,057 last year but only issued £945,417 of tickets. The discrepancy, as you might expect, comes from the machines that don’t give change, a form of institutionalised extortion. Simply arithmetic reveals that hapless motorists are thus facing a 4% service charge for using cash. It’s time to take action: councils should start making car parks cash-free as soon as possible and learn to cut their cloth. But if the car parks are cash free, and not everyone is using mobile payments, and the banks haven’t issued contactless cards to everyone yet, then how to close the gap? Well, why not have local prepaid cards that function as “town cards” as well.

PXT Payments (PXT, formerly Parcxmart) an electronic payment solutions provider, today announced the launch of its new chip-based, secure smart debit cards, designed to create a safe, local currency that boosts consumer spending in municipalities nationwide. The town of Brookline, MA, will be the first town to adopt both Parcxmart and the smart debit card program.

[From PXT Launches Chip-Based Smart Debit Card for Cities, Towns, BIDs | Earth Times News]

I’m really interested in this kind of thing. It illustrates two points that I have been making for some time: first of all, it emphasises the role of transport in the evolution of new payment systems and secondly, it touches on the role of local parallel and alternative payment systems as a potential growth area. Fortunately both transport payments and alternative payments have their own expert panel discussions set aside at the 2011 Digital Money Forum so we’ll be able to explore both topics in detail. (Coincidence? You be the judge!)

Holding court

When I was in Beijing I decided to try and eat some “real” Chinese food as opposed to the stuff in the hotels and tourist joints. In one of the guide books I spotted a suggestion for a cheap food court downtown where you can try and bunch of different dishes from different cooking traditions. So off I went. It was great, despite the fact that the menus and adverts were all in Chinese with no English translation. So I walked around and pointed at things that looked good (eg, not the skinned bullfrogs). I had some great food, learned to eat fried egg with chopsticks and had some wonderful fresh juice too. So why am I posting this here?

Well, the court had an interesting payment system. At the entrance is a booth where you buy a prepaid contactless card, much like an Oyster card. Inside the food court – which was big, with lots of stalls – there is no cash. When you buy something, they tap your card and off you go. Fast and convenient. When you leave, you either keep the card for next time or you can return it to the booth for a refund.

This seemed very beneficial to the retailers: no cash handling, no wasted counter space, no “shrinkage”, no counting, no security, no bank runs. Why don’t they do this at Glastonbury? Or Westfield? Or in the food court in The Friary in Guildford? Put it in the lease that the retailers have to have contactless terminals and offer a prepaid mall-branded card (like they do at the Trafford Centre, but rechargeable) with special offers. Just a suggestion.

China as a whole is cash-centric, but in Beijing many of the shops and restaurants take cards. I’ve been using my Travelex prepaid Visa card US dollar card while here and I have to say it has worked perfectly so far. Some shops ask for the PIN, some ask for PIN and signature, some ask for signature, but it’s always worked. And it worked in the ATM when I quickly needed to cash for a taxi. I left my credit cards locked up in the room safe and only took cash and prepaid when out and about.

Talking about cards, I had an annoying experience yesterday. It was a lovely spring day and the wind had blown away the pollution, so we looked in the guide book and ended up deciding to go for a bike ride (Beijing is very flat). We choose Bike Beijing and booked a tour. When we got there, however, it turned out that they don’t take cards. And I didn’t have enough cash. I was thinking about borrowing one of their bikes to cycle to an ATM when they mentioned that although they don’t take cards, they do take PayPal on their web site. Hurrah! So using my iPhone I logged into their web site and paid with PayPal. Off we went.

When I got back to the hotel that night, however, there was an e-mail from PayPal saying that my account had been restricted and that I should log in and change my password, which I duly did. The next day I got an embarrassing e-mail from the nice guys at Bike Beijing saying that PayPal had cancelled the transaction. So I figured, OK, this is some annoying fraud detection system, so I’ll connect via VPN so I don’t look like I’m in China and then sort it out. I logged in and tried to send the guys their money but got “Your account is limited. Please check your Account Overview page for messages about resolving this problem.” In order to remove the limitation, I had to verify my location through my home telephone number (which, of course, I couldn’t do because I was in China and no-one was in at home), so I tried to add my mobile number to the account, but however I typed it in I was told “Mobile Telephone: The phone number is not properly formatted.”, presumably because it’s not in a US format. I gave up.

I ended up having to promise the guys at Bike Beijing that I will sort this out when I get back to the UK and then send them their money. I promise I won’t send them a cheque.

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