By Steve Doswell
Mobile payments have come a long way in a relatively short amount of time and have solidified their place amongst mainstream payment methods. Their share of the payments market will now quickly accelerate. Here’s why.
Consumer comfort. Mobile bill payment has gone from exclusively serving the tech-savvy community to universal, everyday use, with millions of active users. Banks have fueled this phenomenon, offering a wide array of services available through mobile apps, including cheque cashing, balance transfers and foreign exchange. We are nearing the point at which every service offered by a traditional in-person bank teller will be available via mobile banking. Mobile payments represent a logical progression of everyday banking activities going mobile.
Incorporating biometrics for security. While biometrics security-based technology has been around since before the Internet, it has only recently started playing a key role in the lives of consumers. Biometric recognition has become the standard for smartphones via features like facial recognition and fingerprint scanning. App developers have followed closely by implementing biometric security features such as fingerprint-authenticated gateways on their apps, which helps with authentication by eliminating hackable passwords as well as improve access speed.
Mobile wallet prevalence. Apple was the pioneer in mobile wallet technology, opening the floodgates with Apple Pay on its smartphones. Competitors followed closely behind, with Samsung Pay, Microsoft Wallet and Android Pay. Most major financial institutions now offer their own branded wallets. Anyone with a smartphone thus has multiple wallet adoption options.
Near Field Communication (NFC) universality. NFC is the technology that facilitates mobile payments by allowing two electronic devices to exchange selected bits of information. This technology is most recognizable in mobile transactions like tap payments and scan payments. NFC technology creates a transaction code which allows the customer’s payment card information to be directly hidden from the transaction. This technology has become readily available at merchants and points of sale (POS) globally. It is also the technology utilized by most mobile wallets in North America and has become the backbone of the mobile payment industry on this continent.
Transactional friction reduction. As more devices become equipped with mobile payment functionality, the distances between buyers and sellers continues to decrease. Virtual home assistants through Google and Amazon’s Alexa offer commands to purchase goods with payment card information readily on file. Retailers are seeing the benefits and are opting to offer their customers mobile payment options designed to provide convenience as well as satisfying the digital and mobility expectations of their customers.
Mobile payment impediments
In spite of the positive results to date and the energy which is driving the use of mobile devices for purchases, there remain certain market obstacles that are limiting the rate of growth and use of mobile payments.
- Data security. A key issue with mobile payments has been safeguarding user data against hackers and data breaches. Besides hacking databases containing users’ payment and banking information, the “man-in-the-middle” scenario remains a threat. In such cases the hacker intercepts communication between buyer and seller or bank and recipient and uses the information to their advantage; and
- The adoption paradox. Consumers want to use their phones as their standard payment device. Paradoxically, most of today’s “mobile payment” offerings are largely limited to in-store at the POS. Thus, mobile payments today are actually not very mobile at all. They compete with debit and credit card taps and offer the consumer little advantage to use the phone over cards when already standing at a POS.
For payments to be truly mobile, customers must be able to download payment carts outside of store POS such as at home (in front of TVs or computers), outside from digital signs or billboards, from posters on buses and trains and from signage in stadiums. But to date no existing technology offers instant gratification by purchasing or responding to a call-to-action directly from an ad or broadcast content, wherever one may be.
Enter Soundpays mobile wallet solution
Soundpays offers ultrasonic sound wave technology via an SDK (software development kit) to deliver product purchase or call-to-action information directly from advertising or broadcast content to mobile devices. The solution facilitates mobile payments for enterprises on two levels:
- It can convert a simple third-party mobile app into a mobile wallet, without the app brand having to go through any of the significant effort to create a secure and reliable wallet.
- It can enhance the reach and relevance of mobile wallets by creating transaction carts from non-POS environments and serving these transactions to the wallets for processing.
Upgrading an app to a fully-functional wallet
The Soundpays SDK uses advanced security encryption and tokenization to provide a highly secure mobile wallet back end. When the SDK is deployed, the third-party app users’ payment card information is never stored on the mobile device or in our servers nor is it broadcasted during the transactions.
All of our communication is encrypted through secure Internet connections. After initial sign-up the user of the branded app or wallet (with Soundpays “inside”) is granted a secure token ID used as a reference point for transactions sent to merchant processing gateways. By deploying the Soundpays SDK, a third-party app provider can upgrade to wallet capabilities without having to get involved in the complex world of payments processing and security.
Enhancing existing wallets
Today’s mobile wallets, whether QR (quick response) Code or NFC-based, function solely at a POS. By integrating Soundpays technology into third-party wallets, the wallet users are suddenly able to access product shopping carts from a multitude of non-store locations. This creates more purchase decisions and drives more payment transactions into the wallet processing mechanism.
Each transaction enabled by Soundpays technology is intent-based, meaning that the customer user must open the app and activate the listening process and finally confirm the purchase. On the off chance that someone would duplicate one of our sound waves, it would be functionally impossible for a hacker to shift the destination account in the transaction. The fact that it is functionally impossible to force unwanted transactions onto a user’s account effectively nullifies the risk of fraud. Every party involved in each transaction must be authenticated on Soundpays’ payment server.
Mobile payments have risk, just like most anything else in life does. The Soundpays SDK has been designed to be inherently secure while offering its customers the ability to provide both their consumers and retailers the opportunity to take full advantage of the power and convenience of mobile payments.
Steve Doswell is CEO of Soundpays (www.soundpays.com). Steve has 20-plus years as an executive with tech companies including co-founder or early member of executive teams with three start-ups collectively raising almost $200 million (including two successful IPOs) prior to being acquired. He has held executive positions with Ericsson Canada and AOL Canada.