All the 12 Payment Enabling Technologies & 54 Illustrative Companies

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All the 12 Payment Enabling Technologies 54
Illustrative Companies
April 2014
White Paper written by Lets T_at_lk Payment and
Knowledgefaber
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• Table of Content
• Payments enabling technologies
  Page
• Near field Communication 1
• QR and Bar Code 2
• Bluetooth Low Energy 3
• Mobile Card Reader 4
• Email/Chat/ Phone 5
• Biometric 6
• Radio frequency identification (RFID) 7
• Sound Wave 8
• Magstripe Emulation 9
• SMS/USSD, Mobile internet
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• HotKnot 11
• Dynamic Magnetic Stripe
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Near Field Communication
Near Field Communication (NFC) NFC is in its
most common avatar is a Tap Pay solution that
can be used for retail offline payments, transit,
entertainment and numerous other touch points.
Any unattended payment situation such as a
parking lot presents huge opportunity. For e.g.,
clipper card or any cashless cards being used
today for public transport can be integrated into
the ubiquitous phones itself thereby making the
public transport payments easier
How it Works Uses radio communication to
establish a connection between two devices in
close proximity.
Companies involved
Use Case Payments, file sharing, transit,
ticketing, mobile top up, advertising
Strengths Easy to use (tap and go)
Weaknesses Limited acceptance to date too many
stakeholders requires investment in NFC-enabled
terminals
Security Risks Electronic eavesdropping, data
modification
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QR Bar Codes
A Quick Response (QR) code is a 2d readable
bar-code designed originally by DENSO Corp. in
1994 for Japanese auto-makers to track parts.
With smart phones, and QR codes, customers can
stores their banking account information on their
phones, go into a store pick out an item, and
instantly scan its barcode and check out.
How it Works Two-dimensional optical label
contains data that can be read by any imaging
device
Companies involved
Use Case Payments, advertising, loyalty,
tracking, ticketing, top up
Strengths No special hardware required can be
used with any smartphone Cheap and easy to create
Weaknesses Lack of familiarity among users
camera phone and specific reader software
required
Security Risks Malicious codes
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Bluetooth Low Energy (BLE)
BLE (e.g., iBeacons) Bluetooth low energy (BLE
or Bluetooth smart) is a wireless computer
network technology which allows connected devices
to communicate with each other while keeping the
energy consumption by the devices at a very low
level.
Companies involved

• How it Works
• Uses radio frequencies to passively connect
  BLE-enabled devices to beacons

• Use Case
• Payments, geolocation, shopping, transit, events

• Strengths
• Low power requirements, low cost, most mobile
  phones, tablets, and computers are compatible

• Weaknesses
• Possibility of information overload to customers

• Security Risks
• Susceptible to eavesdropping attacks, but
  frequency hopping reduces exposure

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Mobile Card Readers
These include Mobile card readers, Chip and Pin
card readers that insert into the audio jack of
the phone

• How it Works
• Dongles plugged into a mobile device allow
  swiping of traditional mag-stripe cards.

Companies involved
Use Case Retail Payment Acceptance

• Strengths
• Portability, ease of use, low cost

• Weaknesses
• Varying degrees of security (and consumer trust)
  lack of durability Merchant reluctance
  (particularly micro)

• Security Risks
• Can be modified to siphon card data, but hardware
  can be modified

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Email/Chat/Phone
You can transfer money through email (Dwolla,
Paypal, Google), through Chat (Wechat from
Tencent), and phone (Dwolla, others)

• How it Works
• Users can send P2P payments with linked debit
  accounts. Funds are typically transferred using
  ACH network.

Companies involved

• Use Case
• P2P funds transfer bill payment

• Strengths
• Speed of transaction, ease of use no new account
  (i.e. PayPal) Little to no cost to users (if
  used with bank account)

• Weaknesses
• Security is low

• Security Risks
• Apps have few security features (i.e. Square Cash
  has no passcode), but data transmissions are
  encrypted

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Biometric
Biometric identification basically means
identifying the individual through certain
physiological behavioral aspects of the
individual. Involves use of different scanners
designed to store specific biological traits of
the person. Behavioral traits can also be
recorded in terms of signatures and vocal
characteristics
Companies involved
How it Works Consumers accounts linked with
biometric information which is used as part of
two factor authentication to complete a txn

• Use Case
• Transaction authentication, passwords, etc

• Strengths
• High level of security no money or cards are
  needed to complete a transaction Encrypted
  biometric database

• Weaknesses
• Requires users to setup a profile preemptively

• Security Risks
• Mimicry attacks brute-force attacks

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Radio frequency identification (RFID)
Radio frequency identification (RFID) is the
wireless non contact use of radio frequency
electromagnetic fields to transfer data, for
automatically identifying and tracking tags
attached to objects. The tags contain
electronically stored information. According
to research and markets, the global RFID market
is expected to generate revenues worth 3,925 Mn
in 2016, increasing at a CAGR of 29.3, from a
value of 1,087 Mn in 2011.
Companies involved

• How it Works
• RFID is the basis for NFC - Uses radio
  communication to establish connection between two
  devices in close proximity.

• Use Case
• Payments, transit, tolls, vending machines and
  tracking

• Strengths
• Easy to use

• Weaknesses
• Only permits one way communication between
  devices typically can only be used for low value
  transactions

• Security Risks
• Eavesdropping data modification

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Sound Wave
These are payment systems that use sound waves to
connect smartphones with another device. Secure
payments are made over the cloud with the help of
sound based technology and data is exchanged
through smartphones microphones/speakers

• How it Works
• White noise (transaction specific and valid for a
  few minutes) generated by a Smartphone carries
  digital information

Companies involved

• Use Case
• Vending machines, mobile top up, phone-to-phone
  information transfer

• Strengths
• No personal or account data is stored in the
  sound transmission

• Weaknesses
• Will likely support only small value payments

• Security Risks
• Stolen phone is the primary risk, offset by the
  fact that these are small ticket transactions

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Magstripe Emulation
A patent-pending technology, MST is similar in
nature to that used in inductive charging. The
technology basically involves transmission of
mag-stripe data stored on the mobile device to
the magnetic stripe reader at the POS terminal.
The devices transmitter is used to send the
mag-stripe data over-the-air to emulate just a
normal card swipe

• How it Works
• A key fob generates a magnetic field that can be
  ready by an existing POS terminal

Companies involved

• Use Case
• Payments, transit

• Strengths
• Merchants do not need to upgrade hardware

• Weaknesses
• Cannot be used with certain POS devices can be
  cumbersome to use EMV makes the solution clunky

• Security Risks
• 4 digit pin card numbers can be skimmed

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SMS/USSD, Mobile internet
A patent-pending technology, MST is similar in
nature to that used in inductive charging. The
technology basically involves transmission of
mag-stripe data stored on the mobile device to
the magnetic stripe reader at the POS terminal.
The devices transmitter is used to send the
mag-stripe data over-the-air to emulate just a
normal card swipe
Companies involved

• How it Works
• User sends a payment request via text message and
  the charge is added to user's mobile phone bill
  or online wallet

• Use Case
• Payments, funds transfer, bill pay, top up

• Strengths
• Easy to use cheap user doesn't have to enter
  bank/card info no personal/account data is
  transferred

• Weaknesses
• Functionality is limited due to technology

• Security Risks
• Limited security risk

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HotKnot
A near field communication technology, it was
announced by MediaTek in December last year. The
technology uses the projected capacitive touch
panels of devices and does not require the
embedded NFC chip or the antenna to work.

• How it Works
• The technology involves data transmission between
  devices through signal transmission between the
  touch panels which get coupled. It uses low
  transmission power but the data transmission rate
  is far lower than NFC technology

Companies involved

• Use Case
• Payments, funds transfer

• Strengths
• Transmission rate is far lower than NFC technology

Weaknesses Security is low

• Security Risks
• Susceptible to attacks through pairing

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Dynamic Magnetic Stripe
The technology can be found in form of a device.
Such devices have been developed by firms like
the hardware startup Coin as well as Omne. Such
devices are capable of acting as a standard
credit card but capable of acting as an
integrated form of multiple credit cards

• How it Works
• The device comes with companion android and iOS
  app used by the end user to store multiple card
  data either by taking pictures of cards or by
  using headphone jack dongle. The swapping of card
  info can be done using BLE or other pairing
  options

Companies involved

• Use Case
• Payments, funds transfer

• Strengths
• Devices are capable of storing different types of
  card data gift cards, ATM cards, credit cards.No
  need of carrying multiple cards and also does not
  require the use of cellphone for payment.

• Weaknesses
• May not be compatible with EMV chip enabled cards

• Security Risks
• Currently such devices do not provide a security
  for accessing it

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Authors Lets T_at_lk Payment Lets Talk Payments
is a global initiative which is focused on US,
Europe and Asia for covering innovations in
payments. It is being build to become a complete
resource (online digital news, analysis, events,
payment product/feature reviews, surveys,
interviews and videos) for the payments industry.
The company is based out of Charlotte (USA) with
teams and contributors across the globe.
Knowledgefaber Knowledgefaber is a fact
based research and consulting firm focusing on
emerging opportunities in emerging economies