Monday Mar 03, 2014

Two Really Cool Approaches to Payment

As if the oodles of emerging payment schemes weren't enough, two more approaches have arrived on scene.  Aside from enabling your phone to make payments, they are very unique and well worth some consideration.  The first solution is called LoopPay, and its creators claim it works on 90% of existing payment terminals without any new hardware.  Install the wallet on your phone and plug-in either the fob or charge case, then tap on any existing payment terminal to pay using your credit or debit card.  Now think about that.  How's it done?

No, they're not using NFC or bluetooth to communicate with the terminal.  That would involve additional or updated hardware, and I said this works with existing terminals.  Are they using sound like ShopKick?  Nope.  QRcodes?  Good guess, but no.  Think about it from the terminal's perspective.  The only way to enter card data is the keyboard or the magstripe.  Wait for it.  Yes, the phone via the fob emits a magnetic field that contains the track data.  Its pushing the track data into the magstripe head of the terminal.  From the terminal's perspective, we have a traditional, card-present transaction.

Here's the rub: like I said, it only works on 90% of the terminals, and in real-world tests maybe even less.  Its a tough sell for banks and retailers to say "works most of the time" to their customers.  Obviously there are security concerns as well, but I'm assuming they are able to vary the track data just as EMV would, so its at least as secure...maybe.  But then again, I'm still not convinced that tapping my phone is any more efficient than swiping inserting my card.

The second approach is a bit more traditional.  If you'll recall, Google Wallet only worked on certain phones when it was first released.  iPhones were out because they don't support NFC, and only select carriers were supported with Android.  That's because the wallet made use of the secure element, a place were crypto algorithms are run and data can be secured.  The secure element can be built into the phone, but most of the time its in the SIM chip that's owned by the telcos.  And as Google found out, if the telcos don't allow access to the secure element, you can't do NFC payment.

That's where SimplyTapp enters the scene.  They're advancing Host Card Emulation (HCE), a method by which you can do NFC payments using a secure element that resides in the cloud instead of the phone.  Android has included HCE in their latest version, KitKat, so now all NFC-capable phones are ready for NFC payments.  The big news here is that banks are now free to create payment schemes without getting approval from the telcos.  Both MasterCard and Visa recently endorsed HCE so I'd expect existing banking applications to begin adding the ability to pay soon.

So where does that leave us?  The telcos continue to want a piece of mobile payments via Isis; Google gets access to more handsets; banks are well positioned to support their own mobile payments; MCX continues to focus on reducing merchant fees; and Apple is the wildcard.

Thursday Aug 30, 2012

5 Ways to Determine Mobile Location

In my previous post, I mentioned the importance of determining the location of a consumer using their mobile phone.  Retailers can track anonymous mobile phones to determine traffic patterns both inside and outside their stores.  And with consumers' permission, retailers can send location-aware offers to mobile phones; for example, a coupon for cereal as you walk down that aisle.  When paying with Square, your location is matched with the transaction.  So there are lots of reasons for retailers to want to know the location of their customers.  But how is it done?

I thought I'd dive a little deeper on that topic and consider the approaches to determining location.

1. Tower Triangulation

By comparing the relative signal strength from multiple antenna towers, a general location of a phone can be roughly determined to an accuracy of 200-1000 meters.  The more towers involved, the more accurate the location.

2. GPS

Using Global Positioning Satellites is more accurate than using cell towers, but it takes longer to find the satellites, it uses more battery, and it won't well indoors.  For geo-fencing applications, like those provided by Placecast and Digby, cell towers are often used to determine if the consumer is nearing a "fence" then switches to GPS to determine the actual crossing of the fence.

3. WiFi Triangulation

WiFi triangulation is usually more accurate than using towers just because there are so many more WiFi access points (i.e. radios in routers) around. The position of each WiFi AP needs to be recorded in a database and used in the calculations, which is what Skyhook has been doing since 2008.  Another advantage to this method is that works well indoors, although it usually requires additional WiFi beacons to get the accuracy down to 5-10 meters.  Companies like ZuluTime, Aisle411, and PointInside have been perfecting this approach for retailers like Meijer, Walgreens, and HomeDepot.

Keep in mind that a mobile phone doesn't have to connect to the WiFi network in order for it to be located.  The WiFi radio in the phone only needs to be on.  Even when not connected, WiFi radios talk to each other to prepare for a possible connection.

4. Hybrid Approaches

Naturally the most accurate approach is to combine the approaches described above.  The more available data points, the greater the accuracy.  Companies like ShopKick like to add in acoustic triangulation using the phone's microphone, and NearBuy can use video analytics to increase accuracy.

5. Magnetic Fields

The latest approach, and this one is really new, takes a page from the animal kingdom.  As you've probably learned from guys like Marlin Perkins, some animals use the Earth's magnetic fields to navigate.  By recording magnetic variations within a store, then matching those readings with ones from a consumer's phone, location can be accurately determined.  At least that's the approach IndoorAtlas is taking, and the science seems to bear out.  It works well indoors, and doesn't require retailers to purchase any additional hardware.  Keep an eye on this one.


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