Mobile Payment Showdown
Technology battle breaking out between near-field communications, on-screen barcodes
NEW YORK -- In what may be the first of many deliberate actions to alter the course of mobile payments, the chief technology officer behind one of the higher-profile mobile-wallet platforms has accused several large chain retailers of turning off a form of contactless payment in their point-of-sale registers, essentially opting for one technology over another.
The retailers--including at least one major convenience store chain--have allegedly turned off the near-field communications (NFC) option in their POS devices, choosing instead a scanned barcode that appears on mobile-phone display screens, according to reports.
"This is an industry issue," said Scott Mulloy, CTO for the New York City-based mobile-wallet platform Isis. In an email to CSP Daily News, Mulloy said, "A handful of retailers are moving counter to the broader industry movement towards more secure payment technologies. By turning off contactless acceptance, these retailers are effectively eliminating a more secure payment option for their customers. This will affect millions of contactless cards already in circulation as well as new mobile wallet innovations, including those enabled by HCE."
HCE stands for "host-card emulation," which is an open platform that allows for a mobile transaction to happen without a cardholder identification aspect known as the "secure element." Currently, phone carriers have control over the secure element, according to a report by the publication Computerworld, Framingham, Mass., which originally quoted Mulloy regarding the NFC conflict in an article published earlier this week.
"When a merchant with thousands or even hundreds of locations turns off contactless and chooses a less section option, it's significant for consumers and the broader payments industry, as we have seen with recent high profile data breaches," Mulloy said.
The Computerworld report tied the NFC decisions to retailers signed onto the Merchant Customer Exchange (MCX), Dallas, which is also a mobile-wallet platform that has garnered support from retailers like Best Buy, Dunkin' Donuts and 7-Eleven.
A spokesperson for MCX told CSP Daily News, "MCX cannot speak on behalf of its member merchants," and would not comment on any moves to test any specific mobile-payment technology.
"While I have seen some merchants turning off this capability, I'm not sure that you can draw a line directly to MCX as the cause," said Julie Conroy with Aite Group, a Boston-based consultancy following these payment trends. "Best Buy was one merchant, and they made their move back in 2010, before MCX was even announced. I think it these moves underscore the contentious nature of the relationship between the networks and merchants--a relationship that is perhaps today more acrimonious than ever. Merchants have a number of ways of showing their displeasure with the networks--they do it through the courts, by trying to form their own payment network and also by turning off capabilities such as contactless."
When reached by CSP Daily News, Dallas-based 7-Eleven would not confirm or deny its own actions on the matter. In an emailed statement, spokesperson Margaret Chabris said, "We support MCX and its approach to mobile payments. Also, 7-Eleven is working to make payments and offers more convenient for our mobile customers."
She went on to clarify that NFC and a data-security method backed by the major credit-card companies called "Europay MasterCard Visa" or EMV are two separate technologies.
"The EMV acceptance requirement [from the major credit cards] is Oct. 2015, and for many networks, the specs are still being defined," Chabris said. "We take exception to Isis stating that we turned off EMV; EMV has not yet been implemented in the U.S."
For more on this topic look to the February issue of CSP magazine and its "Mobile Anarchy" cover story.