New Mobile Payments: Evolution at the Speed of Light

If the eyes are the windows to the soul, they could just as well become windows to your bank account at some point in the future. Science fiction or mere evolution? With the arrival of payment methods such as chip cards and contactless technology for cards or mobile phones, the world of payment solutions is undergoing major change.

This blog entry is derived from an interview with Nicolas Guay, senior manager, Payment Solutions, at ACCEO Solutions. “Les nouveaux paiements mobiles” aired on June 11, 2016, as part of the radio magazine “Les éclaireurs” on ICI Radio-Canada Première. Listen to the entire interview (in French only)

At the beginning: Pieces of cardboard or plastic

Payment by smartphone has been making waves for some time thanks to Apple Pay, which was recently launched in Canada. Mobile payment has been available on the Canadian market for about a year on Android platforms, but without Apple’s powerful marketing machine, it flew somewhat under the radar.

This technology is just the latest landmark in the evolution of payment solutions, which has kicked into high gear in the last 15 years. In the ’60s and ’70s, the first payment cards were simple pieces of cardboard or plastic on which were written account numbers. The merchant presented with one of these cards had to place a phone call to authorize the transaction.

From magnetic stripe cards to chip cards: a long period of stability

with one of these cards had to place a phone call to authorize the transaction. The first revolution was the invention of magnetic stripe cards in the early ’70s. These were adopted and remained in use for many years, marking a period of stability in the world of electronic payment. Only in the ’90s did we see a new technology emerge when the chip card was invented in France. Although the French have been using these cards for about 25 years, chip cards did not become the standard until the new millennium. Visa and MasterCard were among the earliest advocates of this standard, thus promoting its global deployment. In Canada, chip cards appeared around 2008.

In the United Sates however, chip and PIN payment cards are still barely used. When making a purchase by credit card, it is still common to be asked to sign the receipt. There are several reasons why our neighbours to the south are the last in the world to adopt this method of payment. The US is a huge and complex market with many card-issuing banks and countless retailers, many of which have tried to resist the adoption of chip cards for as long as possible.

Contactless payment, the innovation behind mobile payment

After the chip card came contactless payment, a forerunner of mobile payment. Contactless payment allows us to pay for our purchases by tapping our card on a terminal or simply by bringing it closer to the terminal. This type of payment uses radiofrequency communication between the card and the merchant’s terminal or card reader. The speed and convenience of this payment method are decisive in the widespread adoption of this technology in Canada. The other main advantage of the contactless card is that just as the chip card, it is technically impossible to clone.

Payment by smartphone and payment by contactless card are essentially identical. An interface on the smartphone simulates a contactless card and, when the phone is tapped on the terminal, it works just the same.

What about security?

The account information in your phone is protected by a sophisticated cryptographic process, and the degree of information security involved in mobile payments makes them no more risky than contactless payments. What would happen if your contactless card or smartphone was stolen? With the card, the thief could enjoy a nice shopping spree in the following minutes. Fortunately, card-issuing banks offer the Zero Liability Policy, which provides that financial institutions bear the losses in cases of fraud. If you have taken the necessary measures, you can benefit from even more protection with your smartphone. Setting an unlock code and the remote phone lock function can help give you peace of mind about the security of your personal data.

After the PIN comes the thumb?

So what does the future hold for mobile payment? If Apple is to be believed, biometrics could very well emerge. The company is putting forward the use of fingerprints as a means of identification. The practical aspect of this technology will without a doubt help its adoption. However, it must be pointed out that biometrics has some theoretical limits. For example, if you are robbed or if you disclose your PIN, you can always change your PIN. But if, somehow, your thumbprint data are compromised, of course you cannot change your thumb.

Payment technologies are progressing in terms of both security and practicality for consumers. Merchants are not left out: fast and secure payments, as well as happy consumers, can only be good for business!


About the author

Nicolas Guay

Nicolas Guay

Senior Manager, Payment Solutions

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Nicolas Guay has a bachelor’s degree in computer science and over 20 years of experience in information technology, including more than 15 years in the payment field. Nicolas has been working at ACCEO Solution’s Payment Solutions unit since 2001. The Payment Solutions team, which is made up of approximately 100 seasoned professionals, is Canada’s largest and most important pool of electronic payment experts. In recent years, Nicolas has played a major role in the migration to chip and contactless technologies, working closely with many Canadian financial institutions.

ACCEO’s expertise covers all areas of electronic payment, and Nicolas is both delivery manager and product coordinator for ACCEO’s e-ACCEPT and Perceptech online payment services.

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