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Beat The Banks With

Robocoin 2.0 - Bitcoin ATM

Mobile Payments Becoming Massively Popular in China

ALSO INSIDE:

Hackers Steal Billions of

Usernames & Passwords

From Internet

2F E A T U R E D A R T I C L E S

Felix ShipkevichFOUNDER

Jason MongielloDIRECTOR OF MARKETING

GRAPHIC DESIGNER

Kevin XuEDITOR

CONTENT STRATEGIST

Andrew BarnesMANAGING DIRECTOR, EMERGING PAYMENTS

Brad RickerbyCONTRIBUTING WRITER

Eric WagnerCONTRIBUTING WRITER

Monique ZamirCONTRIBUTING WRITER

Jane GenovaCONTRIBUTING WRITER

Atifa ImranCONTRIBUTING WRITER

Melanie Macinas CONTRIBUTING WRITER

David CrossCONTRIBUTING WRITER

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M A R K E T P L A C E

T E C H

E M E R G I N G P A Y M E N T S

Exclusive Q&A with Gemalto’s Amol Deshmukh, VP of Mobile Financial Services

We speak with Amol Deshmukh, VP of Gemalto’s Mobile Financial Services division, on leading security in the realm of mobile payments, innovating in wearable tech, and the tricky issue

of consumer adoption.

S P O T L I G H T A R T I C L E

4 - Apple’s Mobile Payments Play Takes Shape

3 -Scan it And Scoot: Instant Shopping Coming Soon from JumpQ

I N D U S T R Y V O I C E S

5 - Hackers Steal Billions of Usernames and Passwords From Internet

A U G U S T 4 - 8 , 2 0 1 4

6 - P.F. Chang’s Releases Information on Extent of Security Breach

7 - Money20/20 Introduces Payments Hackathon

8 - Beat The Banks With Robocoin 2.0

9 - Global Payments Teams Up with BitPay

11 - Newegg Offers Visa Checkout for Seamless Checkout Experience

10 - New App Locks Debit Cards for Added Security

R E G U L A T I O N

14 - European Court of Justice to Rule If VAT Applies to Bitcoin

16 - Exclusive Q&A with Gemalto’s Amol Deshmukh, VP of Mobile Financial Services

12 - Square Acquires Caviar, Begins Offering Food Delivery Services

13 - Mobile Payments Becoming Massively Popular in China

T E C H

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Scan it And Scoot: Instant Shopping Coming Soon from JumpQBy: Eric Wagner

Mobile point-of-sale pioneer, JumpQ is getting a jump on the digitization of the supermarket with a hot new app launching

mid August.

Claiming that it will revolutionize the way people shop and interact at the neighborhood store, “Our aim is to allow customers to spend less time waiting in lines and let them get back to the things they’d rather be doing,” said Jason Musyj, Founder of JumpQ. “The level of convenience that users have grown accustomed to from their e -commerce experiences has not translated over into offline shopping, and our goal is to completely redefine the traditional shopping experience.”

The app works by letting customers “Pay Ahead” using their smart-device. Customers take a photo of the items they want and then they can pay for those items through their mobile device as well; all of which adds up to much less time waiting in lines allowing for a much better experience overall.

The JumpQ app will launch August 15th, 2014 and

will be available on both Apple and Android App Stores. JumpQ makes the entire shopping experience better for both shopper and merchant. Barcode scanning is built into the mobile app and allows for instant item identification through mobile cameras. The App’s coordination of incredibly fast, dynamic and vast product catalogues allow merchants to price their goods in the most effective ways ever.

JumpQ has incorporated the popular Square card reader APIs which automatically connect with merchants’ Square accounts, in order to cast a wider net attracting smaller local merchants wishing to be part of the growing trend towards integrating the online experience into the offline store.

Considering that there has been a lack of any real exciting upgrades to the whole shopping experience for a few decades, any change would come along invitingly. JumpQ however, has brought in a wave of exciting new shopping possibilities, and is likely to take the boredom out of waiting in the meat and dairy isles for good.

MOBILE

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Apple has been engaged in extensive talks with major players in the forefront of the mobile payments sector, and has made it

clear they intend to make a big push for a mobile payments partnership by fall.

Timing is critical as it is widely speculated that the much vaunted Apple smartwatch which fans have been patiently waiting for, will be announced simultaneously with the launch of the iPhone 6.

Apple has recently acquired a patent for a so-called “iTime,” described as a full-featured smartwatch with support for hand gesture control.

Apple’s mobile payments play, which is still under wraps, will allow users to turn their iPhone into a credit card and pay for goods and services either online or even in the actual retail store.

Apple has a reputation among consumers for producing the highest quality hardware in the design of their devices. Apple’s payment solution is said to take advantage of a built in secured element within the iPhone, which is thought to relate to the secured enclave for data built into the new A7 mobile processor.

Leaks from the talks point to the new payments

platform being a function of Apple’s Touch ID which is its new biometrics technology, first launched with the iPhone 5s, which uses a fingerprint reader in your handset to allow iOS to unlock certain functionality when you touch the Home button.

If you’re concerned about your biometric privacy or about Apple getting its corporate hands on your fingerprints, you’ll be happy to know that your bio data is safely secured in your device. The Touch ID sensor is essentially wired directly into a special area of your iPhone’s A7 CPU, called the ‘secure enclave,’ that encrypts data using a key that is embedded into the chip. The data never leaves the enclave, and could not be read even if someone were to physically gain access to your handset and take it apart.

Some have suggested that Apple might include near-field communications (NFC) chips in the iPhone 6, and hardware prototypes continue to leak out of the factories where parts are being made.

Ultimately, time will tell what the final product will look like and how it will work. For certain it’s sure to bring a wave of change amongst the hundreds of millions of I-users who are devoted heart and soul to the brand.

Apple’s Mobile Payments Play Takes ShapeBy: Eric Wagner

MOBILE

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The way companies protect consumers’ information online has once again been put into question following a series of

internet attacks wherein billions of usernames and passwords have been stolen by Russian hackers.

According to a recent report by the New York Times, Russian hackers have stolen 1.2 billion usernames and passwords and 500 million email addresses from 420,000 websites. This series of heists was discovered by Milwaukee-based Hold Security, which has long been involved in uncovering online security thefts.

Security experts fear hackers will continue doing their illegal activities unless companies become more careful.

“Companies that rely on usernames and passwords have to develop a sense of urgency about changing

this,” said Avivah Litan, a security analyst with the research company Gartner.

According to Alex Holden, the founder and chief information security officer of Hold Security, majority of the sites attacked by the hackers are still prone to further thefts.

To date, the information gathered from the wave of attacks are being used to send spam messages such as marketing pitches and schemes on social networks.

The increasing reports of information theft and security breach are indeed alarming. Now is the right time for companies to intensify their security measures in order to protect consumers and their businesses.

Hackers Steal Billions of Usernames and Passwords From InternetBy: Melanie Macinas

SECURITY

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Image credit: gsloan

P.F. Chang’s has released a list of the restaurants affected by a data breach, which occurred during an eight-month period.

In total, 33 restaurants were compromised, with the breaches occurring during the period of October 2013, to June 11, 2014.

The United States Secret Service tipped off P.F. Chang’s of suspicions that credit and debit card data had been stolen from the Arizona-based restaurant chain’s customers.

In a statement, the company said that cardholder data including card numbers, names and expiration dates were stolen.

The breach was believed to have likely stemmed from compromised point-of-sale machines, since P.F. Chang’s quickly switched to manual entry of

cards for payment after they were informed.

The restaurant chain confirmed, “We have determined that the security of our card processing systems was compromised” in the release.

While not on the same scale as recent breaches such as Target’s holiday shopping season disaster, or eBay’s customers having their login credentials compromised, it highlights the fact that no business is truly ever safe from enterprising criminals.

However, P.F. Chang’s is being proactive by offering its customers a free “fraud alert” service that “alerts creditors to take additional steps to verify their identity prior to granting credit in their names.”

P.F. Chang’s Releases Information on Extent of Security BreachBy: Kevin Xu

SECURITY

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This year’s biggest event in payments, Money20/20, has announced that it will be hosting a hackathon.

Aiming to bring together hundreds of “developers, designers and entrepreneurs” during October 31st to November 2nd, the Money 20/20 Hackathon will be a part of the event’s LaunchPad360 initiative.

Launchpad360 itself is an opportunity for budding companies to display cutting-edge innovations in payments, in front of investors and leading busineses in the industry.

The Hackathon’s goal is to provide participants a chance to cook up something impressive using the SDKs, APIs, and other tools provided by ten companies, which include ModoPayments, Blockchain.info, PayPal, MasterCard, and Mercury Payment Systems.

Teams of one to five people will have three days to use whatever they have at their disposable to create something unique and eye opening.

A $125,000 prize pool will be distributed to ten teams, with the top five nabbing $20,000 each. The top team will also have the chance to present during Money20/20’s LaunchPad360 payments solutions showcase, which is certainly a huge opportunity since it will get eyes from industry leaders as well as investors.

There’s no doubt that along with letting some talented developers and programmers flex their muscles, it will also be a stress test for these ten participating companies to weigh the efficacies of their payment tools and products.

Money20/20 Introduces Payments HackathonBy: Kevin Xu

SECURITY

Image credit: Tim Lucas

8E M E R G I N G P A Y M E N T S

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Robocoin, the upstart coin operator which brought us the world’s first Bitcoin ATM, has had some terrific growth this past year. Now

they have announced an upgrade to their platform in the release of Robocoin 2.0, otherwise named Robocoin Bank.

The idea behind this new roll-out is to create a fully functional bank-branch like experience using their already growing network of Robocoin ATM machines. The ATMs already work with 12 national currencies worldwide and the list is expanding. It can also allow users to send money using only a phone number or email. Recipients who haven’t signed up for Robocoin can visit the local branch to redeem their payment in cash.

“Our goal is to make storing and sending money faster, friendlier, cheaper and easier than any other company in the world,” said Jordan Kelley, Robocoin’s CEO.

The hardware behind the Robocoin 2.0 Bank has gone through some modification by way of a huge

cut in the price of the machine. The company has slashed the base price for its Robocoin Classic unit from $20,000 to $15,000. The company assured clients that the machines use state of the art bank safe design for the ultimate in safety and security.

Robocoin bank branches use a biometric authentication technology, in addition to phone and PIN authentication. The aim is to completely protect user accounts and where necessary comply with anti- money laundering and other modern banking regulations.

Moving technology closer to our doorstep is a step in the right direction. Each advancement is making Bitcoin easier and more functional, whole bringing it functionally closer to the mainstream. Replicating our real world desire to interact, Robocoin has caught our attention as a lead innovator in what matters most.

Beat The Banks With Robocoin 2.0By: Eric Wagner

DIGITAL CURRENCIES

E M E R G I N G P A Y M E N T S9

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Payment solutions provider Global Payments has teamed up with BitPay, a leader in business solutions for the bitcoin digital

currency.

Under the referral agreement, Global Payments will integrate the cryptocurrency into its product line and accept bitcoin payments from customers all over the world.

Global Payments’ product suite comprises of solutions and services for debit and credit cards, gift cards, business-to-business purchasing cards, electronic check conversion and check guarantee, verification and recovery, and terminal management.

“We focus on delivering innovative products and services to our global customer base, and this relationship provides us the ability to offer our

merchants an integrated digital currency payment choice,” said David Mangum, president and chief operating officer of Global Payments. “We are pleased to partner with BitPay to provide next-generation payment solutions to our customers.”

Tony Gallippi, co-founder and executive chairman of BitPay, said the collaboration with Global Payments allows retail and ecommerce merchants to easily accept bitcoin payments.

“The cross-border demands of global merchants present a great opportunity for bitcoin acceptance and will allow us to reach more customers in emerging markets,” he added.

Global Payments becomes the newest company to embrace digital currencies as a mode of payment—a testament to the growing popularity of cryptocurrencies such as bitcoin all over the world.

Global Payments Teams Up with BitPayBy: Melanie Macinas

DIGITAL CURRENCIES

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Consumers will soon be able to lock their debit cards thanks to a new technology that provides more security to card users.

Texas-based Malauzai Software is the first to offer an app that locks debit cards when not in use—a feature that users find to be interesting and beneficial.

Last year, the Centier Bank in Northwest Indiana started offering Malauzai’s on/off security feature to consumers through its mobile app.

The bank said the number of customers using the app had increased following Target’s announcement of a breach on millions of its customers’ debit and credit cards.

According to Nessa Feddis, who works with the American Bankers Association, the new service provides customers with more security and piece of mind.

“We’re all familiar with the bank systems that identify suspicious activity, but this is one that actually stops the fraud before the transaction occurs,” Feddis said.

The new technology has caught the interest of Chicago-based BMO Harris Bank and MB Financial, and they are now planning to offer the service soon.

Ondot also plans to launch similar technology through banks and credit unions in the US in September.

“In some of the test markets where the product has been deployed for over 12 months. They’ve seen reduction in fraud by as much as 60 percent,” said Ondot founder Rachna Ahlawat.

This is a step in expanding financial security and placing it firmly in the hands of the consumers, a welcome step following increasing reports of security breaches and card fraud.

New App Locks Debit Cards for Added SecurityBy: Melanie Macinas

CREDIT, DEBIT, & PREPAID

Image credit: www.perspecsys.com

E M E R G I N G P A Y M E N T S11

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Newegg, a California-based online retailer of computer hardware and software, has added Visa Checkout for desktop and mobile users,

providing more payment options to consumers for a seamless checkout process.

Visa Checkout is an important component of Newegg’s mobile wallet solution, joining Google Wallet on Android and iOS, said Soren Mills, chief marketing officer at Newegg North America, Los Angeles.

Aside from a more seamless experience, the addition of Visa Checkout also seeks to reduce shopping cart abandonment and increase conversion potential.

“Newegg’s implementation of Visa Checkout aims to offer more diverse one-click payment options to customers,” said Nathalie Reinelt, an industry analyst with the Aite Group, Phoenix. “Not everyone has a PayPal account, so Visa customers can now set up their payment credentials through Visa Checkout to have a better frictionless online shopping experience.”

Visa Checkout stores credit card information online allowing e-payments to be made on merchants’ website. Visa’s newest offering also allows users to store multiple cards from several vendors.

To encourage more users to try the new technology, Newegg is offering a 10 percent off on all Visa Checkout purchases until August 25. Shoppers just need to enter the promo code “VCO” to take advantage of the discount.

Newegg Offers Visa Checkout for Seamless Checkout ExperienceBy: Melanie Macinas

CREDIT, DEBIT, & PREPAID

VISA CHECKOUT IS AN IMPORTANT COMPONENT OF

NEWEGG’S MOBILE WALLET SOLUTION,

JOINING GOOGLE WALLET ON ANDROID

AND IOS.

“

“

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Square is going from payment platform to full-on retailer with its acquisition of food delivery service Caviar. Square has been

in talks to buy the startup that is valued at $90 million for some time, and now the deal is official.

Caviar follows in the footsteps of much larger delivery services such as GrubHub Seamless, but it goes one step further by providing its own delivery drivers and vehicles to restaurants that do not currently offer deliveries. Caviar also boasts no minimum order requirements and real-time GPS tracking so customers know exactly when their food will arrive.

The acquisition will beef up Square’s foray into the food delivery and restaurant market, which it first targeted earlier this year with its Square Order service, which allows customers to order ahead food from a dedicated app that offers menus from local restaurants. The app will alert users when the food is ready to be collected.

With Caviar, Square can go the last step and actually deliver food to customers’ houses.

Caviar currently serves a handful of metro areas in the country, after starting in San Francisco in 2012. The company has offered delivery from upscale restaurants and more specialty shops in metro areas, which has helped it grow in popularity amongst a small but dedicated audience.

The acquisition comes shortly after Google acquired Seattle-based Appetas, a platform that helps restaurants build their online presence. Other startups like Munchery, Postmates, Spoonrocket, and Sprig have also raised money in recent moves to become players in the growing mobile commerce fueled food delivery market.

Square Acquires Caviar, Begins Offering Food Delivery ServicesBy: Michael Foster

INDUSTRY LEADERS

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Mobile payments in China has increased 707 percent year-over-year in 2013, according to the 2014 China Internet Financial

Development Report published by the Internet Society of China (ISC) and Xinhua News Agency’s magazine, Finance World.

The number of Chinese making payments through mobile phones reached 125 million people last year, up 126 percent from the previous year, the report said.

But as mobile payments became more popular among the Chinese, ISC Deputy Secretary-General Shi Xiansheng warned of the security threats associated with online payments.

Xiansheng called for the improvement of technology and safety standards to prevent problems arising from online payments such as identity theft.

Chinese consumers made over 1.6 billion financial transactions through mobile phones last year and this figure equaled to US $1.6 trillion, the report added.

However, as the mobile payments industry continues to enjoy growth, the People’s Bank of China has planned to impose a cap on the amount of money that users could spend through their mobile phones, a move that might impact the industry.

China’s central bank was also mulling over similar curbs on mobile financial products including Yu’e Bao.

An online investment fund available for use on mobile phones, Yu’e Bao is Alibaba’s entrance into expanding its services past e-commerce and payments.

China also recently barred the use of virtual credit cards and QR codes for payments, at least temporarily.

Regulators said these restrictions were not imposed to crack down on firms providing mobile payment products but to safeguard consumers from security risks.

Mobile Payments Becoming Massively Popular in ChinaBy: Melanie Macinas

GLOBAL & LOCAL

Image credit: Tom Thai

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The European Court of Justice will rule if bitcoin transactions are subject to its value-added tax rules (VAT).

If that top court decides to impose VAT regulations on member nations with bitcoin businesses, they could suffer an economic setback. Others could miss out on the opportunity to establish business initiatives associated with bitcoin. VAT is one way the EU raises tax revenues. It’s essentially a consumption tax, paid by buyers as part of the purchase price.

That case before the Court is C-264/14 Skatteverket v David Hedqvist and it raises the issue: Do transactions between cryptocurrencies and traditional currencies fall under VAT regulations?

As with all tax policies, this one could wind up actually lessening government revenue by weakening economic momentum. Much of the recovery in the EU has been sluggish.

Any nation such as Denmark which classifies bitcoin trading – both gains and losses – as exempt from taxation can be at a competitive advantage in attracting investors. That taxation policy might even motivate investment firms and serious investors to relocate to that country.

In the US, for example, bitcoin investments are taxed. The law also requires that foreign accounts be disclosed.

Currently, nothing in the EU tax rules, which date back to 1993, applies specifically to digital currencies. The current case arose primarily because of a dispute between David Hedqvist and Sweden’s tax authorities.

Hedqvist’s business objective is to begin to sell bitcoins on his website. At the time, the Swedish tax folks were in the process of challenging a court ruling in Sweden which held that VAT should not be imposed on bitcoin transactions. Hedqvist didn’t

European Court of Justice to Rule If VAT Applies to BitcoinBy: Jane Genova

ELECTRONIC PAYMENTS LAW

Image credit: Yanni Koutsomitis

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want to proceed amid regulatory uncertainty. As a result, the Supreme Administrative Court of Sweden filed a request for clarification on the issue.

In addition to the ruling, the decision from the EU’s highest court will guide central bankers on the authority of taxation agencies in relation to bitcoin. They need that clarification to regulate the relationship of traditional and digital currencies.

The EU Banking Authority has warned banks not to engage in any cryptocurrency transactions until regulators can protect both types of currencies. One fear is that the trading platforms for digital currencies could be hacked.

For solid economic reasons, when the EU’s top court issues its decision, the global currency industries will be paying close attention.

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Gemalto is leading the pack in digital security, with hardware and software solutions utilized by some of the biggest names

in tech. We speak with Amol Deshmukh, VP of Gemalto’s Mobile Financial Services division, on leading security in the realm of mobile payments, innovating in wearable tech, and the tricky issue of consumer adoption.

Kevin Xu: Amol, lets start with a breakdown on Gemalto, your place in security, and the global scope.

Amol Deshmukh: Gemalto has been around for a long long time, so we’re definitely considered by the industry as the leader in digital security and M2M technology as well.

We have several lines of business; mostly all of

them have to do with increasing the security in the digital experience of whatever people do on a day-to-day basis. So we have customers in the telecom space who are mostly operators, MNOs that buy our products and services to enhance the security of their networks, on the GSM network. So obviously a large portion of our business is providing the SIM cards, personalizing them, and getting them issued into the hands of consumers.

The other area is of course in the financial space where we sell millions and millions of EMV chip cards and solutions. So that is a big business for us coming in the US as well.

Of course all solutions around it whether its personalizing these cards, getting them in the hands of consumers. So when you order a credit card from say Chase bank, and you get it in the mailer and you get it in your hand, that’s us. Of course the trends are also changing now where you also get

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the same cards over your phones. So Isis is another example of what we’re doing, where Gemalto is the key component for the Isis ecosystem.

And also work with service providers such as Amex, who issue these cards together on Isis phones, which also happen to have the Gemalto SIM cards inside of them. That’s another area. The third area is a kind of pure security in the corporate, government, transportation, and that kind of space, where we sell millions and millions of corporate ID cards to folks such as Exxon Mobil or Shell who want to secure their networks, VPNs, send secure emails between their companies, so on and so forth.

And of course the e-government initiatives, wherever there’s national ID initiatives, Gemalto is typically involved with our products and solutions. And closer to home here, we have the DOD, the Department of Defense where we have a huge majority of the cards that they issue to their personnel and their agencies for network and network logins, checking their emails, security and also physical access at some points.

So the M2M business is a business that was something that we acquired a few years back. Looking at the fact that humans interact with each other but soon its going to be machine interacting security and then you can do that… so that you can have a secure interaction whether its talking to them, talking to humans…. and that’s a huge portion of our business as well.

So from a footprint, about I would say 12,000 employees from over 100 nationalities, we’re in 44 countries and we have about 190 countries that have customers globally. 3,000 plus financial institutions are our customers, 450 plus global MNOs, the names that you would know, AT&T, Verizon, T-Mobile, Orange, Vodafone, everybody.

About 80 plus I would say, government programs, national IDs that we have done, and revenue in 2013 was over $3.25 billion. So a leader in a number of fields if you look at it from a digital security standpoint, anything to do with securing the networks, securing the communications, securing interactions between devices as I mentioned.

And there is probably a chance that several or most of the world’s consumers are going to have a Gemalto product in their pockets or in their phone and wouldn’t even know about it. That’s one of the key things that we do, we’re kind of the “Intel Inside” if you may, for a lot of things, we just don’t have that advertising campaign, but we have several customers who have usage in the background and let them be with their brand.

Lets talk a bit about global NFC adoption for a little bit. Would you say that the security features in NFC and contactless payments are inherently more secure than credit cards? Or is that something that needs to be focused on, built up?

Right. From a US perspective, you have magnetic stripe cards which are quite easy to duplicate, you can just take a swipe of the card and you have all the data. And you can start using it or create a fake card out of that. Now the chip cards inherently have a lot more security built in to it because you can’t really track the chip in terms of trying to get the card data out, EMV is the standard for payment.

EMV has also come out with contactless payment. NFC is the same interface if you may, of contactless payments. So when we’re doing NFC deployments whether it’s using the phones or using our EMV dual-interface cards, then yeah absolutely, we have a much much higher level of security, and

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a challenge response scenario and where the card authenticates the terminal and the terminal authenticates the card. Dual authentication sort of going back and forth, that is way way, way more secure than a simple magnetic stripe card.

The US has finally made the effort to make that transition and has that… on the horizon, so starting to catch up with the rest of the world in terms of security I would think.

What do you think are some of the main friction points in holding back NFC adoption?

With NFC or any new technology, you have to get over the hump of any existing infrastructure. So that’s one of the challenges that the world or any industry usually faces, if you have an existing infrastructure. The infrastructure today in the US is mostly magnetic stripe based. For them to be able to support chip or NFC transaction, there’s a certain change that needs to happen. The good news however on this, especially at this time with the mandates for migration to EMV, both on the issuer and the acquirer and the merchant side, is that there’s going to be a change in this infrastructure at some point with a date associated to it, so its not open-ended. So this kind of a change that’s going to happen for the infrastructure that’s going to help tremendously. The other piece is, most of the US terminal vendors, actually I would say all of them, because there’s just two big ones left now; VeriFone and Ingenico.

All of their terminals support contact as well as the NFC or contactless kind of interfaces on their terminals. So once the physical change of those terminals happens, you’re going to be in a position where there are all these terminals that have the specific connection to be able to support NFC

transactions. I would say that’s probably one of the key holdbacks if you may, for any sort of technology change. We see that with NFC, however we see the light very close now, so we don’t even say its now light at the end of the tunnel, because we see the light already. And our experience has shown that that’s the way it’s worked with the Canadian market, the Australian market, UK market, any of the markets that migrated, once that infrastructure jump or leap happened, then taking on new and more secure forms of payment was quite rapid after that.

What about in terms of consumer habits? What do you see happening?

It’s just simple, very simple for me, from a user perspective, if you’re asked to pay, you pull out your card, you swipe it and off you go.

When actual user behavior has to change with EMV migration, where you now have to have a chip card so either you insert it, or you present it as a contactless interface just because you can now, you might see a change in the user behavior.

We’ve seen it in several places around the globe, there is a slight hump that has to be overcome from a user behavior, for sure, no doubt. I almost put it close to before there were touch screens, nobody ever thought of touching the screen. But now, if you give a regular laptop to my kid, he is four, and he’s going to try to touch that screen because that’s all he knows.

It’s a matter of getting used to it, in that sense so once you see and you start using it, you’re going to have acceptance and ubiquity of that. But yeah you’re absolutely right, you don’t see that in the US today more so because as of now as we speak today,

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the migration hasn’t happened completely. So you’re still in the moment where what you’ve been doing or what users have been doing for a long time is pull their card of the pocket, try to swipe it and be on their way. It’s not overnight, and that’s why the mandates for migration actually do help, because it puts a stake in the sand, a line, where you can say OK, after this at least the technology has to be able to support it, and force users to move to a different user experience.

So what you’re saying is when EMV happens next year, we’ll see an uptake in mobile payments?

Mobile payments as well as NFC transactions globally. And you’re right, you try to link the two together but it’s very difficult to time it perfectly. You’ve got to have the chicken, and then the egg. You’ve got to have enough devices in the market, you’ve got to have enough cards in the market and then the infrastructure change happens. The good thing is, people are not going to wait for each other right now. You see Isis going quite strong, and Isis

with its wallet and I don’t know if you’ve read the news recently but American Express is provisioning several thousand, several hundred thousand cards on the Isis phones. So a month in and month out going forward for the past few months. So that, in the hands of the consumers has started to happen. There are so many phones that can already support NFC as well. And you see more and more devices that are coming out with support for that. So I think that’s a good sign, in general for the contactless industry.

I want to get your thoughts on what you thought was the future of payment security. I’ve read a lot about biometrics and I was wondering if that was something Gemalto was looking into.

Yeah that’s a great question because we’ve looked at biometrics for quite a long time. Just what we’ve seen come back from the markets, is that a system where the biometric information is stored in a central location, is not something that has gained a lot of popularity.

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Purely because if that is once compromised then there is a big problem. Biometrics are a good entry point if you want to replace PINs, and if you want to be able to unlock the credentials that you have, whether it’s payment credentials, security credentials, and instead of trying to remember my PIN, in a more distributed system, if I can use the biometrics to unlock those and then go on with whatever I want to do, that’s going to be probably a more easy to digest.

We have solutions around that as well, whether it’s storing the biometric fingerprint on the card, or in secure elements, so on and so forth, that can be done, not a problem. From a mobile security standpoint I think what is going to be key is the fact that folks actually know that when they’re paying: One it’s more secure than using your magstripe, for sure. Two, its going to be more convenient as well. Security is the tough sell, and I think contactless is going to be seen as a convenient method.

Especially when you start using phones, it’s much easier to tap your phone and walk away. And people are starting to get used to tapping cards, tapping card readers, cards to open doors, to use their cards for payments or for other things, access for corporations, things of that nature.

So the tap is starting to get a mindshare if you may, people are used to using the tap as opposed to doing something else. So I think that’s going to be a key for mobile payments in general, and of course the underlying fact that the consumers, obviously, almost make an assumption that it has to be secure, they put that on the service providers. So they expect that the service providers have put in solutions that don’t compromise their privacy and security. And that’s exactly where we help our customers from our solutions and product standpoint.

Last question, and that comes back to contactless payments. Have you been looking towards wearable technologies and incorporating payments in wearable form-factors?

We’ve seen quite a strong interest from the market, we have solutions actually in the market right now for wearable technology. We’re starting to see a little bit more interest of saying, okay, can I do this as a brand, because there is a branding thing that wearable brings along with it as well. There’s a convenience and there’s a cool factor, associated with it, but yeah absolutely we have actual solutions in the field and technology that allows folks to use payment cards inside of these wearable bands that for us looks like a regular card that you just insert, similar to a SIM card that goes into a phone.

So you stamp it out, put it into the wearable and off you go for payment. So we take care of everything that needs to be done from our product and personalization standpoint. We’re starting to see that as a strong interest from the market for sure. It’s amazing, I was in the business of the financial space about, I would say… six years back, we started pushing this into the market, and there were some stadiums around the world who tried to do that, like football stadiums or soccer stadiums who wanted to do commemorative kind of bands, for their users and then the user can interact with the payment system. We are starting to see that interest peak now and more and more of our customers are coming back to us and saying “Hey, I’d like to issue a companion wearable along with my dual interface card for payment,” for example. So it’s really all about being right there and I think the financial institutions are starting to be in that space again.

Any last comments?

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We’ve really seen contactless as being the key for payments going forward, where there’s migration to new infrastructure happening, the EMV migration happening, start seeing a strong uptake of contactless payments. And once that happens that also bodes well from a mobile payment standpoint, which is… it’s not very difficult to swipe your card, it’s very difficult to swipe your phone but its very easy to tap your phone to achieve the same result.

So those link together, and you see the increase of contactless really bodes well for increase of mobile payments as well. And inherently, your phone is a multi-application phone and can support many many things, so with payments then, you can have other things that we also look at. Geolocation, you know how to make sure that your users can get relevant offers, things of that nature. So it starts

becoming a much more lucrative and enhanced experience from a consumer standpoint. And that’s what starts getting them to use it.

Because lets be clear, folks don’t wake up in the morning and say – how do I pay in a different way today? You’ve got to get them to move and to do certain things because they want to do it, and the power of that choice, giving that in the hands of the consumers, making it something that they choose versus something that’s pushed on to them…. is much easier on a mobile phone than anything else, so you see a start where these mobile payments are on the rise once you have the infrastructure ready and are able to support it. That’s where we are definitely quite excited and we see a very very bright future for mobile usage and payments in general.

Amol Deshmukh, Director of Mobile Financial Services North America, Gemalto

Amol joined Gemalto in 1996, where he has served a variety of roles in the domains of corporate security and financial services. His experience includes engaging Fortune 500 companies, financial institutions and payment associations to champion next-generation authentication and payment technologies. In his current role as director of mobile financial services (MFS), Amol’s broad security and payments expertise has been instrumental in shaping Gemalto’s strategy to address the converging mobile and payment landscape.

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