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receive data is not the same as interoperability 4.2.1 Mobile payments: Interop layers
at the data layer. applied Chapter 4

• Human: This layer is the ability for humans In any complex, interoperable system, all of the
to understand and act on the exchanged four layers will play a role. In some examples,
data. Although it is more abstract than the one layer may be more important than others,
technological and data layers, this layer can be but successful interoperability relies upon
just as crucial for interoperability. Language interconnection at every layer. The recent growth
is one form of human interoperability; in of mobile payment platforms is a useful illustration
order to communicate, people need to use a of how the layers interact to shape the success
common language. Another form of human of the platform as a whole. The mobile-payment
interop is a willingness to work together. ecosystem highlights the important role that the
Interop often succeeds or fails based on the institutional and human layers have played.
individuals and personalities at the end points
of the data exchange, and their level of effort Mobile payments are like traditional credit card
in working together successfully. transactions, just with a mobile device (typically
a smartphone) instead of a plastic card. As smart
• Institutional: The institutional layer is the phones have become more common, a variety
ability of social systems to engage effectively. of wallet-less electronic payment systems have
The legal system is one example of an proliferated, with mixed results. Beginning in
institutional layer of interoperability. For 2011, Starbucks made it possible for customers to
instance, in order for two companies in pay for their drinks using Starbucks’ mobile app.
different countries to collaborate, they need Today, over 16 per cent of U.S. transactions at
to reach a shared understanding of applicable Starbucks are made through an app, representing
law and be comfortable that their rights can more than 7 million payments per week. Around
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be vindicated. Interop at the institutional the same time, Google announced Google Wallet,
layer does not require homogeneity of legal and although Google does not share detailed
systems; instead, it requires only enough figures, there is evidence suggesting it has had
commonality to protect the interests of both limited use.
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parties.
The reportedly divergent results experienced
Although they are related concepts, it is important by Starbucks and Google in this area have not
to clarify the relationship between interoperability discouraged other market entrants around the
and compatibility. Compatibility is a specific form world. Recently, a federation of U.S. retailers,
of interoperability that represents certain design including the discount department store Walmart,
choices in the development of a system. For announced CurrentC, a mobile payment platform
example, in 2014, the EU approved a directive designed to reduce the influence of traditional
that called for the use of a common standard for credit card companies and banks on retail
cell phone chargers. This legislation addressed transactions. In October 2014, The Republic of
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a narrow design choice: the compatibility of the Korea’s Line messaging platform announced plans
cables that provide power to mobile devices. for a mobile payment service called Line Pay. And
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The interoperability of mobile devices is a far in March 2015, South Korean electronics giant
bigger and more complicated issue than a single Samsung purchased LoopPay, a system that allows
element of compatibility, but the compatibility of greater backward compatibility with older credit
cables certainly is one element of it. Throughout card retail terminals.
this chapter, it is important to bear in mind that
compatibility is an important part of interop and One of the most significant new entrants is Apple
can play an important role in how well and easily Pay, which was announced in September 2014.
systems work together. Within three days of rolling out its new app, Apple
processed 1 million card activations. The number
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of card-issuing banks grew from six in September
2014 to 2,500 in March 2015, and the number
of retailers accepting Apple Pay tripled to nearly
700,000.
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