Page 120 - Trends in Telecommunication Reform 2016

What unites all of these mobile payment systems a Near Field Communication (NFC) chip, which
is their reliance on interoperability. The need for is necessary to communicate with the retailer’s
interop becomes apparent when one considers the payment terminal. Apple Pay also requires an
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variety of actors involved in a single transaction, as NFC chip to exchange data with payment terminals,
documented in Figure 4.2, below. Interconnecting but it further requires that the device be an Apple
all of these actors across a variety of merchants iPhone with several security features, including a
and devices requires numerous forms of interop special encrypted chip and Touch ID for biometric
at each layer. Although interop is necessary and identification. Because only the newest iPhone
present in every mobile payment platform, this 6 and iPhone 6 Plus models have all of these
example highlights a point addressed later in technical components, those are the only devices
this chapter: interop is not a binary value – it that currently support Apple Pay, limiting the
can occur to greater and lesser degrees. The application’s technological interop across devices.
mobile payment competitors have taken different
approaches, each trying to find the optimum Another type of technological interop is the
level of interop, and Apple’s and Starbucks’ ability of the device to interact with retailers’
relative success in the mobile payment space payment systems. Because Apple Pay and Google
demonstrates the importance of not neglecting Wallet use NFC communication, only retailers
the human and institutional layers. that have NFC-capable payment terminals can
accept those services. Right now, only a small
Consider some of the approaches the various (but growing) number of payment terminals
payment platforms have taken at each layer: accept NFC, making this is a significant limit on
technical interop. Figure 4.3 is a drawing from an
Technological: Successful implementation of a Apple patent that shows interconnection with a
mobile payment system requires multiple kinds retailer “point of sale.” Although the patent does
of technological interoperability. One kind is the not necessarily describe the current iteration
interconnection between banks and devices. For of Apple Pay, it highlights the complexity of the
example, to set up a credit card to work with Apple technological interop on the platform. CurrentC
Pay, Apple must have back-end compatibility with and Starbucks use bar codes instead of NFC, but
the processing banks in order to transmit user and this requires that the retailer payment system
card information to them. have an optical scanning device to read the bar
code. Samsung’s Loop Pay is designed to work
Another type of technological interop is the ability with both NFC and existing magnetic card swipe
of a mobile device to interconnect to the payment terminals, dramatically increasing the technical
platform. Google Wallet, for instance, can run interoperability.
on a wide range of Android devices that contain

Figure 4.2: Diagram of mobile payment processing and various actors

Customer pays via Payment details securely
phone or website sent via payment gateway

$

Funds settled Merchant account Merchant account
to merchant processes card processes card
details details

Source: Web-Merchant.com, New to Online payments? http:// www. web- merchant. co. uk/ onlinepayments. asp

102 Trends in Telecommunication Reform 2016