What unites all of these mobile payment systems is their reliance on interoperability. The need for interop becomes apparent when one considers the variety of actors involved in a single transaction, as documented in Figure 4.2, below. Interconnecting all of these actors across a variety of merchants and devices requires numerous forms of interop at each layer. Although interop is necessary and present in every mobile payment platform, this example highlights a point addressed later in this chapter: interop is not a binary value – it can occur to greater and lesser degrees. The mobile payment competitors have taken diferent approaches, each trying to find the optimum level of interop, and Apple’s and Starbucks’ relative success in the mobile payment space demonstrates the importance of not neglecting the human and institutional layers.Consider some of the approaches the various payment platforms have taken at each layer:Technological: Successful implementation of a mobile payment system requires multiple kinds of technological interoperability. One kind is the interconnection between banks and devices. For example, to set up a credit card to work with Apple Pay, Apple must have back-end compatibility with the processing banks in order to transmit user and card information to them. Another type of technological interop is the ability of a mobile device to interconnect to the payment platform. Google Wallet, for instance, can run on a wide range of Android devices that contain a Near Field Communication (NFC) chip, which is necessary to communicate with the retailer’s payment terminal.12 Apple Pay also requires an NFC chip to exchange data with payment terminals, but it further requires that the device be an Apple iPhone with several security features, including a special encrypted chip and Touch ID for biometric identification. Because only the newest iPhone 6 and iPhone 6 Plus models have all of these technical components, those are the only devices that currently support Apple Pay, limiting the application’s technological interop across devices. Another type of technological interop is the ability of the device to interact with retailers’ payment systems. Because Apple Pay and Google Wallet use NFC communication, only retailers that have NFC-capable payment terminals can accept those services. Right now, only a small (but growing) number of payment terminals accept NFC, making this is a significant limit on technical interop. Figure 4.3 is a drawing from an Apple patent that shows interconnection with a retailer “point of sale.” Although the patent does not necessarily describe the current iteration of Apple Pay, it highlights the complexity of the technological interop on the platform. CurrentC and Starbucks use bar codes instead of NFC, but this requires that the retailer payment system have an optical scanning device to read the bar code. Samsung’s Loop Pay is designed to work with both NFC and existing magnetic card swipe terminals, dramatically increasing the technical interoperability.102 Trends in Telecommunication Reform 2016 Figure 4.2: Diagram of mobile payment processing and various actors $Customer pays via phone or website Payment details securely sent via payment gateway Merchant account processes card details Merchant account processes card details Funds settled to merchant Source: Web-Merchant.com, New to Online payments? http://www.web-merchant.co.uk/onlinepayments.asp