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Summary:

MasterCard and Blaze Mobile today unveiled stickers that can be attached to mobile phones and used to charge purchases at existing PayPass payment readers. PayPass is MasterCard’s mobile payments processing effort currently in use at gas stations, supermarkets and other stores. The RFID sticker, offered by […]

mastercardMasterCard and Blaze Mobile today unveiled stickers that can be attached to mobile phones and used to charge purchases at existing PayPass payment readers. PayPass is MasterCard’s mobile payments processing effort currently in use at gas stations, supermarkets and other stores. The RFID sticker, offered by Blaze Mobile, does away with the need for a key fob. But will such stickers really help drive mobile payment adoption?

MasterCard hopes so. As it notes in the release:

MasterCard sees this approach as a bridge to fully integrated contactless payment capabilities using NFC (Near Field Communications) technology. “Having a payment capability on the phone is a great way for consumers to see the benefit of having a payment capability in the phone,” added Art Kranzley, Chief Emerging Technology Officer, MasterCard Worldwide.

The sticker is a stop-gap solution to one of the problems associated with mobile payments made using cell phones: the lack of Near Field Communication chips inside the handsets. Most card processing companies and even banks view NFC chips as the most secure means to pay for transactions on a mobile device, but without a clear demand for the chips, handset makers and carriers won’t put them in phones.

NFC radios have been an unrealized dream for the payments industry (and NFC chipmakers) since 2003, and adoption has been slow (Nokia includes NFC chips in some of its phones). ABI Research estimates that in 2009 the value of mobile commerce transacted via non-NFC methods will total $1.6 billion, while mobile commerce conducted via NFC will be minimal. Those non-NFC methods include SMS text messaging and buying stuff online using a smartphone.

So MasterCard is hoping the RFID stickers will get consumers to clamor for NFC chips inside their devices. Regardless, they don’t solve the other main impediment to mobile payments, which is the lack of a business model that rewards the credit card company, the merchant, the carriers and the banks. Mobile payments through NFC require a whole new business model and partnership among all of the potential players.

What do you think? Will stickers will help mobile payments stick, or will SMS and better mobile web sites for vendors comprise most of our transactions on the phone?

  1. I don’t know if stickers are the answer, but I am very interested in the convenience of this type of payment system.

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  2. I never understood why carriers didn’t put them on the SIM. A sort of authorization could happen, through the network or user interaction…

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  3. I disagree with the fact that mobile payments do not reward the value chain. The very fact that making m-payments ubiquitous and usable implies a much larger population will be using “electronic payments” should be reward enough. In one way, it is the same reason why everyone is trying to build ‘social network connectors’ – to get more people to use their service. More volume ==> more (potential) revenue in the SNS model. But in the m-payment model, More volume==> more guaranteed revenue.

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    1. Stacey Higginbotham Monday, March 30, 2009

      Arjun, but who gets the biggest piece of that value chain? That is one of the pressing questions.

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      1. Stacey,
        As I understand, in the standard m-payment model, the entire value chain besides the end-merchant makes around 3% of each transaction. The split of that 3% is in line with how e-payments on desktops work today. This does *not* include air-time charges to make the transaction (Example, if sent over SMS, the SMS plan would apply etc.). If you look at SKorea, companies like Danal (their billtomobile solution – forgot the exact name) have been extremely successful. Just looking at SKorea, today, more than 75% of *any* digital content purchased online is using directtobill services (more than $1.5 billion worth of annual transactions).

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  4. It seems, at least initially, these stickers would be extremely easy to hack. An enterprising hardware guy could create a device to read & process or read & store transaction data. All he would have to do is bump a few hundred people on the subway since physical contact is not necessary.

    This may not be a wide phenomenon now, but as NFC becomes more popular there creates more incentive to create such a nefarious device.

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    1. No need to hack them. These things give out their data without any need to hack anything, and there’s no second key (such as a password or PIN) to validate the user. This type of payment is already a giant kick-me sign taped to the industry’s back.

      They don’t care, because they can write off anything that’s complained about as fraud and they depend on consumers not checking their bills closely for all the nickel-and-dime transactions that these NFC methods are built for. Between the two, the cost of this flawed system is passed on to everyone else OTHER than the CC companies.

      I’ll never willingly use a payment system that has no authentication…the ones that exist WITH authentication have soft enough types to be scary without removing even that flimsy amount entirely. Or maybe that’s the CC companies’ point here, they’re saying the existing authentications are so flimsy they’ve become worthless and we might as well drop authentication altogether?

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  5. The key for NFC in mobiles is having a switch to turn the thing off to prevent snooping, cloning or theft. There is the opportunity to make this more secure than the magstripe card.

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  6. AFIK, the mobile NFC solutions today are either based on the sim cards or in a secure module in the mobile independent of the sim card, but which in reality consists of a smart card (that is not the sim). Now is this sticker a secure device? I am a little bit unsure how much will banks soften their security policies to favor those

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  7. Seems to me the stickers will drive adoption and possibly put the telcos out of the loop. Thus guaranteeing no revenue for them. It will be easy for the consumer to stick one on and replace it as necessary over time.

    These stickers should (but I don’t know) include CVC3 for MasterCard (similar to the NFC cards), so they should be updated with new codes during each transaction. This should make them somewhat more secure.

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