5 Smartphone-Shunning Payment Innovations
While Apple CEO Tim Cook’s claim that “your kids will not know what money is” seems somewhat exaggerated given the current uptake of mobile payment methods, plenty of new companies are still receiving funding in the space. Perhaps because no solution is proving solid yet. Smartphone app-based solutions are yet to become seamless and with contactless cards spreading out, loading up an app is often more complicated. Some solutions make smartphones far less important in the process.
Payments At A Glance
> In 2015 PivotlIQ tracked USD1.8bn in funding for payments companies with 100 rounds completed.
> This was up just less than 30% from the USD1.4bn invested across 87 deals in 2014.
> However, last year saw payments account of 25.9% of total fintech investment, down from the 34% stake it made up in 2014 as a result of surging investment flowing into lending startups.
Here are five new innovations beyond apps and smartphones emerging in payments.
- Hands Free
Google is attempting to let users pay through Android Pay without taking their phone out of their pocket. The company is trialling a point-of-sale device that can detect when a users’ phone is nearby allowing customers to simply ask to pay with Google. There are also some security checks so the person behind the till knows it’s the right person, but essentially the company is trying to remove the friction of loading up an app to pay.
Other companies have experimented with this type of approach and Square previously rolled out a service that would allow users to pay while keeping their phone in their pocket, but it failed to ever gain real traction. UK startup Tab attempted to let customers pay at their regular coffee store through a running tab. The company has since shut down, but CEO Shawn Zvinis highlighted a problem that hasn’t gone away since the company raised funding in 2013 saying: “We’re not going along the e-wallet route because even though it’s labelled frictionless, there’s actually a lot of friction involved.”
- Wearable Tech
Wearable devices are making payments easier to a wide audience. The Apple Watch is the leading device here, with consumers able to use theirs to pay for goods at retailers that support Apple Pay. Payments are a great use case for smartwatches, allowing people to pay without having to take a card or smartphone out of their wallet. The only thing holding them back is few people are using smartwatches. It’s even spreading to ordinary watches, with Swatch building a NFC chip into some of its models to enable contactless payments. Fitness trackers like Jawbone are also integrating the technology.
Shachar Bialick, CEO of UK fintech startup Curve, is also looking at the space, as while it uses a card for now it could come in many different forms in the future.
“Curve will never be a network like Apple Pay, but it can have different form factors,” says Bialick. “Today it’s a card. But it could be a ring, a bracelet or anything, we don’t care.”
The events space in particular is attracting a lot attention with a number of players offering NFC and RFID-based wristbands using the technology to integrate payments with check-in services and marketing opportunities.
More than devices it’s the consumers themselves that are becoming a more important part of keeping payments secure. Apple champions this with fingerprints used to unlock iPhones, as well as complete transactions with Apple Pay and PayPal is also utilising thumbprints for its payments app.
However, startups are attempting to remove the smartphone from the equation. Oslo-based startup Zwipe allows thumbprints to act as PIN codes on card transactions and through a partnership with MasterCard is developing fingerprint-reading cards. It raised USD5m in funding last year. Y Combinator-backed TangoPay is attempting to remove the phone all together by connecting cards directly to user’s thumbprints. Beyond digits MasterCard says it is also considering using consumers’ unique heartbeats to act as security.
- Facial Recognition
If Instagram and Snapchat’s success proves anything it’s that people like taking selfies and payments companies are looking to integrate this into transactions. MasterCard and Alibaba are integrating the technology into their payment apps. At the moment this is still being used primarily as a security check for transactions made on mobiles, but this could develop into a means that in-store technology knows who the shopper is and charges a connected card. However, this raises obvious questions of privacy.
- Prepaid Cards
Everyone’s heard horror stories of children getting access to their parent’s cards on running up debt from their own bank account. UK startup Osper is trying to put an end to that, by allowing parents to give prepaid cards to their children. This prevents children from racking up too much of a spending bill and comes with an app through which their parent can track and top up their card.
Controlling corporate funds is another area in need of innovation with many firms understandably hesitant about letting employees loose with the corporate credit card. This can leave employees out of pocket as they spend a lot of time chasing expenses. That’s where Emburse comes in with a product that lets companies distribute prepaid cards to employees. The cards can be set up with a monthly allowance or a one-off amount, so a company could issue one with a USD3,000 limit for the expenses at an event.