Even though Germany traditionally is considered the land, where people use cash to pay for things, paying by credit card is also becoming more and more popular here. At this point, almost half of all expenditures for merchandise and services are completed with alternative payment methods such as debit or credit cards. In our interview, Konstantin Wolff, CMO of payleven, explains what benefits customers and retailers get through mobile card payment solutions and how he assesses the future of mobile commerce.
Based on different studies, Germany is still considered the land, where people use cash to pay for things. How did you come up with the idea to offer a mobile card payment solution for Smartphones and tablets?
This product has been available for some time now in a similar fashion. Payment via Smartphones and tablets is not a new idea. However, payleven features a fallback to our special hardware and the traditional card. We see the major advantage of our solution in the fact that the end customer does not have to change his/her user behavior. He still pays with his card “as usual”, just as he would at a traditional card terminal by entering his PIN or by signature.
Which specific target groups are being addressed with this solution?
The product is geared towards small businesses that do not accept card payments yet or that look for a mobile alternative. According to our estimate, until now about 90 percent of these businesses are not able to accept card payments for two reasons: fees and mobility.
Many small companies shy away due to high charge fees or long contracts. Many do not want to commit to a solution or a service provider for an extended amount of time. If you just opened a small coffee shop or a store, you usually won’t be able to assess how many customers would like to pay by card. Before he/she enters into a multi-annual contract with a monthly base fee, he/she rather won’t accept card payments.
The bulk of all terminals are stationary and tethered. So far, there are hardly any mobile payment terminals that accept payments on site. Many self-employed people, for instance pedicurists or hair stylists, are mobile and also offer their service directly at the customer. There are also customers, who have a stationary terminal, but who also provide additional mobile services, for instance restaurants with party service or company sales representatives, who would like to sell their products at a trade show.
What concrete benefits does your system offer compared to comparable mobile solutions?
There are two major differences. On the one hand, we developed our technology as a Chip & PIN-based solution. This method is particularly beneficial in terms of security and card acceptance. Several card organizations have also already determined to accept only card payments in the mobile POS area that were verified by PIN. The second point is our customer service. To be especially close to our customers, we exclusively employ native speakers in our support department. So far, payleven is available in Brazil, Germany, the Netherlands, Poland, Great Britain and Italy. Every customer can be sure that he/she is talking on the phone with someone who speaks his/her language and knows the local customs.
You already collaborate with several partners, among others the Berlin Brandenburg Taxi Association, to test the product in everyday use. Are there still other collaborations with partners from other industry sectors planned?
Definitely. Together with o2, we are testing a model to sell our hardware to o2 business customers. That said, in essence such a collaboration is interesting for anyone, who is in contact with small businesses and would like to offer them an additional benefit. At the moment, we are discussing this with several interested parties.
How is the safety of transmissions ensured?
Our Chip & PIN device meets all of the regulatory requirements placed on a card terminal. The device complies with the PCI Security Standard by MasterCard and VISA and it meets all security standards for “regular“ card terminals. As soon as the card is being read, the transaction is encoded with a unique code. This data packet is being transmitted from the terminal to the Smartphone. It is merely a transmission medium, but it does not store and decrypt any data on its own. Even if the data packet is being intercepted, it cannot be decrypted without the code.
Entirely contactless payment solutions are more and more being discussed. Which ones are going to catch on and to what extent does a focus on traditional credit card payment still make sense?
The topic of NFC (near field communication) is currently being heavily discussed, but the question is when and how much these solutions are actually going to be accepted in the market. Compared to contactless payments, we see the advantage of our model in users not having to change their behavior patterns and being able to pay by card as usual. We believe that contactless payment will catch on on a broad basis not until sometime down the road. After all, until users are ready to change their behavior, they need a reliable, standardized technology they can also trust.
Interview by Daniel Stöter, EuroCIS.com