User:PayTechGuy/sandbox

The PayTech of Things (PToT) is the group of payment devices that integrate contactless payment technology such as RFID and NFC with secure payment networks (e.g. Visa and Mastercard) and physical, everyday objects. These new form factors ('things') are an alternative to traditional physical payment cards and are outside what can be defined as wearable payment technology.

History

The initial form factor for electronic payments was the physical credit card. Barclaycard was the first British credit card introduced in the United Kingdom, in 1966. It enjoyed a monopoly, until the introduction of the Access card in 1972. Debit cards were launched in the UK in 1987 in a similar plastic card form factor featuring a magnetic stripe and signature panel.

In 2002, Chip & PIN cardholder authentication was announced in the UK, representing a major step forward for the security of card payment transactions.

The first contactless payments were associated with debit cards and occurred in the UK in 2007. These contactless debit cards used RFID and NFC technology to offer a quick and convenient alternative to cash for low-value transactions. In the same year, a mobile phone with built-in contactless payment card technology (and Oyster card functionality for travel) was piloted in London. In 2012, contactless payments were introduced on London buses.

Since that time, consumer adoption of contactless technology has grown strongly with statistics published by the UK Cards Association (March 2017) showing 442.5m contactless transactions were made during that month alone, representing an increase of 19.9% on the previous month and an increase of 146.3% over the prior 12 months.

Emergence of wearable paytech devices

As consumer adoption of contactless technology grew, payment processing technology companies sought opportunities to embed contactless payment technology into a wearable form factors for their clients.

In 2005, clothing brand, Lyle & Scott launched The Lyle & Scott Contactless Jacket that enables the wearer to make contactless payments using a Barclays bPay chip housed in a pouch in the cuff.

Kerv Wearables launched what it describes as the ‘world’s first payment ring’ early in 2017. The ring does not require charging or pairing with a smartphone to make a payment. The ring is linked to a prepaid Mastercard account. 

 In 2005, the spending limit on contactless payments was increased from £20 to £30, enabling the average supermarket spend of £25 to be covered.

Turning ‘things’ into payment devices

Payments by mobile phones and wallets

Mobile phones were an early ‘thing’ to be targeted to become a payment device. In 2013, Kalixa Group launched the moneto prepaid wallet in the UK which claimed to be able to turn any phone into an NFC payment device. The moneto wallet allows users to tap and pay and was based on Mastercard’s PayPass technology, The NFC chip and technology, including antenna, was held on a micro SD card rather than being native to the device itself. The technology however was not compatible with iPhones and so moneto bridged this gap by developing a phone case that supports the hardware.

Apple Pay was announced on September 9, 2014. The mobile payment and digital wallet service lets users make payments using an iPhone, Apple Watch, iPad or Apple Mac.

Android Pay was released in 2015. Android Pay is a digital wallet platform developed by Google enabling users to make payments with Android phones, tablets or watches. Android Pay builds on the base established by Google Wallet, released in 2011.

Consumer adoption of mobile wallets has been slow and low. According to research presented in 2017 by PYMNTS.com, the percentage of people that have tried wallets has flattened out and actually in decline for Apple Pay. This trend is evident despite security concerns becoming less of an issue for all wallets. The research suggests that mobile wallets do not offer consumers a sufficiently high level of added value over current payment methods. The most common explanation offered by consumers for why they are not using Apple Pay and Android Pay was ‘I am satisfied with my current payment methods’. (Nearly 49% for Apple Pay and 41% for Android Pay), and there is an upward trend in those results in the past two years.

Payment by other 'things'

While the research shows that consumers are not finding mobile wallets a sufficiently compelling proposition to change their spending behaviour, other contactless payment form factors are emerging.

UK high street fashion retailer Topshop collaborated with Barclaycard on a range of paytech things marketed as The Topshop x bPay collection that extend the beyond traditional wearable technologies. The range included phone cases and keychains featuring the bPay by Barclaycard contactless chip, which links to a secure digital wallet.

Australian mobile network operator Optus updated its range of contactless payment accessories to include a SmartCup — a coffee cup that includes the new Optus Pay PayTag in its base allowing consumers to make contactless payments up to US$100 at any payment terminal that accepts Visa PayWave.

HCT Group is a cosmetic packaging company that works with many leading brands. It has collaborated with Mastercard to turn compacts and other cosmetic packaging into contactless paytech devices. The cosmetic item is loaded with a set amount of money so the end user can go out for a night with just her compact (and contactless cash) stored on a chip.

In July 2016, a 22-year-old student invented a set of false nails that carry an RFID chip that allows payment for travel on the London transport network. The press-on nails were also colour coordinated to match the Oyster card design.

In a promotion aligned with its ‘Make Your Day Flow’ marketing campaign, energy drink brand Lucozade handed out thousands of special bottles that were enhanced with contactless payment chips. Each bottle was pre-loaded with a credit for a free ride on the Transport for London network.