July 2016 Monthly Member Bulletin

• Executive Director’s Corner
• Council Highlights
• Security of Things Conference Registration
• Upcoming Training Sessions

Executive Director’s Corner

Dear Members of the Smart Card Alliance,

It has been an interesting time handicapping the latest entries into the mobile wallets market.  With each passing month, it seems another mobile wallet solution is announced and the payments press fills their magazines and digital media forums with columns of text about how this new mobile payments scheme differs from the others and why its backers believe theirs is the killer mobile experience that is going to change consumers’ behavior for how they shop and pay.  So far, what I have seen is that with each new iteration, a new segment of users is enticed to try it out, while other existing mobile wallets loose some of their “newbie” appeal.  And, with the exception of Walmart’s own in-store wallet solution, the merchants don’t seem to have much interest in any of them.

We are coming up on five years with various forms of mobile wallets in the U.S. market.  So far we have witnessed the mobile operator-centric model (Isis/Softcard), the mobile device-centric model (Apple Pay, Samsung Pay), the merchant-centric model (CurrentC, Walmart Pay), the bank-centric model (US Bank, Chase Pay), the mobile OS-centric model (Android Pay), the mobile browser-centric model (Google Wallet) and even the payment brand-centric model (Visa, MasterCard).  Each one has promoted its unique differences which sound terrific but all have their limitations.  In most cases, the mobile wallet choices are limited by the mobile device you have, and using that device to make a payment is limited by where you shop.

Mobile users just want something that is easy to use, doesn’t require them to switch equipment, and is able to be used wherever and whenever they have the urge to do so.  And that is where the greatest challenge has come from for mobile solutions providers.  Consumers just can’t find that repeatable, remarkable, check-out experience yet.  I can’t fault the mobile wallets schemes entirely for this problem.  No one developing mobile solutions, which often take more than three years of designing, testing, and piloting before commercial deployment, foresaw that the U.S. migration to EMV would be this complicated and take this long to get merchants upgraded and operating with new EMV and NFC-capable terminals. Even now, nearly 10 months after the October 2015 liability shift date, we have many merchants who are still struggling with getting EMV debit working to their satisfaction, so they are hardly motivated to extend that timeline even longer to add NFC/contactless enablement for credit and debit at the point-of-sale.  Just when some people predicted that the slow transaction times and frustration with people inserting chip cards instead of swiping them would drive more consumers to demand retailers to accept their faster mobile wallets to reduce wait times, along came the announcements that American Express, Discover, MasterCard, and Visa were going to tinker with the EMV authorization process and make EMV chip card checkout seemingly work faster — thus disincentivizing merchants from investing in mobile payments acceptance to create faster payments.

So where is this all leading?  I think you have to have a long view on mobile wallet adoption.  The long history of mobile payments has been fraught with unfortunate events that have hindered a quick, smooth transition to mobile.  Although some solutions have already folded in the face of bad business models, politics, and technology shortcomings, there are still powerful drivers of consumer innovation that stay committed to their cause.  Some of the largest and most popular brand names, like Apple, Samsung, Google, Walmart, Visa, and MasterCard are still in the game.  They have deep pockets and millions of loyal customers.  They are not relying on mobile payments alone to be a leader in their markets.  In addition, the long, difficult EMV migration has turned the corner and consumers are still in love with their mobile phones – so eventually today’s fragmented market of users of various smart phone devices will find merchants who have come through the EMV migration grinder and have enabled mobile acceptance.  At this point in the near future the market forces will finally be aligned with consumer demand and mobile wallet lovers won’t have to wonder when the promise of ubiquitous, convenient, tap-and-go payments on their mobile device will be a reality.

If you want to learn more about the mobile wallet wars, look for an announcement soon about a one-day workshop being planned for September 15th, called “Mobile Wallets – the Wild West of Payments,” to be held at the Smart Card Alliance’s National Center for Advanced Payments and Identity Security in Crystal City – Arlington, VA.  The workshop will also be live video-streamed over the Internet for people who cannot travel to the Washington, DC training center.  Registration will open shortly.

Council Highlights

Councils published one white paper, continued work on five white papers and launched three new projects. The Councils are also in the planning stages for two webinars, new infographics and additional educational resources.

• The Internet of Things (IoT) Security Council is working on a white paper on embedded hardware security for IoT applications
• The Mobile Council is currently working on three projects: mobile identity authentication white paper; mobile profiles and provisioning white paper; tokenization webinar. The Council is also defining the statement of work for a Trusted Execution Environment (TEE) 101 white paper
• The Payments Council published the new white paper, Contactless EMV Payments: Benefits for Consumers, Merchants and Issuers and is developing statements of work for two follow-on projects – merchant and issuer infographics and educational webinar. The Council is also working on white papers on use cases for the EMVCo Payment Account Reference (PAR) and blockchain and smart card technology

• The Transportation Council is currently working on the multimodal payments convergence white paper, updating the reference architecture white paper, and developing the statement of work for a webinar on mobile ticketing and NFC

If you would like to participate in a Smart Card Alliance Council, please contact Mike Strock, [email protected].

Congratulations New Recipients

CSCIP/Government Certification

• John Aranha, XTec Incorporated
• Jeffrey Poulson, XTec Incorporated
• Frank Luo, UL

CSCIP/Payments Certification

• Honore Afene, UL*
• Chin-Hwang Chen, UL*
• Jaison Jacob, UL*
• Dinesh Babu Kolavennu, UL*
• Margaret Liu, UL*
• Frank Luo, UL*
• Naisha Mack, UL*
• Asim Patra, UL*
• Manis Raje, UL*
• Felipe Riso Bezerra Leite, UL*
• Bart van Hoek, UL*

*Denotes Corporate Exam