Card readers that attach to mobile phones suddenly have become a hot industry topic, and HomeATM ePayment Solutions is about to throw its own device into the mix, PaymentsSource has learned.
CircleSwipe, a modified version of HomeATM’s SafeTPIN card-swipe and PIN-pad device that attaches to a personal computer, inserts instead into the audio jack of mobile phones. The Montreal-based company has 12 prototypes it is showing to merchant acquirers, which would sell the product, according to Kenneth Mages, HomeATM chairman and CEO.
HomeATM in March expects to ship 30 beta units and have priced an order for 250,000 devices for a large merchant services provider Mages declined to name.
Square Inc., the latest venture by Twitter founder Jack Dorsey, captured the industry’s attention with its cube-shaped card reader that attaches to the audio jack of Apple Inc.’s iPhone. HomeATM’s SafeTPIN reader, however, always had the ability to work with a mobile phone, Mages contends.
“We filed a bunch of patents on the way we do it, but by no means am I saying [Square] is doing it with our technology,” Mages says. The Payment Card Industry Security Standards Council certified SafeTPIN last year.
HomeATM has benefited from the buzz Dorsey created, Mages says. Companies originally skeptical of SafeTPIN now are reaching out to discuss CircleSwipe, according to Mages, though he declines to note specific companies.
The rubber, half-circle CircleSwipe device contains the same encryption technology as the company’s SafeTPIN reader. The technology encrypts the Track 2 data on the magnetic stripe on payment cards. Track 2 data contain information such as the card’s primary account number and expiration date.
HomeATM also has a patent pending on technology that powers the CircleSwipe. A power source is needed to encrypt Track 2 data, Mages says. The technology will use sound waves and friction from the card swipe so that no battery is need and there is no drain on the phone’s battery.
Distribution of SafeTPIN has been the greatest hurdle HomeATM has had to overcome, Mages says. Though some experts also believe consumers generally do not want an additional peripheral device to attach to their computers, Paul Turgeon, president of Payments & Processing Consultants Inc., disagrees.
“If I tell you there is a device that is guaranteed to protect your information when you shop online, I’m pretty sure that person will have no problem attaching another device to a computer,” he says. (Turgeon a decade ago headed up NYCE Corp.’s initial SafeDebit venture, in which consumers would use a CD-ROM to enter their PINs when shopping online. It failed to capture market interest. NYCE now is testing a software version of SafeDebit that creates virtual debit card information for one-time use (see story).) http://www.paymentssource.com/news/nyce-partners-with-cardinalcommerce-to-commence-safedebit-rollout-3000050-1.html
If the perception Turgeon describes does exist, Mages believes it is changing thanks to Square. “Now an extra peripheral might be accepted,” he says. “People seem to like [Square], and we’re now getting vetted on a lot of different levels by a lot of different people who weren’t taking my calls initially.”
But HomeATM already faces additional competition. Besides Square, Mophie LLC and VeriFone Holdings Inc. each announced their own payment card readers for mobile phones.
Mophie incorporates the card reader into a case that covers the back and sides of a mobile phone. The card reader extends from the bottom of an iPhone and attaches to the phone through its 30-pin connector, which also connects the phone to a computer or other accessories. VerFone’s device also slips around an iPhone. Each device is compatible with an iPhone application. HomeATM is developing a mobile application for the most-popular smartphones, Mages says.
Turgeon believes the creation and availability of multiple payment card readers for mobile phones boosts the concept’s credibility. “The more, the better,” he says.
Mages hopes CircleSwipe will appeal to merchants in their 20s and 30s. That also happens to be the demographic that uses Twitter most often, he says. “Those are the type of consumers who will use these devices,” Mages says.
CircleSwipe users will need to establish a merchant account through HomeATM, Mages says. He compares process to opening a PayPal Inc. account, which eBay Inc. and other merchants use. Ebay owns PayPal.
HomeATM also is considering processing CircleSwipe transactions or using a third-party.
