Eliminating the need for Near Field Communication hardware or computer chips, French electronic transactions provider Tagattitude is using digital sounds at the point of sale to accommodate mobile payments without storing card data in smartphones, the company announced Oct. 19.
The application, called NFC2.0 with near sound data transfer, will be available as part of Tagattitude’s TagPay mobile-payment application sold to banks, financial-services institutions and telecommunication companies. It operates on any major wireless network, the company says.
By upgrading TagPay with the sound data transfer, Tagattitude seeks to expand its offerings beyond its current target of selling mobile-pay devices to telcos in countries with low-end mobile phones and little access to financial services.
When using NFC2.0 to make payments, the consumer’s mobile phone microphone captures a sound signal from the merchant’s smartphone and relays it to a bank server to confirm the buyer’s credit card data, a Tagattitude spokesperson says.
“The audio signal is actually a one-time password coded into inaudible frequencies of sound,” Isabelle Berner, head of marketing for Tagattitude, tells PaymentsSource. “By sending a unique signal to one device and having that signal picked up by another device, this allows the NFC2.0 server to ‘pair’ the two devices with an extremely high level of security.”
A merchant’s smartphone must be enrolled in the NFC2.0 platform to establish a link with its bank. The merchant initiates a transaction using the application by keying the payment amount onto the phone (or iPad) keypad and sending it to the acquiring bank, and the app responds with a sequence of audio frequencies played through the merchant phone. When the customer hits “pay” on his application, his phone picks up the signal from a few inches away, and the preauthorization is sent to the issuing bank’s server, where the transaction is approved directly or a request for a PIN code verification may be triggered, Berner explains.
TagPay serves as a standalone, closed-loop payment scheme in unbanked markets and as a “gateway” to enable mobile transactions by integrating with a bank account management server in more developed markets, Berner adds.
Merchants would need the TagPay software to be able to use the sound data transfer, which is included in the TagPay application.
Because Tagattitude does not sell software applications directly to consumers (it develops payment programs for banks and others in the payments industry), the challenge to secure acceptance of NFC2.0 falls mainly with those clients, Berner says.
But Tagattitude believes the security of the technology and the company’s strong background in the smartcard industry will overcome any obstacles, she adds.
Before adding NFC2.0 to the TagPay application, Tagattitude was selling TagPay to companies targeting countries with low-end phones and limited access to financial institutions, Berner adds.
Without the data sound transfer, a TagPay transaction is completed by a merchant using a TagPay1600 terminal for keying in the transaction amount. The consumer hits “pay” on his phone and places it in a holder on the terminal to connect to authorizing banks, the company website explains.
“Overall, TagPay-based services have been embraced favorably up to now, and we expect that with the addition of our new NFC2.0 technology, usage and uptake will grow much more quickly for those with smartphones,” Berner says.
Celent analysts based in London view the new application as another interesting development in mobile payments, but they have some reservations.
NFC2.0 solves a problem on the consumer end by allowing many more phones to use the application, but securing merchant acceptance may present a problem, analyst Zil Bareisis tells PaymentsSource.
“Merchants need to be part of this scheme, which we've always maintained is incredibly hard for anyone to achieve,” Bareisis says. “While I am optimistic about PayPal's capabilities to extend their merchant relationships, I think it will be very hard to do the same for most others.”
Moreover, Celent analyst Gareth Lodge is skeptical of any development in mobile payments, whether it is NFC or some other technology. He contends much more time is needed to develop a standard for mobile-payment systems.
“As I like to say, debit cards are the overnight success that took 20 years to happen,” Lodge contends.
The success of NFC2.0 will depend on what is required of existing networks, on whether it benefits both merchants and consumers, and on whether the security process is simple, Lodge says.
“I don’t see many [mobile pay software developers] who can check off each one of those boxes,” Lodge adds.
What Berner describes as a “light” version of NFC2.0 is available for demo with “fake money” at Apple Inc.’s App Store in the U.S. and France. Tagattitude expects the app to be available for Google Inc.’s Android phones in January, the company stated in a press release.
Tagattitude clients, such as Kenya-based Mobipay Systems Inc., Nicaragua-based MPeso and Abidjan and Cote d’Ilvoire-based Celpaid Inc. in West Africa, will release TagPay with NFC2.0 as their own application to their mobile money services, Berner says.
Ultimately, consumers would obtain the software through Tagattitude client banks or telcos, Berner says.
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