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A Thing A Bigger Thing

Tuesday, September 13, 2016

Fintech in sync with smartphone OEMs

F intech companies met Apple Inc.'s Sept. 7, 2016, launch of the iPhone 7 series with an array of market-ready solutions. Many had anticipated the company's decision to eliminate the iPhone's audio jack. Apple's move ‒ hailed as "courageous" by the company and widely panned by consumers and merchants who rely on audio jack access for their ear buds and payment card reading peripherals ‒ spawned an immediate array of aftermarket solutions.

Payments analysts expect some products to have longer shelf lives than others. Many view wireless payment card readers as more future-proof than dongles designed to convert the Lightning port on iPhones into makeshift audio jacks. "Dongles were introduced as a bridge technology during early stages of EMV adoption," said Kathleen Houseman, Senior Vice President Sales and Marketing at Castles Technology Co. Ltd., a global POS device manufacturer with U.S. headquarters in Atlanta. "Many merchants hated the dongle and have since moved on to newer forms of technology."

Derek Webster, Chief Executive Officer at New York-based CardFlight, a mobile payments technology company, said, "In a BYOD [bring your own device] world, service providers must have the flexibility and range to work with whatever technology their merchants are using. The future of technology will be based on digital communications, so moving away from analog technology is an inevitable and necessary step. It will be interesting to see where the industry as a whole takes it from here."

Samsung's flame-out

Fintech companies were also quick to react to Samsung's global recall of the Galaxy Note7 in the weeks following its Aug. 2, 2016, launch. The smartphone was recalled due to its highly combustible lithium battery. "We are asking users to power down their Galaxy Note7s and exchange them as soon as possible," stated Samsung President of Mobile Communications Business D.J. Koh. "We are expediting replacement devices so that they can be provided through the exchange program as conveniently as possible and in compliance with related regulations."

Payments analysts, banks and third-party developers have been largely unfazed by the recall, and expect the re-introduced, stabilized Note to have Samsung Pay, a mobile wallet scheme that is not dependent on near field communication (NFC) and can be widely used in stores. Many look forward to leveraging the platform's biometric capabilities, which enable users to authenticate purchases with iris and fingerprint scans.

"Battery issues are not limited to Samsung," Houseman said. "Apple and other manufacturers have had flaws and issues. Castles peripherals have battery life of 55 hours in standby mode and 78 hours in sleep mode, eliminating the need to constantly recharge the smartphone."

Apple, Android payment peripherals

New product releases by arch rivals Samsung and Apple typically generate millions of advance orders throughout the carrier networks and downstream supply chains.

While T-Mobile may regret calling the Galaxy Note7 a "sizzling new superphone from Samsung," many Android loyalists are opting for the carrier's offer in which qualifying consumers "can choose between a 256GB microSD Memory Card to store all the pictures and video you take while skydiving, a Samsung Gear Fit2 wearable to respond to texts or track your step count while rocky mountain climbing, or a year of Netflix – over a $110 value – to watch someone else go 2.7 seconds on a bull named Fu Man Chu," T-Mobile noted.

Apple called Apple iPhone 7 and iPhone 7 Plus "the best, most advanced iPhone ever," with advanced camera technology, efficient processors and iOS 10 operating systems for improved image quality, processing speeds and extended battery life. "iOS 10 also opens up incredible opportunities for developers with Siri, Maps, Phone and Messages APIs, allowing customers to do more than ever with the apps they love to use," the company stated.

Concurrent releases of mobile payment peripherals, compatible with Apple and Android operating systems, demonstrate the payments industry's agility and innovation. Many of these portable devices support contact and contactless EMV (Europay, Mastercard and Visa), magnetic stripe payment cards and a range of mobile wallet schemes.

Apple's iPhone 7 launch prompted a series of payment service provider and OEM notifications, advising channel partners and customers that wireless solutions are available. For example, CardFlight disclosed it was taking orders for Miura Systems Bold B500 and Bold B550 payment card readers.

"The Bold B500 is particularly valuable for smaller merchants who want to accept EMV payments or prefer to connect to a card reader via Bluetooth rather than the audio jack connectivity used in CardFlight's other readers," the company stated. "The Bold B550 offers NFC contactless payments acceptance, in addition to EMV chip card and magnetic stripe support."

Also, Castles Technology launched MP200, a fully certified, portable device designed for large and small business owners, stating: "MP 200 offers Bluetooth, Wi-Fi, micro USB and GPRS/ 3G connectivity. It also accepts EMV, mag-stripe card payments and NFC/contactless payments such as Apple Pay."

Advance orders, deployments

Payments industry resellers and downstream channel partners have reported a spike in orders for wireless mobile payment peripherals. Randy Hayashi, Chief Operating Officer at Payment Depot, a CardFlight channel partner based in Orange, Calif., is taking orders for the Bold B500 and B550.

"This is a clear indication that the industry is moving toward Bluetooth and wireless technologies," he said. "Audio Jack is a 50-year-old technology, and with so much emphasis on security in payments today, it's a great time to switch."

Hayashi expects the new readers to generate fewer Help Desk calls. The company frequently receives calls from merchants who ask why their card readers aren't working. Customer service technicians will then ask merchants if the smartphone microphone is turned on and at maximum volume, which usually solves the problem, he said.

As he reflected on ever-changing mobile technologies, Webster said, "The lesson here is product development cycles move very fast. We're no longer in a world of purpose-built payment terminals. As a service provider you need to be nimble and iterative as a core competency or you need to partner with companies that can do that."

Houseman concurred, adding, "It's phenomenal that Apple is taking a leap of faith by changing the most popular smartphone in the world. Payment service providers must continue to offer a range of connectivity and communications options, whether it's 3G, Bluetooth, Wi-Fi or NFC, to give merchants a payment platform they can rely on, no matter what."


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