The electronic wallet – at the heart of the mobile payment challenge
Date: Thu, 11/08/2012 - 18:50 Source: Cartes press department
The initiatives launched over the past few months confirm the rapid growth of the e-wallet and are a sign of numerous changes in not only consumption modes for users, but also technologies and the sector for companies now working in the realm of payment. The CARTES trade show (whose main theme for 2012 is mobile payment) is focusing on recent developments in the e-wallet and its future prospects. Who are these players, and what initiatives have already been launched? How can the adoption of the e-wallet be speeded up? And in terms of security and personal protection, what developments are there as regards solutions to reassure users?
The e-wallet Big-Bang is under way
All the key players in payment, including MasterCard, Visa Europe, Western Union and Paypal, now have their own Wallets. "It all began in 2011 with the ISIS Mobile Wallet and the Google NFC Wallet. This latest announcement was a real detonator, marking the start of the e-wallet era and triggering off the wallet war we are now seeing," says Isabelle Alfano, Director of the CARTES show.
It's true that there have been numerous initiatives in this field over the past year. To convince not only consumers but also retailers to use the phone, PC or tablet as a method of payment, the many players now active in the payment sector (banks and payment establishments, telecommunication operators, distributors, etc.) have become aware that it is absolutely crucial to provide innovative functions and a simple, secure tool.
Which functions foster the use of the e-wallet?
According to David Marcus, the new president of Paypal, "Shopping is fun, but paying is not." To spread the use of the e-wallet, the first aim is thus to transform payment into shopping by proposing new services to consumers: price comparers, alerts about discounts and special offers, options for recharging phone SIM cards, buying train tickets, etc. To improve the user experience even further, the Paypal wallet services make it possible to assign types of expenditure or payments to certain accounts or payment cards (credit, pre-paid, debit, and so on).
These electronic wallets now store data from bank cards and loyalty cards, whose advantages they can manage automatically, together with information about deliveries. "The development of the e-wallet has only just begun. In the future, it will probably be able to store other personal data, like ID cards, medical information and health cards," says Isabelle Alfano.
Security and the protection of private life: issues and opportunities
Current developments (the deployment of e-wallets and these new functions) obviously raise numerous questions in terms of security and private life.
This is because the dematerialisation of payment cards or their hosting in a SIM-NFC card or secure component of the phone (in the case of mobile payment) makes it necessary to rethink security architectures not only in mobile objects (cell phones, PCs and tablets) but also in servers that are now cloud-hosted. Conventional payment players will thus need to reformulate their requirements concerning risk management, and reconsider their economic models.
"One of the problems that banks have to solve comes from the fact that they now need to control payment transactions in objects they no longer control," said the representative of a major French card manufacturer at the World Card Summit in the last CARTES show.
Security and data protection are crucial challenges to be met in gaining users' confidence and thus accelerating the adoption of these new means of payment by consumers and retailers. For the smart security industry, these questions are not so much challenges as new opportunities: a number of technological responses are already appearing, which associate security with personal data protection in e-wallets. Recent developments in solutions thus combine on-board security in mobile objects with trusted services provided by TSM (Trusted Service Managers). Others propose the fine-tuning of TEE (Trusted Executive Environment) security zones to execute the orders of certain sensitive applications in the mobile operating system.
With the increasing use of smartphones and tablets, the e-wallet will gradually become more widespread in our daily purchases. Numerous developments need to be envisaged, and a number of questions still have to be addressed, mainly regarding security and personal data protection.