Recently, Dave Birch confirmed what I learnt the hard way at the beginning of the TEDIPAY journey: consumers are wrong. That was why three years ago we decided to
follow Steve Job's advice who famously said that "it isn’t the consumers’ job to know what they want."
It seems that more and more companies have started to realize that "not only do customers
not care about security, they will actively switch to service with less security if it is more convenient or cheaper despite
telling researchers that they value security and think that security is important."
It's not about cutting corners, it's about delivering unparalleled user experience. Barclays did it with Pingit, Bankinter did it with NFC payments - I was critical of both,
btw, from the security point of view, but I am now seeing the other (very attractive) side of the medal much clearer.
Coming back to the main subject, current merchant-oriented mobile payment solutions are "lemminged" around dongles. That's where they get it all wrong, in my opinion. Yes, those companies did raise dozens of millions in funding; yet, half of them are not
likely to be around in a few years' time, when the "dongle bubble" bursts.
Think about "casual merchant". If card payments can be done via m-commerce solution on a mobile phone, why bother paying for the dongle (and, in some cases, paying a monthly fee too) and then carry it around and fiddle with it?
The cost difference - on the transaction level - between a dongle and the "show me your card" payment method is way below 1% - a "rounding error" even for taxi drivers (whom customers regularly tip 10-15%). One could argue about fraud and chargebacks - yet,
there are effective means to deal with that.
Unlike pure MOTO, the "show me your card" scenario is not, strictly speaking, "card/cardholder not present" as merchant does get to see both the cardholder and the card. That's a crucial difference, if one plays it right...
The mobile payments market is (gradually, for now) moving away from "secure element" and "EMV" to "convenient ubiquity". There will be many dust-covered dongles. And tons of "something/someone present" transactions. Watch this space...