18 February 2018
Milos Dunjic


Milos Dunjic - TD Bank Group

15Posts 91,714Views 15Comments
Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

WANTED: Unified Contactless Kernel at POS

05 August 2017  |  11474 views  |  0

Contactless/proximity payments are promising technology, bringing speed and convenience to the checkout counter. They are supported by pretty much all payment schemes – Mastercard has PayPass, Visa has payWave, American Express has ExpressPay, Discover has ZIP, JCB has JSpeedy, Interac has Flash, etc. This also includes support for NFC-based mobile payments (mainly using so-called ‘NFC card emulation mode’).

At the lowest, so-called ‘transport level,’ all contactless implementations build upon the well-established ISO 14443 NFC standard. However, at the higher ‘application level,’ all of the payment schemes have different implementations in their attempts to optimize the standard EMV message flow for a faster contactless environment.

On top of the existing contactless implementation differences between payment schemes, within each of the payment scheme’s specific implementations, they offer two different profiles/modes of operation which must be supported – ‘mag stripe emulation’ and ‘optimized-EMV.’

It is a messy scenario for anyone trying to understand and introduce, rollout and support the contactless/NFC technology at the POS.

Here’s what POS vendors, acquirers, and merchants must go through if they want to enable contactless payments:

  1. For each payment scheme, they must plan to go through a separate certification process of that scheme’s contactless POS kernel and to have the budget to periodically recertify it. 
  2. For each payment scheme, the POS kernel must automatically support and be certified for two separate modes: mag stripe emulation and optimized EMV.

Basically, we currently have five different competing payment scheme contactless implementations, times two different mandatory contactless modes of operation for each payment scheme. That is a total of 10 differently behaving contactless kernels – all basically doing the same simple thing – i.e., executing quick ‘tap payment’ at POS terminal

Here, we have an opportunity for real innovation – to dramatically simplify the technology stack, reduce the contactless/NFC electronic payment transaction deployment costs, improve the cost of support, and in the end, potentially significantly improve the contactless transaction economics. Isn’t it long overdue for the payment industry to unify behind the single contactless specification (as is already the case with the ‘contact EMV’ standard), put it under EMVco control and follow the same standards? POS vendors, acquirers, and merchants would all welcome such direction.



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Milos's profile

job title AVP, Payments Innovation Technology Solutions
location Toronto
member since 2016
Summary profile See full profile »
Technology executive fascinated with and focused on payments innovation. All opinions are my own and not of my current nor prior employers

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