Smart Acceptance Technologies: Visa Tap To Phone

Irina Kiptikova
Corporate Communications Director
IBA Group

It is the continuation of our vlog on smart acceptance technologies published on December 10, 2020.

• In your research, have you seen many micro merchants saying that they don’t want to use cash anymore and they would rather use card payments?

Yes, this technology was introduced a year ago. We launched a pilot with VISA in two different countries. We started piloting in small coffee shops. What we have found out is that it is good for these types of micro merchants. First of all, it is good from the point of view of speed of the transaction. This technology increases the speed of transactions. For example, if a seller wants to collect extra payment, he or she needs to add an extra amount on an extra device. He or she needs to care about battery charge and so on.

Now a mobile phone is a part of the everyday life of modern men and women. A mobile phone is usually in a good condition. It allows for increasing the speed of the transaction. Just enter the amount of the transaction, tap a card, and that’s all.

We received good feedback on tapXphone. The speed of the transactions increases and it will influence the speed of service and the number of customers served in these coffee shops. Thanks to these pilots, we understood that this technology is convenient and there is a demand for this technology. We see that not only micro merchants but also fashion boutiques want to buy this technology. We also see some interest from taxi services. I would say that this technology comes from small and micro merchants to bigger ones.

• Have you seen any changes with your research and the trials you have done in the coffee shop? Has there been any change because of COVID, the coronavirus pandemic? Has it changed people’s behavior and maybe they are now less interested in using cash?

You are right. The current pandemic situation has an influence on the way of payment and not only payment. The way people behave has changed. There is a term “new normality”. In this case, we need to minimize the number of touches, we need to keep social distance, and all these things present new changes for everybody. It should change the way, how we do shopping.

First of all, we see that some merchants can increase the number of payment terminals because there’s no need to pay for extra hardware, which is not easy to adapt to real life. The technology creates big opportunities and helps avoid big queues. You can pay for your goods in a place where you are chatting with shop assistants. Waiters can collect more payments thanks to the increased quantity of payment terminals.

What is more important is that the number of contactless payments has increased during this period based on our analytical research. I think it is predictable and understandable. When we try to pay in cash, some change may be needed and I would not say that money is clean. We all know that money is somewhat dirty. This is one of the ways for people to handle the potential risk of paying with cash.

People use contactless technologies to pay without touching any POS terminals or cash. This is why contactless technology is becoming more and more popular. From this point of view, adaptation and penetration of digital POS terminals will create great opportunities for the transformation of the way how we make our payments.

• Can this technology work without the internet?

It’s forbidden to use the technology offline based on existing requirements. You need to have access to the internet. We should not forget that this is a brand new technology. The first industrial standard was issued last winter. As far as I know, there are many discussions about enhancing this technology and probably some new offline opportunities will appear soon and we are waiting for a new standard to appear. The PCI Council announced that a new standard will be issued next year.

• The IBA Automated Fare Collection system works without the internet, right?

It is another story. I can share two new experiences, which we had with this new technology. One of these new niches is public transport. IBA and Visa were the first companies in the world to introduce this way of payment in the whole system of public city transport. We launched a pilot in one of Belarusian city. All buses with conductors were equipped with regular NFC-enabled mobile phones. In one day, all conductors were able to accept contactless payments.

Now we see that the technology is effective in terms of accepting contactless payments in transit. There are no problems in collecting payments by conductors. However, some limitations come from the technology. Now the technology is available only for assistance. That means that if we are talking about transit, only conductors or bus drivers who sell bus tickets can use this technology.

In the nearest future, I suppose we will see a new generation of ticket validators, ticket machines, which will use regular Android devices. I think it creates a good opportunity for contactless payments in public transport. As I mentioned before, one big barrier for accepting contactless payments in transport is the cost of infrastructure and the complexity of the technology.

Thanks to tapXphone, it can be implemented more easily. Another example of a new integration with an application is the integration with cash registers. If we have a look at our everyday shopping, we see hardware cash registers and a POS terminal. You pay for the goods and receive a paper receipt with a list of purchases and one more receipt from a payment terminal with transaction details. Today we can do without.

In some countries, there is online fiscalization. There is no more need to have a physical cash register. It is also a trend for digitalization. Talking about digitalization, we are talking about online cash registers. If we combine digital cash registers and digital POS terminals, we will have a new niche and a new way of shopping. It means less hardware and fewer receipts. This solution is also eco-friendly because we care about trees, as no more extra paper is required for receipts. You can just use digital payments and I think it is good for everyone.

• The only company that does this right now is Apple. They don’t have cash registers in their stores. The sales assistant comes to you and you pay the assistant directly. But you are saying that this will just become normal. Does that mean that stores will see the end of cash registers, the end of lines to pay, and will just have assistants coming to us?

I agree. You’re right.

• Ok, I think that was everything I was going to ask except maybe one thing. I just wanted to check what you meant when you were talking about the pilot. Does the public transport system use the same Tap To Phone technology you were piloting and using for your retail solution?

Our tapXphone product is a payment channel that allows for accepting contactless payments securely on regular NFC-enabled mobile phones. Now we are looking for new niches and new approaches to using this technology. That is why we are focusing on integration with other mobile applications and other use cases that come from the market.

The pilot on the Automated Fare Collection System is one of the examples of how this digital POS can be integrated with fare collection. Not so long ago, Visa introduced a new program called Urban Mobility related to payments in city areas, covering all means of transport, such as public transport, parking, taxis, shuttles, and so on. This is a digital POS, a payment channel that can be easily integrated into any other device, which collects payment. That is the idea behind it. Easy integration and easy spread of convenient payment methods, including contactless payments for merchants and their consumers.

This is the final part of our vlog series on smart acceptance technologies. Get in touch with us, if you are interested in learning more about our new contactless payment solutions. Please share your thoughts and offer your topics for future videos by leaving your comments or suggestions here.