Barry Levett
CEO
Payments innovation have always been about increasing customer convenience, whilst keeping personal financial details as secure as possible. SoftPOS has now become mainstream as acquirers and payment service providers are rolling out mobile apps to enable merchants to accept payments from consumers with the simple tap of their card. However, what about the technology being used on consumers’ own phones? Tap on Own Device (ToOD) offers significant potential for mobile consumer app-based payments growth.
Consumer app payments on the rise
Consumer payments behaviour has changed massively over the last few years. According to Statista’s Consumer Insights, the share of consumers who regularly process banking transactions via their smartphone or tablet increased from 63 per cent in 2019 to 71 per cent in 2023.
As consumers have become more comfortable with transacting via mobile apps, merchants have responded in greater numbers by launching payment-ready consumer apps. So, your favourite coffee retailer that enabled you to collect points, receive gifts and other ‘engagement’ content now also enables you to purchase your chosen brew via their consumer app.
However, these payments are typically wallet-based (i.e. e-commerce ‘card not present’ transactions). In most cases, you put in your chosen card details and they are stored within the consumer app unless you delete your card details and disable payments within the app.
Some more sophisticated apps allow for tokenization (see my previous article); or use Apple, Google or Samsung Pay to provide some protection for subsequent transactions. There is still the issue of initial tokenization as well as having the ability to complete one-off transactions.
However, there are several important use cases which confirm the value of enabling card present transactions via these ‘tap on own device’ (ToOD) to pay transaction-ready consumer apps. Mypinpad is currently conducting several pilots around the world to investigate where ToOD and card present transacting can work together very effectively to improve transaction security and user experience. This piece shares a few relevant use cases worth exploring.
Business not personal expense
It’s Friday, you want to buy some coffees for your team in the office. You have taken everyone’s order on your app and you now go to the nearest café to collect and pay. However, you don’t want to charge your personal banking card which is attached to the app. Instead, you could now pay as a guest using your business credit card. The advantage of this approach is that your credit card details will not be stored on the app and you are present to authorise this one off transaction which is clearly a legitimate business expense.
The family shop
The idea of not storing sensitive card details which you don’t want widely shared also goes for apps which the whole family might share as shopping baskets are being built. Perhaps that supermarket app which you share with the rest of your family is a good example. You may not want your children to be able to see all your bank card details in case they get tempted to borrow the card to buy something else online without your permission. Enabling card present only payment ensures that you retain control over what items you ultimately pay for in the weekly shop. It avoids the potential of card details being stored in browser history, potentially reducing the risk of abuse.
Platform-to-consumer services apps
The use of platform apps which enable order and delivery of multiple different types of food to your door exploded during the Pandemic and the market is still growing fast all over the world. In the UK, your food delivery app might be Just Eat or Deliveroo. In the US, it’s more likely to be DoorDash or GrubHub. In Asia, HungryPanda is the Number 1 food delivery app.
Whatever your chosen food delivery platform the scenario is likely to be the same. You are over at a friend’s house with others. Your host pulls up their favourite food app on their own phone. However, he doesn’t want to pay for all your food via his app, so he sets up the new order to include guests. Your host will pass his mobile device over to you to select your take-away outlet of choice and order from the menu.
Once you have completed the order, you put in your own card details specific to, say, your McDonalds order via his UberEATS app. Paying this way, your friend’s app will not keep your card details. The chances of card not present fraud fall away to zero as no card details are shown onscreen or stored in the app or browser.
Going dutch the digital way
SoftPOS-enabled Tap on Own Device also offers a great use case around ‘going dutch’ or splitting, say, a restaurant bill evenly between a number of guests who have joined you for dinner. You know the scenario: it’s getting late, you’ve all finished eating and drinking and are ready to head off home.
In the pre-ToOD days, and before merchants had their own consumer payment-enabled apps, this was slow and difficult. It might take more than 15 minutes to find an available waiter with access to a card terminal, get them to collect and charge multiple bank cards – asking awkward questions about the amount each is prepared to pay. This whole process can now be handled seamlessly in less than a minute with the aid of ToOD.
What would the new customer experience look like? You might choose to go into that merchant’s consumer app, or enter via a QR code on your table, to place your order and get others to place there’s in the same way. At the end of the evening, simply return to the restaurant’s platform to pay – tapping your phone against the phone that is displaying the merchant’s consumer payment interface. One device acts as the sender of the money, the other as a receiver.
If you want to go dutch, many payment platforms already offer the capability to automatically split the bill between the number in the party, or the number of payers, or by specific part of the order, and then ask each of them to tap their device against the assigned ToOD device which has the live mobile app open on the bill/basket in question. This capability is fully managed and all payments are authenticated until the total balance goes to zero and full amount is paid to the merchant.
In summary
What then are the key advantages of exploring the option of card present transacting via consumer apps? Put simply, it offers that great combination of a good user experience with tighter security. It offers yet more strong use cases for SoftPOS adoption which can only drive up the amount of payments that transact via consumer apps. These examples can only encourage merchants to build out the functionality of their consumer apps, expending to card present ‘guest’ or ‘one off’ payments and bill splitting where appropriate.
So, ToOD looks ideal for accepting payments on the move at point of delivery. For example, it works well for food delivery businesses or home-based services providers such as at your home ‘mobile’ dog groomer, gardener or your window cleaner. It takes the payment to the point of consumption which appeals to consumers and also works well for merchants.
ToOD also lowers the friction associated with mobile payments still further because you use the credentials and security associated with your phone to keep the payment secure, while simultaneously speeding the transaction up for app holders and guests alike.