Cellum Insights

Any smartphone should be smart enough for brilliant mobile payments

Guest post by Cellum Global CEO Dr. János Kóka

A year ago, a quiet but seismic shift took place in the telecommunications space, when smartphones began to outsell feature phones, with 51.8% of mobile phone sales in the second quarter worldwide.

Cellum Global Chairman & CEO Dr. János Kóka

Cellum Global Chairman & CEO Dr. János Kóka

While undoubtedly a sign of tremendous progress, the fact that almost half of new handsets sold are still feature phones is a reminder of how far behind much of the world’s mobile population remains in terms of hardware – and is likely to remain, as today’s smartphones slowly degrade into tomorrow’s “dumb” phones. And this is not even to consider the unequal distribution of knowledge and investment in apps and the other add-ons that put the “smart” in smartphone.

Just as too many consumer startups focus on building products for select pockets of affluent young singles in place like San Francisco and London, the mobile payments industry seems to habitually overestimate what should be expected of consumers and merchants in terms of handsets and other hardware. Instead, the mantra of the industry should be clear: Any smartphone should be smart enough for brilliant mobile payments, and any other required hardware is pure friction.

The most conspicuous example of what I am talking about is Square. The inability of micro-enterprises and individuals to accept plastic card payments was certainly a problem worth solving, and in many ways Square has done a good job solving it. But anyone can see that requiring merchants to procure a special card-reading peripheral and hang it off their device is at best a temporary solution. A similar shortcoming hobbles near-field communication (NFC)-based “tap-and-pay” solutions. These not only require merchants to install specialized point-of-sale equipment, but demand NFC-enabled handsets and raise issues vis-à-vis local carriers.

Instead of all this extra gear and requirements, wouldn’t it make more sense to just rely on the natural “abilities” of the average smartphone?

This, for example, is why we at Cellum are so excited to be making genuine innovations in the area of QR codes, which utilize the two things all smart phones possess: A camera and a display. (Anyone who thinks QR codes are passé hasn’t seen our “motion QR”, which blends together multiple sets of data into one dynamic code that changes ten times a second, so it can be displayed without any risk of being copied or forwarded.) Overall, it is clear to us that the display will play an increasingly critical role in facilitating payments and related transactions, such as those involving loyalty schemes.

All this is not to say that certain new hardware elements won’t some day turn out to be crucial to the mobile payment revolution. But the technology of the moment that seems to most fit this bill – fingerprint recognition – is, to be charitable, a work in progress. Instead of fingerprints, we may very well end up discovering that the best way to securely link user and device is through facial recognition or even scanning of eye veins, using the high-resolution user-facing cameras that already ship on most smartphones. With each passing day it becomes more apparent that the winning combination in mobile payments will be that which requires the least extra work or gear on behalf of the customer.

Using the basic “building blocks” that we have now not only can help bring forward the era of ubiquitous accessibility of mobile payments. It will also put genuinely future-proof wallets into the hands of untold millions of consumers. Today’s smartphones are smart enough to make this happen. The question is whether we are.

The above article, by Cellum Global Chairman & CEO Dr. János Kóka, initially appeared in the September issue of The Paypers.