PIN-on-Mobile is coming

December 18, 2017 // By Jeremy Gumbley
Imagine taking a regular smartphone and turning it into a payment acceptance device with a simple app download. That’s the utopian dream many companies are chasing today and it could bring huge benefits to the payments ecosystem, merchants and consumers as card and mobile payments continue to grow.

For small transactions, accepting a payment could work in much the same way as traditional terminals do for contactless card or mobile payments; using the RF/NFC rails with no need for an additional PIN pad or external device. For larger transactions, the security of the transaction needs to be strengthened by enabling PIN entry on the mobile device itself. This is commonly known as PIN-on-Mobile or PoM, as Visa and Mastercard have referred to it, or as PIN-on-Glass.

 

Targeting micro merchants

Historically, if you look at the micro merchant space where people are doing a few transactions a week or even month, they don’t want to spend a few thousand dollars on a full-blown POS or a few hundred dollars on a payment terminal but accepting cards is increasingly important to maximise sales.

This makes micro merchants the ideal candidates for turning a regular mobile phone into a payment device. They deal primarily in cash so getting them to accept payments would open a new market to the card issuers. Additionally, micro merchants tend to process low-value purchases which typically have a low amount of fraud. When you also consider that as of April this year there are already 108.4m contactless cards in circulation in the UK alone it’s no wonder the card issuers see this as a significant opportunity.

 

Card issuers seek to defend territory

For further evidence of this opportunity, we can note how Visa and Mastercard have relaxed their stance on PIN standards, which have historically progressed hand-in-hand with PCI PTS (PIN transaction security) — an onerous, heavy-weight, albeit important, security standard. The brands have always deemed PIN security important and there was a time when the notion of accepting a PIN on a consumer mobile phone would have been difficult to talk about, let alone get approved.

It’s possible that some of this willingness to evolve is being driven by the Asian market, where we see alternative and unique payment methods being adopted and becoming very popular. With the wide scale adoption of mobile phones, and the use of NFC and QR codes for payments, the card brands most likely see a threat to their business model and, in a defensive move against potential disruptors, are wisely embracing the spirit of mobile.