Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
Detailed below is the mobile payments solution I came up with in June of 2010 and that later became the foundation for the company I founded, MobilePayUSA, a TechCrunch DisruptStartup Alley Winner in Fall of 2010. The company never publicly revealed this solution, but often referred to it. It required a partnership with a payment network to make a reality, but for various reasons, we never had the opportunity to meet with payment networks while I was still CEO or a director of the company. I do not see why a payment network would not want to immediately adopt this solution. This solution could spark a war for licensing rights. The race for speed, security and ubiquity in mobile payments could make this solution the 'Holy Grail for mobile payments'. I no longer hold any IP rights whatsoever (but am aware of whom does). School of 'hard knocks' for me. But I can offer the developer of such technology additional insights and share the plans I had planned to carry out with MobilePayUSA.
How it Works:
Step 1: Merchants receive a 'Mobile Payment Initiation Card'. This card is encoded just as any credit card, but does not contain any consumer card credentials. This is not a payment card, but one acting like it is to the POS. The number encoded could be the same number at any merchant or issued per store.
Step 2: Consumer downloads mobile payment app and adds a couple of payment cards.
Step 3: Consumer pulls out phone to pay in store. Using GPS, the merchant location is pulled up, enters the terminal ID number as clearly displayed on or near POS and consumer taps on 'pay now' button.*
*The original invention (as displayed on video demo on bottom of this page) required user to enter amount due as displayed on cash register. My tech team retooled the solution to work without requiring entry of amount due and was needed to enable transactions at high volume; with the consumer virtual card swipe being initiated via mobile first. My tech team also came up with the idea to use a QR code scanner to scan the terminal ID vs manual entry of the ID. They too came up with several ideas to prevent denial of service attacks as well. EG, Steve, Ryan, Matt and Todd (my tech team) were all very talented and performed incredible work. I'll save the full story for another day, but long story short, without them we would never have made it on TechCrunch stage. We teamed to build the TechCrunch live demo in just 3-weeks. I provided functional specs, screen shots and partners and they converted into code and connected to multiple API's.
Step 4: On the mobile app screen the consumer would see a screen displaying the words "Show phone to cashier" after completing step 3.
Step 5: The cashier of the store is trained to swipe the 'Mobile Payment Initiation Card' upon a consumer presenting a phone screen with the words "Show phone to cashier." This card could not be used to run transactions without the consumer first providing their card credentials via mobile phone in step 3.**
**The original invention just had the consumer telling the cashier they would be paying by phone and then the cashier would swipe 'Mobile Payment Initiation Card'.
Step 6: In as fast as two seconds from time of card swipe, messages will appear both on mobile phone and POS if the transaction was approved or denied.***
***What is happening here is the transaction is rerouted by a payment network or processor based upon the BIN or IIN number (first six-digits of card numbers) for authorization as normal. However, the card data is not being forwarded along by the merchant, nor the consumer's mobile. Card credentials are stored securely in the cloud by a PCI-DSS service provider. Upon the merchant's authorization request reaching the invention's 'Transaction Authorization System (TAS),' the transaction is routed as normal for authorization. Authorization confirmation is sent back down to the TAS and relayed back to POS terminal and mobile.
Step 7: A paper receipt is issued as normal. Signature may still be required.
So essentially the invention uses existing network standards and infrastructure. The POS terminals are following programming and merchants get confirmation of payment, which is the main thing merchants care about in regards to payments. But merchants do care much about unnecessary infrastructure costs, security, speed, simplicity of training cashiers and simple solution integration. This solution never shares card credentials with merchants, thus relieving them of PCI compliance and perhaps even liability for fraudulent transactions. It seems to me that every few years PCI comes up with new mandates requiring merchants buy new terminals or software. By not handing out card data to merchants, this solves the problem of merchants needing to secure the data.
Mike Mulcahy, the CEO I handed the reigns off to in October of 2011, advanced the solution by suggesting the card swipe could be replaced, if NFC was in both phone and terminal, by inserting 'Mobile Payment Initiation Card' credentials unto the NFC chip. By doing this the card swipe is eliminated and the consumer would be told, after hitting the 'pay now' button, to "Gently tap your phone to the payment terminal to complete transaction."
The integration for each store and terminal would take just seconds or be similar to an actual payment transaction. This would tie the actual 'Terminal ID (TID) to the one generated for use with mobile transactions or the Mobile TID.
So there you have it. No new hardware or software and very simple integration. Well if you know the complete transaction chain the primary merchant account, a secondary or independent merchant account needs to be tied into this solution. As you may know there are several ways of accomplishing this. We partnered with an e-commerce service provider. It seems PayPal, Stripe, Braintree, Paydiant, LevelUp or MCX could make use of this tech. First Data, could make adjustments to their boarding process to enable in excess of half of the merchants in the US to accept mobile payments.
By the way, I also invented a solution for pay at table that would incorporate a card swipe of a 'Mobile Payment Initiation Card.'
The 'Disruptive Innovation Meteor' named MOBILE has struck the world's of retail payments, banking and marketing. Firms wanting to survive, compete and win in this new environment must adapt by embracing disruptive innovation or risk becoming irrelevant or extinct. Read story
This MobilePayUSA Video was produced the week of Aug 1-7, 2010.
This video was miraculously produced in less than a week (script to completion) back in August, 2010.
It was used to quickly explain my vision for the future of mobile commerce and mobile wallets thru
MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner in 2010, SF.
This is the first of several mobile payment innovations to be announced that could cause disruption of existing mobile payment solutions. Another solution could give massive leverage to merchants and point of sale software providers. I planned to launch these solutions through MobilePayUSA, but the company never received the funding it needed to execute. Our team had the talent to be worthy of a million+ in seed capital, but with competitors like Google, ISIS and PayPal, it was a tough road to raise ample capital. Of course this is often the ‘chicken and egg’ dilemma that many tech startups face. The challenge is always gaining ample talent, traction and money needed to execute goals, all in a very timely manner. Myself, being new to the industry, did not help our ability to raise sufficient capital. Announcing these solutions as such introduces my abilities to the whole industry. I'd like to get back in the game if the opportunity is right.