The Issues and Advances Facing Unattended Payment

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With unattended payment fast becoming the norm rather than the exception, we asked Andrew Banks, Head of Petro and Unattended, VeriFone Northern Europe, Middle East and Africa, in what direction he thinks this Lonely New World will eventually take us.
 
KIOSK EUROPE: As they say on all the best talk shows, Andrew, let’s talk about you (and your role in VeriFone).
 
ANDREW BANKS: I joined VeriFone in September last year, as head of Petro and Unattended for the Northern Europe region, Middle East and Africa. My background is actually in the petroleum industry, where I have worked for the last 20 years. I worked on the unattended side of the business and, in particular, on the payment systems within the petrol forecourts, which have a rather complicated system with fuel cards and loyalty cards.
 
It was a good opportunity for me to move to VeriFone to focus on that part of my previous job and expand my knowledge of the issues surrounding unattended in different settings.
 
KE: Do you think unattended payment originated on the petrol forecourts?
 
AB: Partly, although unattended originally originated with the ATM. There are a number of scenarios for pay at pump: for a small rural site without 24-hour staffing, it can enable the site to stay open all night; whereas for a busy site it means there are less queues in the store, as customers who don’t want to go to the shop can pay by their card. On the other hand, people who do want to make purchases in the shop don’t have to queue for as long and they are also more inclined to make purchases.
 
The most obvious unattended application that people use regularly is the pay and display meter in car parks, and transportation is where the mass market for unattended is currently. Chip and PIN unattended terminals are becoming more and more common in pay and display metres, so customers have the option of cash or card.
 
KE: Chip and PIN must have opened up a lot of doors in the unattended market...
 
AB: Absolutely. The customer experience was key to this, as the transaction is smooth, easy and intuitive. PaymentThe UK is the leader in Europe for chip and PIN, with the highest number of chip cards and terminals in the marketplace, although other countries are now catching up. Visa and Mastercard in the UK were leaders in introducing chip and PIN – probably because, if you want to be cynical, of the huge amounts of fraud with the old magstripe cards.
Legislation, like the introduction of PCI Compliance across Europe, also drives the increase in chip and PIN as EMV chip and PIN is the only solution which is compliant. Transactions that are made with an EMV card and PIN number are far more secure than the customer simply signing their name. However, fraudsters have also moved on since then, so the equipment in use has to move on too to maintain the highest levels of security.
 
At Cartes last year, VeriFone announced a new end-to-end encryption solution, VeriShield Protect. As soon as the credit card is placed in the card reader, the card data is immediately encrypted, so that even if someone stole the data stored in the system it would be useless to them. This level of security and encryption is no longer a ‘nice-to-have’, but is the level that Visa best practices demands. The data has to be encrypted as soon as it enters the card reader, and the real card data is never stored.
 
KE: Is this level of security absolutely required to meet existing mandatory standards, or is VeriFone second-guessing the next wave of rules with the VeriShield Protect?
 
AB: The VeriShield Protect is already in line with the next step (that hasn’t arrived yet) and it is the only system that is truly end-to-end, as it actually encrypts within the card reader.
 
KE: One of the biggest advantages of the VeriShield Protect, as far as integrators are concerned, must be that it can be implemented without changes to existing POS applications.
 
AB: Yes, the card data that passes through the system from the card reader is given in a format that the system is used to dealing with, so the encrypted data can go through the system without integrators having to replace the whole payment system part of the infrastructure.
KE: But would you still expect to see growth in the replacement of equipment as new standards are passed?
 
AB: We’re certainly expecting that over the coming years equipment will be replaced to meet the various levels of PCI and EMV. The first type of chip and PIN machines that were installed after the move from magstripe are no longer compliant, so better units will have to be installed in these cases.
 
Aside from the security aspect, the other thing about the newer units is the customer experience. When chip and PIN was first introduced it was rather alien to customers. However, customers now expect to interact more with technology and also with chip and PIN units. This is another driver in the upgrading of pieces of equipment. Older card readers, for example, had a small, two line screen, whereas the ones that we see coming will have larger, colour touchscreens. The whole experience of chip and PIN payment is moving on.
 
KE: How do you see contactless payment emerging within this new model of interactive payment at the POS?
 
AB: Contactless has certainly got a place within payment, especially for low cost transactions, such as those which occur at vending machines. In this context, it is a very painless, quick and easy payment method.
 
There are, though, two key issues for contactless: the availability of the cards and the availability of the readers for these new cards. Aside from that, the banks and acquirers need to agree rules on these transactions. The first steps, though, are to get the cards and card readers out there. Not all credit cards are contactless enabled, but, I can almost guarantee, all the ones coming up for renewal this year will be issued with contactless capability.
 
KE: Because the PIN is not required for contactless payment, does that raise another security issue?
 
AB: This level of security is removed in contactless payment. Currently the way that is dealt with is that the banks and Visa and Mastercard set the value of a transaction that can be paid for using contactless quite low, at around £10 or £15.
 
KE: Do you see mobile payments as another form of contactless?
AB: Mobile is just an extension of contactless. Either a card or a mobile can be used with a contactless reader and, from the contactless reader backwards, everything else about how the system processes this is no different.
 
Mobile will support the growth of contactless, but there are also a lot of questions that still need to be answered, such as how this is going to operate on various mobile handsets. The handsets need to be out there and the applications need to be out there. Not everyone has an iphone so just having an application for an iphone isn’t enough.
 
KE: France is a bit ahead of us in terms of mobile payments, isn’t it?
 
AB: Asia in particularly, actually, is steaming ahead. There are already NFC-enabled phones in China, Japan and Singapore and other areas. The availability of headsets for GSM and mass adoption will move this rapidly forwards in Europe over the next couple of years.
 
KE: A classic ‘old chestnut’ question is whether cash is going to disappear and be replaced by the card. So, will contactless payment make chip and PIN obsolete?
 
AB: Chip and PIN has got a place for rather a long time until it is superseded by a new technology: whether it is superseded by a chip in a mobile phone or one that’s in your arm remains to be seen!
 
Technology will move forwards, and payment is a particularly rapidly advancing arena. Cash, I think, is here to stay because people love putting cash under their beds; it’s hard to see it disappearing completely.
 
KE: Isn’t cash less of a security problem for unattended payment because fraud checks can be made very simply within the cash acceptor itself, with no card data to be encrypted?
 
AB: It is, but one of the problems of cash is that it’s very difficult to trace, and that’s where the fraud comes in. A cash transaction is also very expensive as bank notes need to be transported in a secure environment. Cash has its own problems.
 
There has been a social shift actually during the recession from pay later to pay before, as people now want more control over their spending. Prepaid cards have become more popular, particularly in the US where almost every shopping mall has a prepay card system. This is becoming more prevalent in Europe, especially in Italy. The Oyster card for London’s transportation is a good example of a prepay card system.
 
KE: Do you think transportation is the biggest growth area for unattended?
 
AB: Unattended payment at kiosks is hugely widespread in transportation, and this is already developing from a simple buy-your-ticket-here to giving you travel information while you buy your ticket.
 
Taxi payment systems are also going to become more advanced. Passengers will be able to pay by card at a terminal in the taxi rather than by cash, and taxi media advertising will also become more interactive so that there is almost a kiosk terminal in the back of the taxi. The screen will stream advertising content, be linked to GPS to show a map of the route being taken or be used, for example, to book a table at a restaurant in advance.
 
We already have systems like this in the US and elsewhere and we will shortly see them in London and other big cities in Europe.
 
KE: Before I let you go, I saw recently that VeriFone in the USA has recently acquired the Taxi Media business from Clear Channel Outdoor: is that part of this scenario?
 
AB: Yes. The digital signage in the taxis is linked to the payment terminals and VeriFone provides both the payment system and the digital signage.