It's a familiar experience for many of us – standing
in front of a cashier and fumbling through an assortment of credit,
debit and loyalty cards to find the right combination for that
particular store and purchase (or to discover that you have
forgotten your points card, again). Wouldn't it be great if all
of these things were available in a convenient place?
The use of "mobile payment" technology for point of
sale purchases and an array of other consumer-friendly functions is
picking up steam in North America. There are a number of early
entrants already in use in Canada, and they all function
differently. For example, while Starbucks' app uses 2D scanning
technology to transact payments and link to the
customer's cache of points, BMO's mobile payment solution uses a
near-field-communications (NFC) enabled sticker on the back of the
customer's smartphone. CIBC and Rogers recently announced a mobile
payments program that will utilize NFC technology that is
embedded directly in the smartphone's SIM card.
The term "mobile payments" has a much broader meaning
than NFC-enabled point-of-sale payments (see this paper by Deloitte for a great overview),
but the embedded NFC model in one form or another appears to carry
the most promise for consumers and businesses because of its vast
potential for integrating a smartphone's hardware, operating
system and apps with the products, services and loyalty programs of
banks, retailers, mobile network operators and other industries.
This convergence of technology, business and the individual is so
appealing partly because it appears so simple.
Beneath the surface, however, lies a complex set of
relationships and interdependencies among organizations. These
organizations each have different goals for participating in a
mobile payments solution as well as different operating models and
risk tolerances. For lawyers and other advisors, navigating this
new world will sometimes require us to rethink traditional
strategies for addressing risks. This post begins a four-part
series in which we will explore some of these areas. In part 2, we
will discuss the risk of integrating a technology solution where
there may be no centralized responsibility for integration.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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