The problem with the mobile revolution is that it has been “coming” for so long without ever actually fully arriving that the idea of eminent ignition has become somewhat easy to discount. Mobile has been technologically accessible to a mass number of Americans for almost a decade, merchants are starting to come around (or be swept along as EMV upgrades often come part and parcel with NFC capabilities) and big name players like Google, Apple, PayPal and Samsung are staking out their space and going after the emerging mobile market.
There’s just one problem – consumers at real-world POS are still using their credit and debit cards. The InfoScout/PYMNTS Apple Pay Transaction Tracker reports that 85 percent of those who can use Apple Pay (have the appropriate device and are at a physical merchant that will accept it) don’t because they either like how they currently pay, or just forget entirely that mobile is an option.
“Consumers have been using cards for such a long time it’s natural for them to take a card out and swipe. In the high tech world we want to move people to mobile, but there aren’t a lot of use cases yet,” Ashutosh Dhodapkar told MPD CEO Karen Webster in a recent interview. “Most people discount consumer behavior, but if you talk to PayPal and Google they’ve had mobile wallet solutions for years that people cannot get used to using.”
Dhodapkar is the founder and CEO of SWYP – a mobile payments platform that started with consumer behavior as it is today and built its business concept out from there. And where people can’t get used to using mobile is the physical point of sale. And for an obvious reason – acceptance. Though SWYP is a mobile payment platform, its central piece of technology is a electronic mag stripe card that is designed to literally replace the consumer’s physical wallet by allowing users to store up to 25 pay cards (credit or debit) or loyalty cards onto one programmable device.
“We designed SWYP to literally replace the wallet and that came from our own consumer experience,” Dhodapkar explained, noting that he realized that, like himself, most consumers were looking both for a better way to carry their cards and a better way to organize them. “My wife and I had hundreds of dollars in gift cards that we never used either because no one ever had them at the right time.”
But, as Webster pointed out, there are multiple “dynamically programmable mag stripe cards” in market today. And, that aside from the high tech early adopters who will try anything, not any of them have taken off. That’s when Dhodapkar explains what, in his mind, makes SWYP different.
“[What we built is] not just a card that consolidates all your loyalty, payment and gift cards but also predicts your shopping behavior so it can learn what card you are most likely to use at a certain place.”
In other words, the next generation “smart card” with a mag stripe on it.
The card makes “decisions” in two ways. The device itself is capable of noting use patterns – someone who always get coffee at the same place in the morning and uses a debit product, or a user who buys business lunches three days a week on a corporate Amex for example. The card device learns through that pattern of usage to pull up a certain payment method at certain times of day and to make that card “top of wallet” and ready to go. (Dhodapkar noted that if the machine gets it wrong, users can switch cards with a button tap).
However, because their service is also Bluetooth and cloud-enabled, the device can also use external clues about location to pull up what cards the consumer might need.
“As Bluetooth beacons become more and more mature, we can make even better predictions because SWYP can now locate the consumer,” Dhodapkar told Webster on how his company’s smart card is designed to get smarter along with the systems it interacts with.
To get started, users scan their up to 25 pay/loyalty/gift cards into the SWYP app via a mag stripe reader the company sends along with its electronic card product.
Admitting that the card onboarding process today is a bit clunky, Dhodapkar will investigate “different onboarding options like Apple or Google” by working more directly with issuers. Dhodapkar noted that the scanning of the mag stripe data, however, is necessary for their electronic mag stripe card to work and be recognized as a card present transaction for merchants.
Less visible than the electronic mag stripe (also EMV enabled) cards are the behind-the scenes security innovations – though Dhodapkar noted those are as important to making his company’s product viable.
“From Day 1, security has been our main concern because if you put 25 cards on a single card, the loss of one card is like the loss of your whole wallet. We have a two factor authentication system where the mobile phone and the card need to be close together or the consumer will have to enter an additional PIN,”Dhodapkar told Webster. He also noted that the card was configured to shut itself off if it gets too far from the phone for too long.
Because security is just one area where the mobile platform has to not just be able to meet the level of security offered by the cards today – it actually has to surpass what is offered. Because though using a SWYP card has the feel the tech consumers are used to using, it can be souped-up with all the capabilities of a dynamic, provisionable device. Layered on top of the proximity based security, SWYP has also patented a tokenization scheme for transactions.
“The card is actually a bridge between the existing device and emerging infrastructure,” Dhodapkar told Webster.
But is that bridge already outdated?
Webster pointed out that the ecosystem is evolving past the mag stripe card – and that others like Samsung Pay are using mag stripe technology inside a mobile device that provides the ability to use a phone with multiple mag stripe cards stored inside at existing points of sale. So why choose now to build the smartest version of a card?
Building a form for use makes sense, Dhodapkar notes, because consumers simply don’t have a reason to simply eschew the payment method they are used to in favor of something emerging and not fully proven out for either consumers or merchants.
“Every five years someone comes in and says they are going to come in and become the defacto standard. I don’t think people understand how much work goes into building the legacy systems. There has been massive investments and thinking that have gone into these platforms. Our thinking is the best way to bring mobile payments into the forefront is to build on top of those to build a bridge into the mobile future instead of asking people to jump across a chasm.”
Which is not to say that SWYP’s corporate goal is to stay forever on that bridge – which is why the card functions as part of a mobile platform with an app.
“We want to be ready if mobile phones take off over the next two or three years. The fact that we work today where everything works today gives us a big step up into the competition. It gives us a pass into people’s wallet and a path to customers.”
Today you can’t use SWYP – only a few corporate insiders have access to the tech, though that will change in the next several weeks as the company goes into a closed beta test with a select group of users who signed on earlier this year. Dhodapkar told Webster that after about two weeks of soliciting orders, the company’s beta was all filled out.
“We wanted to take only enough orders that we can fulfill this year. We got an overwhelming response that we had to shut it down after about two weeks.”
That beta will run this summer, and the company hopes to ship its first batch of cards to the wider world of consumers this fall.
“At the end of the day, consumers are losing $300 a year in unspent gift cards – we can help with that by letting them use a mobile product that really is smart and can help the user pick the payment method they want or is most appropriate for the transaction.”
Dhodapkar points out that the programmable card is actually a 30 year-old piece of technology first patented by Visa in 1986. Visa never did anything to develop or put the tech into use – and so the patent on the general form expired. SWYP (and others) saw an opportunity to adapt the technology and a form factor that leverages the ecosystem that is already in place and creates a bridge to the mobile future.
By doing so, SWYP finds itself in an unusual position – competing with both the past – with the standard plastic cards consumers know and love – and the future – with companies that have decided to skip the card form factor and jump to the next big thing.
But SWYP is betting that consumers and merchants would rather not leap if they had a valid choice that gave them all the benefits of smart tech, while still having a behavior POS that feels familiar.
This fall we’ll find out if SWYP has managed to build the set of training wheels mobile payments needs.