A payments solution that requires micromerchants to buy — and then wait for — special hardware isn’t much of a solution if you ask Joe Lynam, chief executive officer and co-founder of payments technology firm xPressTap. For that matter, a solution that only works for some merchants and some customers can never be the true cash replacement that digital payments innovators are hoping to deliver.
Lynam said it’s time to move beyond dongles and leverage the one piece of hardware that’s already in everybody’s pocket: the smartphone.
In a recent interview with PYMNTS, Lynam took Karen Webster on a tour of xPressTap’s latest technology, the Tap2App, which aims to serve as that universal solution. Instead of a dongle, micromerchants download an app which turns their NFC-enabled phone into a point of sale (POS) system in minutes. The POS is capable of doing business with anyone who has a contactless card or NFC-enabled smartphone.
The end result? Giving those micromerchants a path to their digital payments future.
“Our real aim is to empower and enable every consumer with their NFC-enabled phone with a full payment acceptance capability, no hardware needed,” Lynam said. “It’s about unlocking payments for all. We’re taking the expensive and cumbersome aspects of hardware and eliminating that.”
While xPressTap’s Tap2App solution certainly could have a place in a large-scale enterprise setting, it’s the micromerchant who stands to benefit the most, said Lynam. Plumbers, tutors, vendors at farmers’ markets and book fairs — all of these people and more need a reliable and secure way to accept payments from their customers, and Lynam believes none of them should have to buy or keep track of a payments dongle or mPOS device in order to do business.
“They find that the second [mPOS] device drains their battery, or they lost it or threw it in the back of their pickup truck,” Lynam said. “Their phone is just in one spot. The other device hasn’t developed the phone-like love where it’s going to sit in the other pocket, always ready.”
Instead of trying to build that love for a separate piece of hardware, xPressTap has built its capabilities on top of the love that customers already have for their phones. A merchant who has downloaded the Tap2App can use an NFC-enabled phone to accept payments in three ways.
First, users can have a customer tap their EMV chip card directly on the phone. The phone, using the Tap2App mobile application, creates a unique transaction code in the same way a POS would at a retailer, and the chip in the card responds by completing the transaction.
This creates an acceptance capability for a tutor, a farmer at a market or any other micromerchant to transact with just about anybody who walks up — particularly outside of the U.S., said Lynam, where chip and contactless payments are more widely embraced.
“The real laggard is the U.S.,” Lynam said. “Other countries aren’t asking people to bend down and look for the chip card slot. They just tap and pay.”
The second method Tap2App unlocks is simply tapping two NFC-enabled smartphones together. The parties will, of course, have to authenticate and approve the transaction, similar to how Apple Pay requires users to input their thumbprints at the point of sale. Once approved, the transaction briefly takes over the NFC reader of the receiving device in order to complete the exchange.
Finally, Tap2App can also power transactions within an eCommerce merchant’s website using a customer’s mobile wallet.
“The merchant value proposition is that we are streamlining and eliminating friction,” Lynam said. “We’re reading a chip, so we’re along the continuum of card present versus card not present, and that gives the consumer assurances. We’ve moved the consumer away from manual card entry, which is fraught with fraud.”
Lynam said the new app is in pilot mode for the next 90 days, a phase that will involve 100 or fewer micromerchants and will test the platform’s uptake and security. But it may be a while yet before we see Tap2App and similar solutions in the U.S., where the appetite for contactless payments is somewhat less than it is in Australia — where xPressTap is based — and the rest of the world.