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.
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