Riding the wave of contactless payment: How innovative semiconductor solutions support the rapid change of the payment market
Over the last years and especially during the last months our payment behavior has changed dramatically - yes, also due to COVID-19. "By card, please" is what you hear most of the time now. You can hardly ever see people paying with cash anymore; instead, more and more customers are pulling out their cards of even smartphones or smartwatches. The market for contactless payment is changing rapidly. How this exciting future of payments will look like and how we will get there - that's what we talk about with Ursula Schilling in our new podcast episode. Ursula works as “Director Ecosystem Management Payment Solutions” at Infineon and in her role is responsible, among other things, for the business development of the Contactless Payment Solutions at Infineon.
Guest: Ursula Schilling
Date of publication: 13 December 2021
The potential of the Internet of Things is well known. But how do we actually implement it? How can people and companies benefit from it? In this podcast, we meet experts from infineon, partners and customers who tell us how it can work and what it takes to Make IoT work. My name is Thomas Reinhardt, I am your host, and I am excited to have this great opportunity sharing this podcast with all of you.
When we started preparing this episode, we first really noticed how our payment behavior has changed - yes, also due to COVID-19. "By card, please" is what you hear most of the time now. I hardly ever see people paying with cash anymore; instead, more and more customers are pulling out their cards of even smartphones or smartwatches. The market for contactless payment is changing rapidly. How this exciting future of payments will look like and how we will get there - that's what I'd like to talk about with Ursula Schilling today.
Ursula works as “Director Ecosystem Management Payment Solutions” at Infineon and in her role is responsible, among other things, for the business development of the Contactless Payment Solutions at Infineon.
Hi Ursula, it's great to have you as our guest today.
Thank you very much for the invitation, I am happy to join you today.
For a long time, we held on to cash and looked somewhat skeptically when people started paying for their bread at the bakery with cards much earlier. But in general, there is now a strong trend away from cash and contact-based payment cards toward contactless payment, right?
Definitely, Thomas. The future of payment will be digital. In an increasingly digital global society, we will also have more choice in how we pay.
According to a study on "NFC and Contactless Payment Technology" conducted by ABI Research in December 2020, over three-quarters of the respondents use their contactless payment card or mobile payment wallet multiple times per week or more. That shows high levels of acceptance and confidence in the technology. And we can observe trends that will mean that the use of digital, contactless payment options will persist and continue to grow.
Could you describe a few of these trends in more detail?
Consumers and businesses want to pay securely and conveniently, in-store and online, wherever they are in the world. The hygiene factor will still play a role in the future – the less contact the better.
And there is another important aspect: lifestyle. With the increasing connectivity and digitalization of our everyday lives, consumers' demands on their devices are also rising - for example, on wearables. These practical everyday helpers are constantly being supplemented by further functionalities in order to be able to offer more and more application possibilities. Let's just think of so-called "convergence" - a process in which several services or technologies that previously had nothing to do with each other are brought together in close integration or unification. The possibilities of what these services could be are endless and range from access control to loyalty programs to the linking of transport ticketing and payment. Rings and wristbands will join the smartwatches and fitness trackers as NFC-enabled payment devices.
And these devices are also becoming more and more innovative. Take the startup DEED, for example, with its novel get® device. It combines higher security standards with a unique method of identity capture and a revolutionary screenless user interface for a highly intuitive user experience. get® uses the electrical signal of the human heart for strong, fast and secure authentication of contactless payments. The electrical heartbeat signal, which is unique to each person, opens up new possibilities for biometric identification. get® represents the next step in the evolution of wearables. And also shows the direction we will take in contactless payment.
That sounds really exciting. And for the consumer, it promises great new and convenient solutions. But what does it look like for the manufacturers? I could imagine that it's not that easy to offer such solutions that are working reliably and at the same time are safe and energy-efficient.
That is true. Users expect payment services to work quickly and securely. In other words, they want to just swipe and go! This convenient new world of payment, ticketing and access solutions brings some key challenges for manufacturers: Very low power consumption, ultra-small physical dimension, security & contactless performance and service enrollment.
That all sounds very complicated. How can we support? And how does it work, especially for companies that are not so technically fit?
At Infineon, we have the “contactless competence”, means we help our customers navigate rising demands for user convenience in the fast-evolving, contactless landscape. A successful implementation of new smart services hinges on security – what is almost in our DNA-, the interoperability across contactless infrastructures – a field where Infineon plays a major role in driving this topic – and the need for compliance with a host of specifications and standards.
With our SECORA™ Connect family we offer a NFC payment solution that empowers smart wearables and IoT devices. It is a complete turnkey solution that enables the user to securely provision, store, select and use multiple credentials such as payment card, transport ticket etc., turning the de-facto wearable or IoT device into a powerful and versatile wallet. SECORA™ Connect allows smart wearables system designers with no security or antenna design experience to seamlessly integrate a very compact, ultra-low power consuming solution for various NFC based applications. And this system-on-chip solution integrates all functions in the security controller including power management.
Additionally to make it even easier for manufacturers, onboarding services are already available for wearables.
I would like to come back to our current payment behavior: Often, you still have to sign or enter a PIN when you pay. The payment process is contactless, but the authentication still works with contact.
I agree, this is indeed a cut and somewhat contradicts the desire for as little touch as possible for the greatest possible hygiene. To solve this, we are working with innovative partners and can already present some great results.
Biometric payment cards with integrated fingerprint sensor make contactless payments more convenient, more secure and hygienic: The contactless card remains in the hands of the cardholder throughout the entire payment transaction, while eliminating the need for PIN entries or signatures to authorize even high-value payments. Biometric fingerprint sensors are already omnipresent as more than 60% of smartphones already have fingerprints. So the fingerprint authentication for payment moves from phones to cards. Due to ABI Research 66 million biometric payment cards will be shipped globally by 2024. In this field, we have joined forces with the Swedish company Fingerprint Cards to enable mass deployment of this emerging solution. We selected Fingerprints as they are the leading biometric silicon and technology provider with market proven performance.
And together with the Norwegian company IDEX Biometrics, the leading provider of advanced fingerprint identification and authentication solutions, we developed a reference design for the next generation biometric smart card architecture. The reference design leverages the combination of our new SLC38BML800 security controller with additional GPIO-interfaces and the latest generation of the TrustedBio™ solution from IDEX Biometrics. This enables fingerprint authentication with low latency, high accuracy, and power efficiency. The integration of the fingerprint sensor, the secure element, power management and communications reduce the complexity of card manufacturing which shortens time to market and lowers costs.
So here, too, we see once again how important strong partnerships are in making the IoT work. So, Ursula, please allow me one last question: The payment market of the future - what might it look like?
We expect additional interfaces such as BLE (Bluetooth Low Energy), UWB (Ultra-Wideband), and Wi-Fi provided for wearables in ultra-small formats, operating at extremely low power. These new interfaces and technologies will not only bring enhanced seamless interaction between customers & merchants, but will also foster a multitude of additional payment transactions and use cases in public transit, mobility and event ticketing. Customers can for example leave their UWB-enabled phone in their pocket, bag or mounted on their dashboard and still make a payment, trigger personalized ads and offers that reflect their interests and preferences when passing a billboard or get access to the parking garage or office.
In addition, we can observe that the payment market is also influenced by sustainability issues. For example, the production of payment cards from environmentally friendly materials such as wood, Polylactid (PLA) or recycled plastic is becoming increasingly important. However, this presents a major technical challenge as these materials are more challenging to work with compared to PVC, especially when it comes to the card manufacturing processes such as lamination and printing. To support the payment industry’s move towards the use of more environmentally friendly materials for smart card manufacturing, Infineon is now offering a complete, single-source solution that is easily adaptable to different projects and market requirements. SECORA™ Pay with Coil-on-Module (CoM) package comes with a newly developed antenna, specifically designed for cards made from recycled ocean-bound plastic or wood. It is the industry-wide thinnest payment module with a copper wire antenna, which allows cost-efficient card manufacturing for mass deployment.
That sounds like an exciting but also sustainable future! Thank you very much, Ursula, for your insights in this area.
This brings us to the end of this episode. Dear listeners, for more information, please visit infineon.io. We will publish the next episode soon. Until then, take care and goodbye.