Three decades of PayTech

Last week, I had the pleasure of attending the Vendorcom Future of Merchant payments conference, organised by Paul Rodgers. Hosted in the highly decorative Magic Circle venue,? there were some really interesting attendees and talks that encouraged broader thinking around a variety of payment topics.

The panel discussions were varied - from talking about how open banking will impact merchant payments in the future, to solutions supporting a method cleverly named Pay Now Buy Later scheme. The audience, a mix of payment folks and merchants, plenty of whom had been doing Fintech for much longer than the phrase has been around, were highly engaged. What was most interesting to me, was a session on the definition of PayTech as a new industry segment. PayTech is where payments and technology overlap, and is a subsection of Fintech. After the session, I began to think about how often I’ve been working at the bleeding edge of innovation in payments. And how much of what looked so futuristic back then we take for granted today.?

In the last few decades many companies in this PayTech sector, several of whom I’ve worked for, have pushed the boundaries, and developed technology well ahead of their time. Sadly some of them were so far ahead that they didn't survive, but we need those who are willing to take the risk, to drive new technology forward and innovate. For many of these companies, despite their eventual demise, their legacy lives on strong.

I started my career in payments back in 1990, before EMV and chip cards had gone into circulation. In fact, my first employer, as well as manufacturing EFTPoS terminals that I programmed, also delivered and personalised the old ZipZap credit card machines. That industry was still going strong, in fact, it's only been in the past couple of years that the embossed characters used by ZipZap machines have started to be removed from our credit and debit cards.

I spent several years at the coalface programming EFTPoS terminals, learning the ropes from the ground up. I worked with some very talented people, many of whom I’m close friends with over 30 years later. It was exciting to develop payment terminal applications and then see them in use across Europe.

After a few years working in pre-sales for the terminal division at Verifone, I moved into the newly formed eCommerce team. Oh, they were crazy times, supporting and deploying solutions, some of which look like science fiction even today! For example, we had a solution called VeriSmart, which gave customers a device called a Personal ATM (PATM). This device plugged into a phone socket and enabled you to perform transactions and withdraw virtual cash from your bank account and load it onto an ePurse stored value card at home. ePurse was a technology that was way ahead of its time, solutions including Mondex and VisaCash were really pushing the boundaries. In fact, ePurse has never really made it into mainstream use, but the underlying technology and card operating system developed by Mondex called Multos, underpins many of the chip cards in use today.

As well as ePurse solutions, we also delivered solutions designed to enable card payments over that new thing called the World Wide Web. The solution was based on a protocol called Secure Electronic Transactions (SET). It was a highly secure but some would say, overengineered eCommerce solution based on PKI technology. All the hype around SET, and the desire to compete with IBM who had a competitive solution was the driver for Hewlett Packard to acquire Verifone for a heady $1.18 billion dollars. Despite Verifone successfully selling several SET gateways for high sums, the technology never really took off as it was rather too complex to deploy at scale. It did however encourage the development of alternative solutions like 3-D Secure.

These are some examples of great technical solutions that never got deployed at large-scale, but were instrumental in helping drive other technologies to market.

We as a PayTech industry must continue to innovate, try new things, fail, learn, get up and start again.

It’s exciting and sometimes incredibly frustrating being at the leading edge, but I can’t imagine that I would have enjoyed a more stable or traditional job-for-life anywhere near as much.?

Next came ViVOtech, another company that was breaking new ground. They were the leading innovators in the contactless payments and mobile wallet space. They developed and manufactured the contactless readers we all used in forward-thinking retailers like Eat and Pret A Manger. The ViVOtech VP5000 contactless reader was the poster child of the contactless industry. ViVOtech technology was also often licensed and embedded into other companies' solutions. I remember back in 2011 working with Transport for London when they were deploying contactless into their infrastructure ahead of the London Olympic Games. It was hard trying to convince them that their desire for a transaction time of under 100 milliseconds was not realistic when using a traditional contactless payment card!

But what ViVOtech was really all about was mobile wallets. They had a complete Trusted Service Manager TSM solution, securely delivering payment cards into mobile wallets. These solutions were the predecessors of what we now know and love as Apple Pay and Google Pay. In fact, several of the members of the ViVOtech team in California ended up in Apple, leading the Apple Pay engineering teams. In the early days, contactless capability was limited to a small number of phones. We worked with innovative companies like Device Fidelity who provided bridging technologies such as NFC SIMS and contactless-enabled cases, all designed to provide contactless capability to non-contactless phones to enable us to prove the use case.

For years, I tried to convince my family and friends that paying for stuff with your phone was the future, but few believed me back then.

It took a global pandemic to drive adoption from those early adopters to the levels we see today. Can you imagine having gone through COVID-19 without the ability to perform contactless transactions? Now, even my 81-year-old mother pays for stuff by tapping her iPhone.

ViVOtech also had a vision that I totally believe in. They felt that mobile wallets need to do more than just payment to make them really useful. They also need to support value-added services like ticketing, loyalty cards, coupons and vouchers. And whilst all these capabilities are technically available in today's wallets, I’ve yet to see a joined-up approach properly deployed in the wild. Imagine a wallet where vouchers you have received are automatically redeemed when you perform a payment. It frustrates me today when I go to the supermarket, I’m paying with a mobile wallet and shopping with a self-scan device, but I still receive paper vouchers for discounts and money off my next shop! As I don't carry a physical wallet these vouchers rarely ever get redeemed.?

Proxama, my next employer, shared the joined-up wallet vision. We delivered a great many proof-of-concept solutions showing joined-up loyalty and payment. We even won the contract to deliver the mobile wallet to WEVE, a joint venture between the major UK mobile network operators that sadly failed as they couldn’t agree on anything, not even the colour of the user interface in the wallet!

We worked with a company called Loop Pay which eventually was acquired by Samsung. They had some technology that enabled you to perform a sort of contactless transaction but through a mag-stripe reader on a terminal rather than a real contactless reader. Their strategy was to enable payment even without a contactless reader, but it always felt strangely like a magic hack to me rather than a real solution. Samsung deployed the technology into a number of phones, marketing it as the solution to the then-limited Apple Pay, but despite it gaining a little traction in the US, its life was short-lived.

I led an R&D team of amazing engineers at Proxama. This team delivered, amongst other things, one of the first-ever SoftPos solutions for a major card scheme. It was designed to prove that phones were capable of taking a contactless payment and was the precursor to the CPoC and MPoC PCI standards we have today.? After Proxama I spent a few years working for two application security vendors, Trustonic and Intertrust. Both provided great technology that enables application developers to secure their applications without the need for specialised hardware. My focus was unsurprisingly aimed towards the financial services market, most specifically in helping SoftPos vendors achieve the security requirements set by PCI.

And over the past few years whilst at Abrantix, a Swiss payment technology company, I had the pleasure of being part of the PCI Mobile Task Force, helping define the future SoftPOS standards. We also built custom SoftPos projects as well as more traditional POS-based payment applications.

Maybe next time people will believe me when I tell them that you will start paying for things by tapping your card (or phone) on another person's phone instead of a POS terminal!

PayTech is still so nascent and evolving. It's hard to believe tens of thousands have been working in it for three decades to deliver ordinary people better, safer payments. And it’s only recently been given its own name…

Relentless innovation and the push for new technology has made a significant difference to our daily lives. Many of the technologies I’ve worked with failed, but they were the enablers, the prototypes to prove a concept, some were just too wild to ever get to market. But from the ashes comes the technology we know and love that has fundamentally changed the way we pay today.

I can't wait to see what new PayTech I’ll be helping drive forward for the next decade.