The second law of thermodynamics
Now, the industry is facing an entropy increase with multiple solutions floating around. Contactless cards are well positioned on the path to adoption. Consumers are changing their habits and accepting that transaction may be secure event without inserting their car din the terminal and without a PIN. The US vision of EMV with an online PIN is another variation, and let’s thinks that, with good pedagogy, it can be accepted.
Another game changer is the flood of small simple readers for mobile devices such as Square, Paypal Here, iZettle or many others. Companies involved in these developments claim huge adoption rates, at least in terms of number of signed merchants. A major reason for this is the low cost of the reader, which means that signing new merchants is much easier than with traditional terminals. PCI SSC, the body in charge of ensuring the security of payments, just issued a “guidance for payment on mobile” which reaffirms its core principles, and seems to be away from reality, as it keeps on making a separate PIN Entry Device mandatory. At the same time, MasterCard published mPOS guidelines, endorsing simple readers.
The industry has been investing for years in NFC technology, and one must admit adoption by the ecosystem at large as well as by customers has not fulfilled our expectations. Now, entropy is increasing again with rumors saying that Apple could well announce a payment system using Bluetooth Low Energy rather than NFC.
The Second Law of Thermodynamics states: “the entropy of a system always increases or remains constant”. However, economics do not follow thermodynamics laws. In the real economic world too many options often means no decision is made, no standard is agreed upon, and no technology is widely adopted. We will see what happens in the future of payment systems, but let’s hope all major stakeholders will be bale to agree on a standard for the industry to move forward.