For small transactions, accepting a payment could work in much the same way as traditional terminals do for contactless card or mobile payments; using the RF/NFC rails with no need for an additional PIN pad or external device. For larger transactions, the security of the transaction needs to be strengthened by enabling PIN entry on the mobile device itself. This is commonly known as PIN-on-Mobile or PoM, as Visa and Mastercard have referred to it, or as PIN-on-Glass.
Historically, if you look at the micro merchant space where people are doing a few transactions a week or even month, they don’t want to spend a few thousand dollars on a full-blown POS or a few hundred dollars on a payment terminal but accepting cards is increasingly important to maximise sales.
This makes micro merchants the ideal candidates for turning a regular mobile phone into a payment device. They deal primarily in cash so getting them to accept payments would open a new market to the card issuers. Additionally, micro merchants tend to process low-value purchases which typically have a low amount of fraud. When you also consider that as of April this year there are already 108.4m contactless cards in circulation in the UK alone it’s no wonder the card issuers see this as a significant opportunity.