Category Archives: Payment

Many successful MDB2PC projects and a new housing

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I just wanted to share some very successful projects that were realized with our MDB2PC device. And the good stuff is: It is happening all over the world. Thanks to everybody who did a project with us. (If you are not familiar with the MDB difficulties, please read this blog.)

Let’s start in Europe. We had the Technical University of Berlin who connected their coffee makers to the student network. Maybe they were inspired by the ETH Zurich who did basically the same thing. Now they both are able to pay with their student cards for coffee.

In Denmark, a private school is giving their students a smart card using Myfare technology for the attendance check. Students need to wave their card over an iPad and the teacher immediately sees who is attending the classroom and who’s not. Smart, isn’t it? Since all student s already had cards, it was quite obvious to also enable these cards to pay for food and drinks at the school. They used an AX-T1 contactless, with built in MDB2PC technology, to connect their “card system” with the vending machines installed on campus.

In San Francisco we are connecting a vending machine with a standard EFTPOS terminal. Most terminals only support the RS232 interface and the MDB2PC is a wonderful way to connect RS232 with MDB.

In Brazil a private label payment system must be integrated into vending machines. As you can guess by now, the MDB2PC helps a lot to perform this task since the MDB2PC already supports the MDB protocol to connect to the vending machine. Plug and play, it is really easy.

We had a lot of demand to offer a housing for the MDB2PC. Therefor we designed one. It is a small and robust housing and protects the MDB2PC. It has a Plexiglas window that enables seeing the LEDs on the board easily to check the operating status. We have attached a video that shows the new housing. http://www.youtube.com/watch?v=xuUwUStK5zg

You see, the MDB2PC can be used in a variety of use cases. If you have a similar project, just let us know, we are very happy to send you our starter kit; 1 MDB2PC plus SDK, containing the source code to give you a jump start into the project.

Just drop us an email or reply on this blog.

Why is Google NOT the biggest payment company?

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Ten years ago I was reading that Google will launch Google Checkout. Boom! Google! A new world class technology company is challenging the rather slow moving banking dinosaurs. Crazy. I had to read the article several times and think about it for a long time. What would all change with this move? Acceptance, integration into web shops, commissions, fees; it could change everything. In the beginning there were rumors that Google will process transactions for free as long you would buy adwords. Awesome idea. I thought this will rock the world. While Google made this announcement we just had launched a new internet credit card processing service called Saferpay. I thought about how Google Checkout will affect this service. I was thinking of very bad scenarios. This was somewhere around 2002, or so.

Last year Google launched the Google Wallet. Another promising and highly interesting effort to enter into the payment business. This service could also change a lot. Imaging combining a location based adword service with a wallet holding payment cards. This is the marriage of payment and loyalty. I’m sure you can think of many opportunities for this scenario. If not, just browse the internet, there are hundreds of ideas what would be possible with payment and loyalty. I have a lot of ideas in my mind. Some of them we are already working on and I can’t talk about it. But at lot of them will only be invented in the future to show the full benefit of loyalty and payment.

And now since Google has it all, why are they not the biggest payment company? I don’t know. I just know that Google never launched the Checkout service worldwide. I personally have never seen a Webshop using Google Checkout. Probably this is because I am not living in the US. In the Google Wallet case, we subscribed for the developer program early last year and we have never heard anything from Google. In the last twelve months there were basically no news from Google concerning Google Wallet.

Why is this? Is Google not convinced by their own payment products? Is the competition to hard? Is it too hard to sell these services? Or are Banks so unhappy about these offers that they are actively slow down the roll out of Google payment products?

I read another wonderful article from Karen Webster on pymnts.com describing the last ten years of Googles payment endeavor. Unfortunately she doesn’t give us the answer why Google is not becoming the biggest player in the payment industry. (Thanks Karen to share all this Knowledge with us. There must be a lot of people out there loving you for this.)

What do you think? Please share your comment with us.

MPOS and EMV, where is the business case?

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In our last post we asked ourselves if EMV killed MPOS in Europe before it even started. Thanks for all the sharing and discussion on this topic, we received a lot of feedback (here is an example on linkedin) and appreciate it.

As all of us know there are companies in Europe that already provide EMV MPOS solutions (iZettle, Adyen, …). And there are even more companies who are about to come out with a solution, or at least claim to do so. Interestingly, most of them decided to use Miura Shuttle as the card reader and PIN pad. Of the better known companies, only mPowa seems to use a different hardware, at least from the pictures on their website.

Of all the feedback received it seems that opinions are 50/50 on successful EMV MPOS business cases. Some even question if the Squares out there turn over positive figures. Therefore I went through the numbers and want to quickly share a simple business case.

Say…

  • … we used the Miura Shuttle or something similar, acquired for EUR 200.-
  • … we sold the Shuttle for EUR 100.-. There are some teasing sales campaigns for EUR 50.-, e.g. with Payleven, but the regular price seems to be around EUR 100.-
  • … we took 2.75% per transaction
  • … we had a deal with a processor for 1.25% per transaction
  • … we had marketing/sales and handling costs of approximately EUR 100.- per device
  • … our merchants made transactions for an average amount of EUR 80.-

This leaves us with device costs of EUR 200.- that need to be covered by the transaction fees. EUR 200.-  (device costs) + EUR 100 (marketing/sales/handling) – EUR 100 (selling price).
With the above fees and average amounts we can take EUR 1.20 per transaction: The breakeven is achieved with 166 transactions per device.

The numbers above are just estimates, although probably not too far off. To me, this does not look like the easiest ball game. I doubt this will bring card payments to the small merchants in the near future, because:

  1. Device costs are too high. Why should I buy that? My business has been running without this option so far.
  2. Small merchants aren’t attractive as it’s highly questionable they will bring 166 transactions within a reasonable time.

However, I think this is a real winner for mid-size merchants with door-to-door services such as locksmiths, gardeners and the like. If you look at losses caused by late payments or defaults, enforcing card payments by these merchants could save them a lot of money and hassle, and would justify purchasing the equipment. An Abrantix-internal study (available on request, in German only) suggests this is definitely the case here in Switzerland.

Target industries and merchants are definitely where the successful will part with the unsuccessful MPOS providers. Mpowa seems to be heading in the right direction.

On the other hand, the approach taken by Square is also worth considering. While we are all talking about MPOS they are already a step ahead, trying to create their own payment network. Here is Karen Webster’s interesting article on pymtns regarding this. MPOS was only the foot in the door. With broad merchant acceptance gained by MPOS and a huge number of users gained by the Starbucks deal, they are definitely on the way to becoming a second PayPal. In the future, will Square care about MPOS with credit cards once they are a payment network?

I have three predictions for Europe:

  1. We will see MPOS for mid-size door to door merchants, but not for small merchants.
  2. We will not see the creation of a payment network that starts with EMV MPOS, such as with Square, as the target industries are quite specific for the business case.
  3. There are a huge number of small businesses out there that will not be catered for with EMV MPOS solutions. Hence there is definitely room for other solutions such as the Starbucks App or private label cards, or even bank to bank payment solutions.

Please let us know your opinions and ideas. We are really interested in continuing the discussion on this one.

MPOS Business, is Europe missing out?

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I found this very informative report about the MPOS Market.

http://www.pymnts.com/assets/Uploads/MPOS-JanuaryFINALv3.pdf

Not surprisingly, there are almost no MPOS players in Europe, except iZettle who is given hard times by Visa.

Form the report one can see that there are businesses in India, China and specially the US. As far as I understand, these countries are all magstripe-based, whereas Europe is fully EMV covered. It looks like EMV enabled countries have to stand aside in the MPOS business. We had lots of talks with European acquirers and they all look for a fully EMV compliant MPOS device, meeting all the requirements like Chip and PIN, sometimes even NFC. Technically, such devices can be manufactured. But it requires a lot of effort and time to market is long since you have to undergo PCI 3.x certification, which is very tough. If you achieved this, you still need an EMV L1 and L2 certification which is also not that easy. Say you are experienced in payment applications and willing to go there, then I would estimate something like 18 to 24 month. Now everybody can calculate, at their cost rate, how much it will cost to get a fully PCI and EMV compliant MPOS device from scratch.

So here we are. If you have to deliver an EMV/PCI compliant device to your customers to enable the MPOS market, all your business cases break down. You cannot give away those readers, they are too expensive. Or you give them away for free, ending up to raise transaction prices to an uncompetitive level. Leveraging the reader costs, particularly with the typically targeted small businesses – I don’t see how that could be possible. So lets assume you sell the devices. Chances are that you will end up employing a sales team, which also costs a lot. If this is the case, the only way to leverage these costs are higher device prices (higher hurdle for merchants to come on board) or higher transaction fees (uncompetitive). Vicious circle anyone?

As a conclusion: Currently, the thing you can sell your customers is a mobile EFTPOS Terminal. This is an expensive, big and heavy (compared to a Square or iZettle reader) and unsexy solution. Hence nobody does it and the MPOS business is not addressed in Europe.

This is a very unfortunate situation! We made a study about the Swiss MPOS market and identified more than 80’000 complementary customers to the POS world who could use an MPOS device. Since we only have 90’000 EFTPOS Terminals in Switzerland this would double the market volume for nearly everybody: Acquirers, processors and terminal manufacturers. I think this is the case for the whole of Europe, not only for Switzerland.

Rules and regulations are often a hurdle to enter new markets. If anybody out there has an idea about how to get MPOS in Europe working, I would love to discuss this topic with you. Sometimes you must think outside the box to work around those hurdles. Maybe partner with a PSP or Payment Facilitator, or an international (India, China) acquirer who wants to get access to these huge markets. Just let me know and leave your comment or send me an email.

 

 

The versatility of the AX-T1 products

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We just had a very successful year with our AX-T1 product. The AX-T1 was designed to meet the vending industry demand of a flexible payment device that supports all major credit cards, either through magstripe-, chip- or NFC-technology.  The AX-T1 was built using the latest technology and is based on ARM9 environment and runs a Linux operating system. This design allows the use of modern programming languages such as C, C# or Java on the device. Given this fact and the several interfaces (Serial, USB, LAN, GSM, MDB etc.), our customers started to realize that this product has great versatility and can be used to enable their ideas. Some customers started to use it in connection with their private label cards and in one case a customer even used it for access control only.

Here are some examples that we found particularly interesting:

In one case, a Danish private school allowed their students to buy sandwiches at the vending machine with their NFC enabled student card. They connected an AX-T1 to the MDB Interface of the vending machine and to their student card server where they manage the funds on the accounts. Simple and easy. It only took them a couple of weeks to do that.

In another case, Parkomatic, a large parking equipment manufacturer used the AX-T1 to grant access to private parking areas buy reading an NFC enabled parking card. To accomplish this, we developed a small parking application on the AX-T1 that operates a boomgate through a programmable I/O port connected to a relay switch. The possibility to do this in a modern programming language made this an easy task. (Check the video on Youtube)

As a final example both the University of Berlin and the University of Zürich (ETH) connected their vending machines to their university networks using MDB2PC modules. These are the MDB connectivity sub-modules used also in the AX-T1.

I hope this gives you an idea of the versatility of the AX-T1 products. If you have a use case, just give us a call. We might be able to help you.

Happy New Year!

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We made it! Despite hard economical times and the end of the Mayan calendar the year 2012 will soon be history, and we are still here. To make this payment world a little bit better, we suggest the following new years resolutions:

  • As an acquirer, instead of only focusing on signing the big accounts I will also be  focused on better service and data quality for all customers.
  • As an issuer, I will reconsider whether I really need the part of the interchange that funds my innovations, or if  I can also be innovative without it.
  • As a card scheme, I will try to make it easier for all players to adopt new business models whilst trying to lower the hurdles for these.
  • As a merchant, I will provide my customers with convenient, fast and modern payment methods.
  • As a bank, I will devise a bank to bank payment method that makes it easy to transfer money C2B and C2C, with low transaction fees.

Besides losing all the weight gained with the mountains of chocolate we ate, we at Abrantix have commited to a new years resolution of supporting all above parties so that together, we get a step closer to the best of all payment worlds.

We wish all our customers, partners and readers a very happy new year and a successfull 2013!

The darned 9th bit

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As Daniel said in his birthday post, one of our products is the AXT1 vending machine payment terminal. For a long time now I wanted to share some of the problems we had and insights we gained while creating this product. As a software company, starting with the product design we never imagined that the final product would be a fully engineered hardware terminal. But that’s what it turned out to be…

One of the key features of the AXT1 is its MDB vending machine interface designed in the 80ies by Coca Cola. MDB stands for Multi Drop Bus. Simply put this is a serial bus you can connect one master and several slaves to. The MDB protocol is widely used in vending machines and it’s the way to go if you want to provide a payment terminal for vending machines.

The special thing about it – or at least special for us software people coming from 8, 16, 32 and 64 bit environments – is that it is a 9 bit protocol. Instead of using the more common 8 data bits and one optional parity bit, it uses 9 data bits and no parity bit. The 9th bit is used to to address the slaves in the beginning of a communication session. The problem is that the UARTs (hardware components that takes care of the serial communication on the bus) provided by standard embedded PC boards (PCB) support 5 to 8 data bits, but 9 data bits are not supported out of the box. Therefore, connecting a “more intelligent” device such as a PC to a vending machine is not a plug and play kind of thing. But this is exactly what we wanted to do. Our payment software runs on linux and we undoubtedly wanted to keep it that way. The reasons for this I think are quite obvious and could fill another blog.

Easy done, we thought. We simply get a linux PCB, use a UART in 8 bit mode and use the parity bit as the 9th data bit, as this guy here suggests. Not very elegant, but it works. Another option would be to get a PCB with 9 bit UART support. There are some of these out there, but this limits the choice of PCBs and creates an unnecessary dependency to the PCB used.

Happy about our first implementation, we connected our terminal to a vending machine. This first test was a big disappointment. The MDB protocol specifies a time window of 5 milliseconds for a slave to answer. We found out that when running our software on an OS like linux, it is more or less accidental wether we could reply in this short time or not. In hindsight, it is now obvious… We thought about changing to a real time OS, but dismissed this because it would have required massive efforts to port and maintain our software.

AXT1
The only way to go forward was to design our own piece of hardware with a 9 bit UART and a micro controller that acts as a “gateway” between the PCB and the MDB. The MDB2PC was born. The micro controller on the MDB2PC takes care of all the MDB specific timing issues and uses the 9 bit UART to communication with the MBD. On the PCB side, we use a standard 8 bit UART and an internal communication protocol. As a final step, we integrated the MDB2PC with a standard PCB into one piece of hardware and there it was, the AXT1.

Currently, we run this solution in over 500 vending machines and are very happy with the solution. It gives us the flexibility we need to extend our software while still keeping up with the MDB requirements.

Talking to our partners, we found out that most of the companies who want to connect linux or other modern devices to vending machines have the same problems. Therefore, we now provide the MDB2PC as a standalone module. Simply connect your device to the vending machine using the MDB2PC. Or you can use the AXT1 and port your software onto it. Whatever suits your needs, we are open for discussion.

If you have had similar problems or are looking for a solution in this area, please share with a comment.

New secure mobile bank-to-bank payment solution

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As stated earlier in this blog, we think bank-to-bank payment networks will be one of the big things in the future. Of course, we also do invest in things we believe in. Therefor we have partnered with Kobil, one of the leading European security companies for mobile banking solutions. Together, we developed a secure mobile banking and payment solution that allows sending money with your mobile phone from bank-to-bank.

We will show this solution the first time at the Cartes 2012 exhibition in Paris. We will demonstrate the purchase of a Nespresso Coffee with your mobile phone. To do this, we establish a secure connection to your bank account, using the Kobil mIDentity AST technology. The Abrantix payment solution then executes a bank-to-bank payment transaction. Our AX-T1 vending payment terminal receives a confirmation of the money transfer and sends an MDB vend success message to the coffee machine. Finally, the coffee is being dispensed. And all of this happens in a few seconds only. Fast, secure and easy; what else.

Watch our video on the payment process: http://www.youtube.com/watch?v=49ov4lurf80

If you by any chance are in Paris next week (November 7/8/9, 2012), please visit us at the Cartes, at Both 017/Hall 4. If you can’t join us, we of course appreciate any comments here.

 

Are credit card firms criminals?

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Are credit card companys criminals? The creditcard industry just received a massive fine for not having charged adequate commissions. Now read this as stated in the LA-Times:

“Visa Inc. and MasterCard Inc. agreed late Friday to pay retailers $6 billion to settle a price-fixing lawsuit that alleged they overcharged companies billions of dollars in credit-card transaction fees. The agreement is believed to be the largest settlement ever of a private antitrust case, according to lawyers for 7 million American merchants who sued the card companies in 2005. The total value of the agreement is $7.25 billion, counting a temporary reduction in card fees.”

Wow, 6 Billion, that’s a whole lot of Money. That’s one Dollar for every human being. That’s massive. How can a company over-charge their customers that badly?

Also in Europe the European Commission had to step in and set the Interchange Fee to a decent level. Why must the politics step in and correct the to high prices of this industry?

As stated in a Blog earlier this year, I am not sure if credit card companies are feeling the needs of their customers.

What do you think? Are credit card companies criminals, or is this overcharging just a little white collar crime that we must take not too serious? Share your Feedback.

 

 

Are iZettle and Square facing hard times?

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There are rumors in the market. Is the hype of iZettle and Square already over?

Visa is invested in Square and Mastercard is invested in iZettle. Looks like the positions are taken. A couple months ago I wrote in my Blog that there will be hundreds of Squares and iZettles in the next few years. But I might have to change my mind. Maybe Visa and Mastercard are not really forcing other Companies to compete against their own solution.

But I heard that it is even worse, since Visa and Mastercard are competing against each other in the MPOS business. You can see from various press releases, that iZettle will launch its service shortly in the UK. But there is one card missing: Visa. We heard that they will not issue a license for iZettle in the UK.

What is the intension of Visa? Do they want to move Square to Europe? To do that, they will need EMV-Technology, which is the natural evolution of Square. Or do they already want to stop the success of MPOS since it is not really secure?

This all looks a little strange to me. Maybe someone out there has some information. Please share with us.