The rise of the machine

Mobile web devices will outnumber puny humans this year!

February 14, 2012 9:44 AM

The rise of the machines is upon us. A new report from Cisco predicts that mobile Internet devices will outnumber people on Earth for the first time by the end of 2012 - a sign of ever growing love and dependence on technology that always keeps us connected.

“By the end of 2012, the number of mobile-connected devices will exceed the number of people on earth, and by 2016 there will be 1.4 mobile devices per capita,” Cisco stated in its latest Global Mobile Data Traffic Forecast Update. “There will be over 10 billion mobile-connected devices in 2016, including machine-to-machine (M2M) modules-exceeding the world’s population at that time (7.3 billion).”

Cisco’s new study also indicates that mobile data traffic grew more than two-fold in 2011, which is the fourth year in a row such traffic has doubled. 2011′s mobile data traffic was actually eight times the size of the entire global Internet in 2000, which shows just how rapidly the mobile web has been utilized across the world.

The study also presented some interesting tidbits about the state of 4G networks like Verizon’s LTE and Sprint’s WiMax offerings. Users with a 4G connection generated a staggering 28 times more traffic than a non-4G connection. At this point, 4G connections only represent 0.2 percent of mobile connections, but are already accounting for 6 percent of all mobile data traffic.

While it might be a little premature to say the machines are taking over a la Terminator (see the pretty guy above), having more connected web devices than humans as well as more ubiquitous web connections is a step in that direction.

In the Terminator films, the machines are able to rise up against humans because they are diverse in capabilities and connected through the Skynet artificial intelligence system. Maybe we’re heading toward our own Skynet with our connected phones, tablets, and TVs that know an awful lot about us?

Terminator image: Terminator 3: Rise of the Machines/Warner Brothers

European Parliament: 2014 voted legally-binding deadline for SEPA migration

The European Parliament has passed legislation that establishes 1 February 2014 as the legally-binding deadline for banks to migrate to the new SEPA system.

The single European payments area (SEPA) regulation was passed by the European Parliament on 14th February 2012 and lays down EU-wide rules aiming to ensure that banks compete fairly, eliminate hidden national charges and accelerate transfers, potentially saving up to EUR 123 billion within six year, according to official estimates.

To this end, the rules will ensure that euro credit transfers or direct debits that are possible within SEPA countries are also possible across frontiers between them.

By eliminating multilateral interchange fees on cross-border direct debits as of 2012, the regulation enables businesses to establish their payment centres in any EU Member State.

Businesses could also organise all cross-border euro payments from a single euro account in a country of their choice in order to improve money management and speed up cash flows at lower cost.

The new legislation was adopted in the first reading with 635 votes in favour, 17 against and 31 abstentions.

Barclays unveils cash-free payment app in bid to poach bank customers

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BARCLAYS has launched a mobile app that could see the bank poach thousands of customers from rivals by giving them the ability to pay without cash.

The app, called Pingit, is aimed at boosting Barclays’ brand by linking the lender to a convenient service. It lets users link their mobile number to their bank account – with Barclays or a rival – and then send cash to any other registered user using a five-digit PIN code.

Barclays head of retail Antony Jenkins told City A.M.: “It lets us build relationships with new customers as well as strengthen relationship with our own customers.”

That gives the bank a chance to peel off customers from its rivals one service at a time – effectively un-packaging bank products so that account-holders more commonly use different banks for different financial services.

Jenkins said: “We will hope this forms a favourable impression in the minds of non-customers so when they’re thinking about a savings or mortgage product, they will come to us... We expect the benefit from that to be powerful.”

He would not detail how much Barclays has invested in the app beyond saying it is “significant”.
Jenkins is not sure what uptake is expected or where the returns will come from, but said: “Once you have engaged customers using the product you then have the opportunity to talk to them about other things.”

He added that the aim is not to use the app to flood users with marketing material, however.
The app is aimed at a mass market for those who need to quickly send small amounts to one another, for example when splitting a bill in a restaurant or, in the case of small business owners like plumbers, collecting a fee after a job.

It will be rolled out first in the UK and Italy.

HOW TO PAY WITHOUT CASH

• The ubiquitous Oyster card is a cashless payment method for London’s transport system and many National Rail services.

• McDonalds, Pret and Boots are among the UK shops where you don’t have to fumble for spare change. You can pay by tapping your Visa or Barclaycard on a reader.

• Orange Quick Tap lets you spend up to £15 by holding your phone over a contactless reader. This function, which links to your Barclays account, is currently available on Samsung’s Tocco and Wave 578 phones.

• O2 is working on similar technology after running a trial in Sitges, Spain. O2’s Mobile Wallet will double as an Oyster card, host several bank and loyalty cards and allow you to text cash to other phones.

• The Google Wallet mobile app also works by letting you tap your phone on a reader. It is currently only available in the US, but rumour suggests Google Wallet could land in London before the Olympics.

• Dwolla is another app, on iOS and Android, which facilitates money exchange in store and with other users, much like Square. Both apps are only available in the US.

Will Apple take a bite out of mobile payments?

Year after year, Apple fans have expected the company to make a splash with an iPhone-based mobile payment system. And year after year, Apple has let them down — but a lot has been going on under the surface.

Many mobile payment systems, including Google's, use near-field communication technology as the starting point. To use Google Wallet at the point of sale, a consumer must have one of the few NFC-equipped smartphones running its Android software. Similarly, a merchant must have a terminal with the proper hardware to read the chip.

For Apple, however, NFC is not the key ingredient. If it comes, NFC will simply be the icing on a cake that Apple has been baking — and will still be baking — for a very long time.
"Right now, Apple devices are not NFC-equipped, but they are a more flexible environment from a software perspective than traditional" point of sale terminals, says Rick Oglesby, a senior analyst at Aite Group LLC.
Google's Android is the leader in smartphones, according to Gartner Inc., but the Android product line is too fragmented to sustain the sort of payment ecosystem Apple is building. Android devices come in hundreds of different shapes and sizes along with operating systems that are often tweaked according to carriers' whims.

Apple's i-devices, by contrast, are not customized for different carriers and have fewer hardware variations (Apple typically removes older iterations of its hardware from stores whenever a new version is launched). This allows for a uniform experience across the entire product line — and a more practical foundation for a payment system, experts say. (Representatives from Apple did not respond to inquiries made by phone and email.)

Apple retail stores in Paris and London are currently using a device from Ingenico SA that slips over iPhone and iPod Touch devices, for chip-and-PIN transactions as well as for full access to the iTunes app store, says Svy Nekrasas, vice president of marketing for the French terminal maker.

"Apple is definitely a market leader, and we have nothing in the pipeline in terms of integrating other devices to this form of payment," Nekrasas says. Ingenico is also the hardware provider for a test of PayPal's wallet in Home Depot stores using traditional point of sale devices.

Most payment systems built around Apple's devices still rely on plastic cards. Square Inc. set the tone for mobile payment acceptance with a freely distributed reader that lets small merchants accept transactions through the iPad and iPhone.

Square's reader was designed for small merchants such as flea market vendors, but other hardware makers are bringing Apple's devices into established retailers.

For example, when customers go to the women's clothier C. Wonder in New York's SoHo district, salespeople greet them with Apple's iPod Touch devices equipped with a card reader from VeriFone Inc.

The reader turns Apple devices into mobile point of sale machines that tap into the store's enterprise resource planning system.

"The Apple devices provide a more dependable platform," Paul Hoffman, vice president of business development and strategy for J. Christopher Capital, the management firm for C. Wonder, wrote in an email. Vendors offer more products that work with Apple devices than with other mobile hardware, he said.

And "there is the inherent coolness factor with Apple products," he wrote.
Perhaps even cooler: the platform cost less than $500,000 and took about four months to implement.
Hoffman claims it would have taken more time and cost millions of dollars to do a terminal and system upgrade and to manage Payment Card Industry data security standard compliance for all of its stores. (VeriFone's sleeve, like Ingenico's, encrypts transaction information.)

VeriFone recently announced a bluetooth version of its hardware to work with other mobile devices, but its current version works only with the iPad.

If Apple chooses to turn its iPhone into a payment device, it will not have to deal with the hassle of enrolling consumers into a new payment system.

Apple already has the payment details of countless consumers enrolled in its iTunes digital media store. As some of Apple's patents have shown, the company has explored adapting this system for other payment settings.

And the iPhone's status as a consumer-friendly handset that can handle business functions positions the device well to serve small-business clients — a group that banks and payment companies are largely ignoring in their mobile payment deployments with big-name retailers like Duane Reade and Home Depot.

"There is a big set of merchants that traditional bank merchant acquirers have ignored" and that Apple and its partners "could bring into the electronic payment ecosystem by making the process simple and not requiring the purchase of point of sale" equipment, says Gil Luria, senior vice president of Wedbush Securities.

Another advantage to Apple's approach is that people typically update their phones a lot more frequently than merchants update traditional point of sale systems, says Larry Berlin, a vice president and research analyst for First Analysis.

"The market is ripe for some fierce competition," says Sandeep Bhanote, vice president and general manager of mobile retail for VeriFone.

But, Bhanote adds, "The only way to compete on par with Apple is for someone to come up with some standardization across the [Android] OS and form factors."