9TH ANNUAL rewards in ways that would have been unimaginable a few years earlier. It's the new world of alternative payments, and it's pretty much a mobile FIELD GUIDE TOworl d now. That's thanks not only to smart phones but also to clever applica• tion programing interfaces and the relatively recent opening of tech shops to ALTERNATIVE outside developers with smart ideas for integrating payments functionality with new apps (for more on this, see page 2A). PAYMENTS So here we are with our 9th Annual Field Guide to Alternative Payments, The increasing commercialization of mobile and, as you might expect, it bears little resemblance to the first Guide we put payments is showing up in a proliferation together in 2009. Herein, you'll find fully 27 entries that either didn't exist back of so-called Pays from a bevy of banks, then, or that were too nascent to include. tech companies, and merchants. You'll also find more than half a dozen "Pays," more if you count services like BY JOHN STEWART, JIM DALY, AND KEVIN WOODWARD People Pay and Self Pay. The inventors of the smart phone may not have conceived of the device as a payments tool, but in due course that is what it has become. As in prior years, Digital Transactions generally defines an alternative-payment system as any network or consumer interface (a mobile app, for example) that displaces the Visa/MasterCard/ AmEx/Discover networks (seen as one traditional system for this purpose), enables payments in a way that stands apart from that network (even if it ulti• mately uses it), and/or stands between that network and the consumer in an important way. We emphasize consumer- facing payment systems, but of course many, if not most, of the systems profiled here market themselves to merchants to maximize acceptance of their products. This year, we are also including compa• Time was, a cutting-edge alternative-payment service involved nies like CardFree and SimplyTapp entering card or bank-account details into a branded interface that do not directly offer mobile- payment services to consumers but on a laptop computer. Mobile payments were nascent, held do develop the software that makes back by the limited power and ergonomics of flip phones. Even innovations like mobile order and pay the advent of smart phones didn't make an immediate differ• and host card emulation possible. ence. Then, in 2014-, Apple Pay emerged for the iPhone, and suddenly consumer payments were cast in a whole new light. Information for the listings comes from news reports over the past year, It wasn't long before other "Pays" and from among tech giants like Google, company Web sites and spokespersons, followed, from among Apple's competi• but also from among a surprising array and financial filings in a few cases. tors in the handset market, of course, of companies you wouldn't think of, We list pricing for the merchant and ordinarily, as technologically savvy. By consumer when it is publicly available. 2016, consumers could get a mobile- The "Year Founded" line refers to the payments app from merchants like Kohl's year the particular service was founded, ~Z r\ Digital Transactions or Wal-Mart, or from banks like Chase not the parent company, except in OU May 2017 or Citi, that streamlined payments and those cases where the two coincide. Field Guide to Amazon Pay Apple Pay Alternative Payments PARENT Amazon.com Inc. PARENT Apple Inc. HEADQUARTERS Seattle, Wash. HEADQUARTERS Cupertino, Calif. YEAR FOUNDED 2009 (as the Flexible YEAR FOUNDED 2014 the digital currency rose steadily through Payments Service) WEBSITE apple.com/apple-pay/ 2016, finally reaching the symbolically WEB SITE pages.payments.amazon.com PRICING Free to consumers, but merchants important $1,000 level by early January, pay standard per-transaction fees. Credit a height it hadn't scaled since late 2013. Tightlipped Amazon card issuers pay 0.15% of sale, debit card There were several factors driving that doesn't disclose many statistics about issuers 0.5 cents. increase, among them an event dictated Amazon Pay, but its online and mobile by Bitcoin's software that cut compensa• checkout service is clearly growing fast. Apple's almost tion to Bitcoin miners, but the result Some 33 million consumers, half of them 3-year-old Apple Pay continues to be was that the currency began to look Amazon Prime members, have activated adopted by more banks in more countries more valuable as an investment than the service, giving it a built-in user base. and by more service providers. Most as a medium of exchange. Meanwhile, Payment volume is up by a factor of 5 recently, The Western Union Co. inte• the split continues between enthusiasts just since 2015, with nearly one-third grated the service into its app in April. over the question of how best to increase of that volume last year coming from More than 2,100 banks in the United capacity to allow for growth. One side, a mobile browser or app. Now, Amazon States, Canada, Europe, and Asia support called Bitcoin Unlimited, would like to is returning to its roots as a bookseller, Apple Pay with their cards, according to see no limit on block size on the block- having set up five physical bookstores Apple's Web site. Yet, widespread adop• chain, the distributed-ledger system around the country where customers can tion, especially among U.S. consumers, that manages Bitcoin transactions. The scan quick-response codes to get product remains low. Indeed, a Juniper Research other side, Bitcoin Core, wants to leave information, including reviews, and pay report in April said that Apple Pay had 45 things the way they are. Neither side for the books they want. That encour• million users, but user growth in the U.S. seems willing to compromise, leading the ages customers to keep their phones out, market has been flat, according to another Unlimited camp to propose a so-called which in turn makes it more likely they'll firm, Phoenix Marketing International. hard fork of Bitcoin's software. That use the devices to pay, Amazon says. Apple said the number of Apple Pay would in effect create two versions of users tripled over the course of 2016 as the currency, a development that has the service launched in new countries. added to Bitcoin's price volatility. One bright spot has been the adop• Android Pay tion of Apple Pay for online purchases. PARENT Alphabet Inc. Though available only in Apple's Safari CardFree HEADQUARTERS Mountain View, Calif. browser, the service has been adopted by YEAR FOUNDED 2015 many merchants. E-commerce platform PARENT CardFree WEB SITE androld.com/pay provider Shopify Inc. said more than HEADQUARTERS San Francisco 150,000 merchants offered the service YEAR FOUNDED 2012 within five months of its debut. In addi• WEB SITE cardfree.com Android Pay is the tion to payments, Apple Pay uses loyalty mobile wallet that Google parent company to entice consumers. Walgreens Balance Alphabet unveiled in September 2015 Rewards was the first loyalty program Consumers wouldn't to take over the point-of-sale payment to integrate with Apple Pay in 2015, recognize CardFree's name, but plenty of functions once assigned to Google Wallet, and now many others, including USA them are using its technology these days. which is now a person-to-person payments Technologies Inc.'s MORE program for CardFree's platform supports mobile gift service (page 34). Android Pay is now live in vending purchases, are tied to Apple Pay. cards, digital offers and loyalty programs, nine countries, including the U.S., United order-ahead services, and social-media Kingdom, and Japan. The service, in addi• integration. It is the provider of the tion to supporting in-app payments, also mobile-application platform for Dunkin' is available on the mobile Web and works Bitcoin Donuts' On-the-Go Ordering app, which with Visa's Visa Checkout and Mastercard's includes the ability to order and pay Masterpass as well. Android Pay works with PARENT None ahead. Dunkin' Donuts has more than KitKat 4.4 and later versions of Alphabet's YEAR FOUNDED 2009 8,000 U.S. locations. Other CardFree Android mobile operating system and comes WEB SITE bitcoin.org/en clients include Taco Bell, Sonic Drive-in, preloaded on Android phones sold by the PRICING Depends on processor. Typically and Checkers/Rally's. CardFree chief major carriers. The service uses near-field free to consumers, with a transaction fee executive Jon Squire helped develop communication and also host card emula• to merchants that is less, sometimes dras• the Starbucks Card mobile program tion, a technology that relies on credentials tically less, than credit card discount rates. while working at mobile developer delivered from cloud servers using tokens to mask account data. This allows card Bitcoin, which had issuers to bypass a mobile phone's secure traded in the low hundreds for years, element, typically the SIM card or a chip suddenly saw its value take off in 2016. Digital Transactions installed by the device manufacturer. From a price of around $450 a year ago, May 2017 31 Field Guide to it's also more than that. The app lets you send money via a messaging interface, but CVS Pay Alternative Payments also lets you add text, emoji, pictures, and animated gifs to payment URLs. Think PARENT CVS Health Corp. of it as a more private version of PayPal's HEADQUARTERS WOOnSOCket, R.I. mFoundry, which Fidelity National Venmo: With Circle, information is visible YEAR FOUNDED 2016 Information Services (FIS) bought in only to sender and recipient; with Venmo, WEB SITE cvshealth.com 2013, and also has experience at CorFire, transactions appear on a public feed.