Lockdown or no lockdown, smartphones have become integral part of everyday life for people anywhere in the world. A smartphone owner never leaves the smartphone even for a second. Wherever he/she is going, whatever he/she is doing the smartphone is always beside the master just like a faithful dog. Without the smartphone life becomes insecure, meaningless and pointless. During the pandemic induced lockdown, the smartphone dependence became more pronounced. People were homebound and hence became more and more attached to the magic device that gave them a touch if outside world through its narrow window. Most widely used smartphone application during lockdown is no doubt the WhatsApp. The next in the line is various mobile payment apps. Be it grocery, bill payment, tax payment, mobile recharge, school/college fee or rent payment, users were forced to pay through their mobile devices as there were no other alternative. A whole range of mobile payment apps were available such as UPI payment (BHIM UPI), QR Code payment (Bharat QR), Wallet payments (G Pay, Apple Pay, Amazon Pay, Samsung Pay, PayTM or PhonePe) and were extensively used by innumerable mobile users during lockdown.
Apart from these, two more advanced mobile payment technologies were also available namely sound wave (NSDT) based mobile payments and magnetic wave (MST) based mobile payments. The major advantages of these two technologies are they don’t need internet connections for making payment transactions and hence could be used not only by smartphones but also by ordinary cellphones. So these technologies were particularly helpful for people in rural areas where smartphone penetration is not very high. Both of these offer short range contactless mode of mobile payment without any data connection. However, for making long range mobile payments, i.e., for making mobile payments from home, people still need internet connection.
The details of these two advanced mobile payment technologies are discussed below.Sound Wave Based Mobile Payment: NSDT (Near Sound Data Transfer)
In any mobile payment system, the payment is actually made in the form of bank account transfer. Both the payer and the payee (receiver of the payment) must have a bank account in same or different banks. At the time of making payment the payer sends a payment instruction to the bank (in which the payer has an account) for making the payment. The payment instruction consists of the following information: payer bank account details (account number, bank IFSC code, bank PIN/Password/OTP), payee bank account details (account number, bank IFSC code) and amount of fund to be transferred from payer account to payee account. Thus the payment instruction consists of private and confidential account information and needs to be protected from possible hacker or malware attacks that may lead to financial or other loss to the payer/payee. The protection usually comes in the form of encryption which is a mathematical process that converts the payment information to a coded data which is difficult to tamper with. The encrypted code is then sent over electronic medium (usually the internet) to the bank network where it is decoded and processed to complete the payment transaction. In case of UPI payment, QR code payment or mobile wallet payment, the encrypted payment instruction is converted to electronic signal (i.e. digital data) and sent over the internet towards the bank.
In case of sound wave based mobile payment, the payment instruction is converted to sound signal and sent towards the merchant (payee or receiver of the payment) mobile device (such as POS or MPOS) from where it is sent to bank network for further processing. NSDT (Near Sound Data Transfer) technology produces ultra-high frequency audio signal containing payment information which is then broadcast in the nearby region using the speaker of the payer mobile device. The microphone present in the merchant POS terminal (or merchant mobile device) placed in front of the payer mobile device picks up the audio signal containing the payment information and forwards it to the respective bank network for completion. It offers a simple, convenient and low cost mobile payment option which is more secure than other mobile payment systems. The frequency of the audio signal is randomly generated and is very short duration (5 to 10 sec). So it is practically impossible for a hacker to guess that frequency and break into the audio signal to hijack payment info. In order to improve security and reliability of the payment, the audio signal is sent in encrypted form to the merchant terminal where it is decrypted before being used for making payment transactions. No internet connection is required in the payer device for sound wave based payments and hence this feature is available not only in smartphones but also in ordinary cellphones without a data connection.
Tone Tag is an Indian startup company that employs encrypted audio waves for making contactless proximity payments between two mobile devices in offline mode. Tone Tag has collaboration with HDFC bank that offers Ultracash mobile payment app which offers sound wave based mobile payment option to its customers. Customers can use the app for making payments in restaurants, grocery stores or electronics stores even if there is no data connection available in their mobile devices.
Magnetic Wave Based Mobile Payment: MST (Magnetic Secure Transmission)
Magnetic Secure Transmission (MST) is an advanced technology that generates a magnetic signal similar to the signal generated by a magnetic card reader when a magnetic credit/debit card is swiped in it. MST technology along with NFC (Near Field Communication) technology is widely used for making credit/debit card based contactless mobile payments.
Mobile users store their credit/debit card information (i.e., credit/debit card number, PIN, Expiry date etc.) in their mobile devices. In case of NFC payments, at the time of making payment, the mobile payment app in user mobile device generates an electromagnetic signal which is sent wirelessly to a nearby electronic card reader. For MST payments, the mobile payment app generates a magnetic signal and send it wirelessly to a nearby magnetic card reader. The magnetic/electromagnetic signal carries all necessary payment information (such as payer credit/debit card number, payee account number, amount etc.,) for completing the payment. No physical card swiping is required in the card reader as the information is carried by the magnetic/electromagnetic signal in wireless mode and hence the name contactless payment.
In the card reader (electronic or magnetic), the payment information is extracted from the electromagnetic (in case of NFC) or magnetic (for MST) signal and converted to digital data and sent to bank network through internet. Bank completes the credit/debit card transaction according to the payment information received from internet. The advantage of MST over NFC is that, MST works fine with old magnetic card readers but NFC requires sophisticated electronic card readers. For making payments using MST no hardware upgrade is required as it works fine with old magnetic card readers. Thus MST has a wider user base and are extensively used in rural and semi-urban areas.
The magnetic/electronic signal coming from MST/NFC enabled devices contain user private and confidential credit/debit card information and account information. In order to protect the sensitive payment information from possible hacker/malware attacks, digital tokenization technology is used. It generates digital tokens (which are a series of dummy digital data without any meaning) corresponding to each piece of payment data and the tokens are sent towards the card readers wirelessly. The card readers forward the tokens to the banks through internet. The bank converts the tokens into original payment data using a mapping process. Tokenization prevents hackers from tampering/hijacking payment data as tokens are dummy data and extracting any information from a token is impossible.
Both Apple Pay & Google Pay offer NFC based contactless credit/debit card based mobile payments and require electronic card readers for completing the payment transaction. Samsung Pay offers MST based contactless credit/debit card based mobile payments and works well with old traditional POS terminals fitted with magnetic card readers. Hence MST payments enjoy a wider user base than NFC payments.
MST technology was first developed by LoopPay which was later acquired by Samsung. Samsung Pay mobile wallet system offers both NFC & MST based mobile payment and supports a wide variety of electronic/magnetic card readers fitted inside the POS & mPOS terminals.
Written by: Prof. Karabi Bandyopadhyay Faculty, IT & Systems, ISB&M, Kolkata