Member Profile: ViVOtech Profile

This month, Smart Card Talk spoke with Mohammad Khan, President and Founder of ViVOtech.  Mr. Khan held several engineering, marketing, and business development management positions during the 15 years he worked with VeriFone.  Joining VeriFone in its early stage in 1983, Mr. Khan helped the company develop its payment automation systems and later helped successfully market these products in more than 96 countries.  Included were the smart card and security payment products he conceived for VeriFone and launched to its worldwide markets in the early 1990s.  He was also a co-founder of the Internet Commerce Division within VeriFone and was responsible for the expansion of VeriFone's Internet payment systems business into more than 25 countries.  VeriFone grew to $600 million in revenue before being acquired by Hewlett-Packard for $1.2 billion in 1997.  Mr. Khan is a co-founder of Sparkice, Inc., China's e-Hub for global commerce, where he worked as its senior vice president.  He holds a master's degree in electrical engineering from the University of Hawaii at Manoa. Mr. Khan was recognized as a leader of the Electronic Payments Industry by the Transaction Trends Magazine in 2006 and as a “Mover and Shaker” of the Electronic Payments Industry by the Transaction World magazine in 2005.

• 1. What are ViVOtech’s main business profile and offerings? 

ViVOtech is the leading technology provider for the 3rd generation payment systems being built on contactless and Near Field Communication (NFC) mobile phone technologies. ViVOtech products include NFC mobile phone wallet software, an over-the-air (OTA) payment solution and one-to-one marketing infrastructure software, and transaction application management software, as well as customer-facing contactless/NFC readers/writers. These innovative solutions allow:

• Consumers to make contactless payments with radio frequency-enabled credit cards, smart cards, debit cards, key fobs, and NFC-enabled mobile phones.
• Merchants and card issuers to do location-based and personalized loyalty, coupon, and promotion programs.
• Cell phone operators to provide payment- and commerce-related services to their customers

With more than 200,000 units in 18 countries, ViVOtech's products are currently being used by some of the most prominent retailers across the globe. ViVOtech technology is used at movie theaters, fast food or quick service restaurants (QSRs), casual dining establishments, coffee shops, convenience stores, gas stations, drug stores, grocery stores, buses, taxicabs and vending machine locations, enabling a wide variety of businesses to provide their customers with a convenient and secure payment option.

In 2005, ViVOtech received the prestigious Frost & Sullivan technology award for its role in transforming the contactless payment industry. The company was also awarded the first annual ETA Technology Innovation Award and was recently honored with a MasterCard "Best Vendor Partner Award" as the first vendor to deliver standalone contactless readers for MasterCard PayPass customers.

2. What are the main products or technologies ViVOtech is providing to enable 3rd generation payment systems? 

ViVOtech provides a complete end-to-end solution for the extended ecosystem required by 3rd generation payment systems. 

Contactless Readers/Writers for Merchant Point-of-Sale (POS) System
ViVOtech provides intelligent, easy-to-use, and customer-facing contactless payment reader/writers.  ViVOpay contactless readers from ViVOtech enable merchant POS locations to accept contactless payments. Customer-facing ViVOpay readers and writers also allow merchants to accept coupons, promotions, and tickets from their customers electronically. ViVOtech has contactless readers for various point-of-sale environments including indoor stores, outdoor drive-through kiosks, vending machines, and "pay-at-the-table" restaurants. For both EMV and non-EMV countries, ViVOpay readers support American Express, Discover, JCB, MasterCard, and Visa contactless payment programs as well as merchants’ gift and loyalty contactless programs. ViVOpay contactless readers also accept payments, coupons, and promotions from NFC mobile phones.

ViVOwallet Software for NFC Mobile Phones
ViVOtech has developed easy-to-use wallet software, ViVOwallet, that allows consumers to store payment card data electronically in their mobile phones.  With this option, consumers are able to choose their preferred payment method at the time of payment. ViVOwallet is designed to support multiple applications like contactless payments at the merchant POS, electronic coupons, and person-to-person payments, and over-the-air payments. ViVOwallet payment software has been successfully tested in various pilot programs and is growing in acceptance.

ViVOnfc Suite 2 and Transaction Management Software for Extended Ecosystem
ViVOnfc Suite 2 allows OTA provisioning of payment cards, coupons, promotions, and tickets into NFC mobile phones, so that consumers can use their NFC mobile phones even more frequently in everyday life and enjoy extra convenience and savings. ViVOnfc 2 software includes three important servers.

• ViVOplatform Issuer Server, VpIS, is a dedicated server that sits in the premises of credit/debit/prepaid card, coupon, promotion, and ticket issuers. Placed behind the firewall, VpIS allows these issuers to manage and provision their data over-the-air into mobile phones while managing data security.
• ViVOplatform Control Server, VpCS, is a server that is designed to be operated by or on behalf of mobile phone carriers and allows card provisioning, coupons, ticket, promotions and advertising over-the-air into NFC mobile phones on a per-charge basis.  This creates additional revenue streams as well as stronger customer retention for operators.
• ViVOplatform Content Manager, VpCM, allows operators to route and manage service discovery/smart poster applications. Touching an NFC phone to a smart poster, the phone automatically connects over the air into VpCM where various service discovery applications are managed (e.g., content request and delivery, coupon delivery) and where users can access product information.

The ViVOnfc solution has been used successfully to provide OTA provisioning of cards into NFC mobile phones for a trial conducted in China in August 2006.

3. What role does smart card technology play in supporting ViVOtech’s business? 

Smart card (chip) technology plays a vital role in enabling ViVOtech's business.  ViVOtech's contactless technology and NFC mobile phone payments are built on smart card chips embedded in contactless cards, key fobs, readers, and NFC mobile phones. Smart card chip technology is found throughout ViVOtech's business -- securely storing and managing consumer financial data, carrying multiple payment card data in a single chip, and supporting EMV and other stored value payment schemes through a contactless or NFC payment device.

4. What trends do you see developing in the market that ViVOtech hopes to capitalize on? 

I see a major evolution in the payment industry based on contactless and NFC technologies, mobile phones and wireless networks defining the 3rd generation payment system. This new ecosystem is driving cash replacement, increasing card acceptance, and bringing both speed and convenience to the purchasing experience. Moreover, these technologies drive location-based loyalty and incentive promotions as well as personalized one-to-one marketing on behalf of merchants and card issuers. This next generation payment ecosystem is evolving based on open standard contactless programs driven by American Express, Discover, JCB, MasterCard, and Visa and is leveraging NFC mobile phones and OTA (wireless) data networks.

Further, consumers benefit from increased convenience while receiving additional savings and rewards when they shop. Merchants will see faster checkout times, increase operational efficiencies, and gain stronger allegiance from their customers. Acquirers, processors and ISOs will be able to see increased revenue growth through a greater volume of transactions and through new services they can offer on behalf of merchants and card issuers. Mobile phone operators will be an important part of the extended ecosystem needed by 3rd generation payment systems that will benefit from OTA wireless data networks and mobile phones. All of these innovations will also benefit card issuers and card associations/networks while accelerating their growth and differentiating their services more effectively.

Today, consumers are becoming more familiar with how to use sophisticated mobile phones for voice, camera, and SMS messaging, as well as for playing tones and songs. They will be using mobile phones for their financial applications, especially enjoying convenient payment methods and assisted shopping experiences.

As a leader in contactless and NFC payments, VIVOtech is well positioned to capitalize on this trend. ViVOtech was formed in 2001 with the vision for using contactless technology and mobile phones in next generation payment systems that is today coming to fruition.

5. What obstacles to growth do you see that must be overcome to capitalize on these opportunities? 

The good news is that contactless payment is gaining momentum worldwide. In the United States alone, more than 17 million contactless credit and debit cards have been issued to leverage the over 250,000 POS systems that are now enabled to accept contactless payments.

However, there are few challenges to get contactless and NFC phone payment to critical mass.  For example:

• In the early days of the contactless program roll out, there existed a "chicken and egg" situation where merchant and acquirer communities have wanted to see more contactless cards available in the market before accelerating contactless enablement at merchant locations. Logically, card issuers would like to see more merchants enabled before integrating contactless cards. 
• Because fewer cards are being issued in certain geographies, many merchant locations, such as those on the West Coast, are seeing only a limited number of transactions using contactless cards today.
• A more interesting challenge is the recognition of a contactless card. Currently, different card issuers are using different symbols or names to identify their contactless products. Unification can occur if a single contactless symbol is available, communicating a consistent message to consumers. The good news is that all card associations or networks have agreed to use common contactless symbols for contactless readers, although they need to do the same for contactless cards to ensure mass adoption.
• On the NFC mobile phone front, mobile operators are still trying to figure out  profitable business models using NFC-enabled mobile phones. The good news here is that they are making good progress. It will likely take an additional one to two years before we are going to see NFC mobile phones widely enter the market for consumer use, while the industry is building the needed infrastructure to support NFC mobile phone-based payments and promotions.

6. What do you see are the key factors driving smart card technology in the market?

As I mentioned earlier, I personally believe that the global payment industry is going through a major revamp based on contactless technology, mobile phones, wireless data (OTA) networks, and eventually biometrics. It is all going to happen over the next 5 to 10 years. Smart card technology plays an extremely vital role to make this transition possible. Most payment devices are going to be based on chip technology a few years from now; it does not matter whether it is based on contactless or contact technology. However, I believe contactless technology will prevail as it provides a broader value proposition due to its freedom from any specific form factor and its ability to drive a quicker payment experience. Payment devices could be a card, key fob, or mobile phone.

In the future, biometric-based identification could become a norm where I could just touch my mobile phone to establish my identity. I believe that the next major wave after contactless and NFC will be mobile phone-based biometric identification for payment, access, and remote identification for both physical and frictionless commerce, providing even greater security.

In short, the smart card chip will be an increasingly essential and critical component of various applications in a consumer's life.

7. How do you see your involvement in the Alliance and Contactless Payments Council helping ViVOtech become successful?

The Smart Card Alliance is a neutral forum of industry leaders that addresses core-level issues that touch industry participants across the board. That’s why I have been involved with the Alliance since 2002. Considering that Alliance activities are expanding, it was a great idea to start a Contactless Payments Council to focus on addressing the core issues for the wider acceptance of contactless payments.  The Alliance and Contactless Payments Council produce white papers, position papers, webinars, and focused task forces to make the contactless roll out smoother and more successful. This provides a direct value to ViVOtech.

8. In your role as co-chair of the Smart Card Alliance Contactless Payments Council, what do you see are primary goals for the Council for the next year?

2007 will be an exciting year for the payment industry. We are going to broaden the participation of all leading players in the roll out of contactless technologies including acquirers and ISOs. Primary goals for the Contactless Payments Council will be to:

• Continually educate the media and the industry on the security perception and new value proposition of contactless technology.
• Educate acquirers, processors, and ISOs on the value proposition of contactless for them and their merchant customers.
• Identify merchant-specific contactless applications that would further motivate merchants to accept contactless payments.
• Educate the industry on broader value propositions made possible through NFC mobile phone applications.

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