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Wireless

Polish banks launch competing mobile payment services

Monday 13 July 2015 | 10:54 CET | Background

Poland has become a growth market for mobile payment. NFC at point-of-sale is wide spread and the number of active users for m-banking has doubled in the past year. Since 2010, the banks in the country have used the switch to EMV to upgrade to dual mode cards that support chip and contactless payment over Near Field Communications (NFC). M-payment is following the upswing of contactless at point-of-sale. Several mobile operators have developed their mobile payment services and offer card payments in cooperation with banks. Six leading banks have joined forces to develop a proprietary m-payment infrastructure, Blik. Host Card Emulation is rapidly approaching.

Mobile banking is still growing at rates that point to as-yet unfulfilled potential. The number of active users of mobile banking in Poland has exceeded 4 million; report PRNews.pl and Bankier.pl in June based on data from thirteen banks. Those are users who log in at least once a month from a mobile phone. The biggest mobile bank is mBank, which has over 953,000 active users of mobile banking. The second is PKO Bank Polski with 734,000 users and the third is Bank Pekao with 657,000 mobile users.

This number has roughly doubled in one year. In May 2014 Money.pl reported that more than 2 million internet users use mobile banking. There are some 20 million banking customers, and most financials have brought out mobile banking applications. Of 29 banks researched, at least 19 offer an application for at least one operating system, usually Android and iPhone. The market is three times bigger than in 2011.

IKO becoming Blik

Banking applications are developed into mobile payment at an impressive pace. In 2013, PKO Bank started the development of a bank-led platform for mobile payments and mobile commerce. Six banks cooperate on the development of the services. Bank Millennium, PKO Bank Poland, Alior Bank, Banco Santander's Bank Zachodni WBK, Commerzbank's BRE Bank (mBank) and ING Group's ING Bank Slaski are involved.

The services were developed on the IKO m-payment service launched by PKO supplied by Swedish service provider Accumulate. It’s an online service that uses a web based two factor authentication. No user credentials are stored on the phone. Going without a Secure Element means the service will run on most smartphones, older models included. The app is available for Android, iPhone, Windows Phone, BlackBerry and as a Java-based application.

A six-digit PIN on the app is the primary key. The app allows customers with a smartphone application to generate a one-time transaction code to pay merchants with a special payment terminal.

In the fourth quarter of 2014, the service gained approval from the Polish National Bank, following the prior consent of the anti-monopoly office UOKiK. The services were launched in February 2015 under the Blik brand, after a lead time of almost two years.

According to the banks that offer the service, there are over 10,000 acceptance points, including ATM’s. A Blik code can be used to withdraw money from an ATM without using a bank pass.

The IKO mobile application has 300,000 users, said the banks in June, coinciding with the launch of a peer-to-peer payment option. Of 300,000 users of IKO, 85 percent are clients of PKO Bank Polski, 10 percent are clients of Inteligo and 5 percent are users of IKO wallet.
Broad support notwithstanding, the fact that it requires dedicated terminals could become a disadvantage in a market that has more than one option.

Competition in NFC

The banks have developed their own solutions to compete with mobile operators, not for want of NFC infrastructure. Poland has adopted NFC, as much as an opportunity as borne out of necessity as large batches of mag stripe debit cards were due for replacement. In 2010-2011 PKO alone has swapped around 6.5 million cards in slightly over a year for dual mode chip and NFC cards.

This NFC inflection point has prompted the mobile operators to develop UICC-based NFC services, with T-Mobile offering banking services to go with them. The brand T-Mobile Uslugi Bankowe originated in May 2014 as a result of cooperation by T-Mobile Poland and Alior Bank. The services are provided by Alior Bank, which replaced Alior Sync. In selected T-Mobile shops, 133 points of sale had been established.

After the first year of operation, the banking services T-Mobile Uslugi Bankowe had 500,000 clients. T-Mobile has an agreement with eight banks. Bank BPH recently joined T-Mobile Uslugi Bankowe, Alior Bank, mBank, eurobank, Raiffeisen Polbank, Getin Bank and Noble Bank.
Orange Poland has its own solution with m-payment based on the SIM card. With the backing of ING Poland and mBank is has started swapping SIM cards earlier this year.

Both the BLIK service and mobile operator-led NFC services have been under construction for a while. Since then however, Host Card Emulation (HCE) has become a feasible route to integrate contactless payments directly into banking apps on Android smartphones.

In January this year, Visa Europe announced that nine Polish banks will develop HCE services. ING Bank Slaski, mBank, Bank Millennium, Raiffeisen Polbank, eurobank, Getin Bank, Bank Polskiej Spoldzielczosci and Bank Smart will join Bank Zachodni WBK in rolling out services utilising Visa's Cloud-based Payment specifications, enabling customers with payment apps utilising Host Card Emulation (HCE) functionality to make contactless payments using an NFC-enabled Android smartphone.

Separately, Oberthur Technologies (OT) has announced its selection by Getin Bank. Getin Bank performed a first transaction compliant with Visa specifications for HCE at the end of December 2014.

Visa Cloud services

Nine Polish banks have confirmed plans to commercially launch Visa Cloud-based Mobile Contactless Payment services from early this year, re-enforcing Poland's reputation as a hotbed for innovation in digital payment services. Banking providers ING Bank Slaski, mBank, Bank Millennium, Raiffeisen Polbank, eurobank, Getin Bank, Bank Polskiej Spoldzielczosci and Bank Smart will join Bank Zachodni WBK in rolling out services utilising Visa's Cloud-based Payment specifications, enabling customers with payment apps utilising Host Card Emulation (HCE) functionality to make contactless payments using an NFC-enabled Android smartphone.

Innovation ongoing

Poland has proven to be a testbed for new services and short development periods. A rapidly developing user base and a lack of existing infrastructure contribute to this.    

Getin Bank is testing payment cards with an embedded battery and display. This card has a Dynamic Card Verification Code (CVC) which is changed every hour. This technology adds extra security to online payments and comes in the place of two factor authentication with an SMS code. Getin says it will also launch cards with an embedded fingerprint sensor.

This willingness to try new ideas could mean that biometric verification on consumer devices can be implemented quickly. Smartphones with a fingerprint sensor and NFC can – if the back office supports it – be used to authenticate payment this way.



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