Beyond Stickers: Contactless ‘Skins’ for Payments with Handsets

The trend toward using adhesive tags to give mobile phones contactless-payment capability is going one step farther?now at least one startup is marketing a small sheet of vinyl that wraps around the entire mobile device and contains a contactless chip-and-antenna inlay. Mobile Payment Skins LLC launched last week to offer the wraparounds?or “skins,” as the mobile industry calls the phone-personalization technique?to banks and card-fulfillment companies as alternatives to contactless cards and the so-called stickers that normally feature the inlays. Doug Yeager, co-founder of the Knoxville, Tenn.-based company, says the skins serve two purposes: they're more attractive than stickers, the small radio-frequency identification tags a number of major players have started to rely on to give handsets payment functionality, and like stickers they serve as an interim technology while the payments industry sorts out issues plaguing near-field communication (NFC). Yeager says the problem with stickers is that many consumers are reluctant to put them on their mobile phones, especially high-end smart phones. “The existing stickers don't seem like a practical solution,” says Yeager. By contrast, consumers can personalize the skins with photos or other graphics they upload online, making it more likely they will use them and keep them on their phones. And since the skins have an adhesive backing handset users can peel them off at any time and replace them with new skins. A number of companies have been selling skins online since about 2003, says Yeager, though Mobile Payment Skins is the first company to add contactless capability. Yeager estimates about 3 million of the wraps were sold last year. A typical price, he says, runs from $12 to $22, for an item that costs 50 cents to $1 to make. “The margins are huge,” he says. Huge enough, he argues, that banks could sell his contactless wraps for the same price as a non-contactless skin and still make plenty of money. “It'll be up to the bank how they price it,” Yeager says. Skins consist of sheets of vinyl coated with a laminate and cut to fit a handset model specified by the customer. The technology was originally developed by 3M Corp. for the automotive industry as a substitute for paint, and was adapted by the computer and handset markets as a way to allow customers to personalize their devices, Yeager says. Though they have an adhesive backing, the skins can be peeled off without leaving a sticky residue, he says. Mobile Payment Skins, which has applied for a patent, will license the technology and funnel orders to banks or to their designated card-fulfillment houses, says Yeager, though to the customer it will appear he has been using his bank's Web site all along. The company has set up a demonstration site, at phoolah.com, and has distributed a number of samples so far, though Yeager says it hasn't taken any orders yet. Companies like First Data Corp. and Oberthur Technologies have introduced stickers as a sort of half-way house to handset-based contactless payments while the payment industry awaits the arrival of phones with integrated circuitry for point-of-sale payments, a technology called NFC. But Nick Holland, a senior analyst at Boston-based Aite Group LLC and a fierce critic of contactless stickers for mobile phones (Digital Transactions News, May 20) says the skins are no better as a temporary substitute for NFC. “Again, it's the same old story,” he says. “It's an interim measure that doesn't give us the endgame. The endgame is having the chip in the device.” The contactless skin isn't Yeager's first foray in electronic payments. Two years ago, he introduced a contactless fob with a USB connector that could be hooked up to PCs to make online purchases (Digital Transactions News, July 31, 2007). Another company he owns, Elemental Knowledge LLC, has licensed the technology to U.S. Encode, a San Diego company.