Digital Transactions Authoritative, insightful and timely information for payments professionals
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The payments industry’s push to harness smart phones’ scanning capabilities took another step forward this week with an announcement from a startup called card.io that it has released a version of its card-scanning software for phones using Google Inc.’s Android operating system. The product allows users to automate the entry of card data on phone apps by scanning a credit or debit card with their smart phone camera.
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The San Francisco-based company, which is aiming its product at developers, in June released an iOS version for Apple Inc. devices. It says the software is now active on 80 applications, with another 750 having registered but not yet gone live. “Getting such a wide variety of apps to integrate our iOS [software development kit] in less than three months has gone beyond our expectations and has set the stage for our Android availability today,” Mike Mettler, cofounder and chief executive of card.io, said in a statement. Users of card.io’s SDK so far include Venmo, a so-called social-payments platform, Merchant Billing, a processor, and Qthru, a retail shopping application.
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Mettler tells Digital Transactions News that the product, which was about nine months in the making, responds to a common problem in mobile commerce. “We saw a huge growth in mobile usage but not a whole lot of purchasing going on,” says Mettler, who started card.io after working at AdMob, a mobile advertising network. Hampering payments, he says, is the need to type out long strings of letters and numbers from credit cards on a tiny keyboard. “Purchase conversions are pretty low because of this,” he says.
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With card.io, smart-phone users can capture card-account numbers and expiration dates by scanning their cards. The system does not capture the card-verification value, the three-digit number found on the back of the card near the signature panel. The data then populate the merchant’s checkout form. For Venmo, the system takes 20 steps out of the process of entering card information, according to a Venmo executive quoted in a card.io news release issued this week to announce the availability of the Android SDK.
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Inaccurate reads, in which a complete card number is captured but with a digit or more wrong, run below 1%, Mettler says. As for security, he says the company does not store card scans or data, and transmissions to its servers are encrypted. Current pricing is 15 cents per scan on top of card acceptance costs, with no contract needed and no setup fees.
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Rene Pelegero, a payments consultant and former PayPal Inc. executive, agrees that entering card data on mobile devices “represents a bit of a usability challenge,” depressing conversions for developers. But he’s not convinced that using a phone’s camera to capture the data is the right solution, contending that it presents usability challenges of its own. “I’m in the middle of an app, now I have to pull my wallet out of my pocket, and then I have to scan [my card]. You might as well put a card reader on the phone,” says Pelegero, president and managing director of Retail Payments Global Consulting Group LLC, Woodinville, Wash. A more likely solution, he says, is for consumers to store their card credentials on their phones, as for example is possible with phones using mobile wallets held in secure chips.
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Card.io also faces potential competition from companies like Jumio Inc., Mountain View, Calif., and Mitek Systems Inc., San Diego. But there are differences, leaving the mobile card-capture market to card.io for now. Jumio focuses on e-commerce, relying on the PC’s webcam to capture short video images of the card when consumers are ready to pay. Mitek pioneered the software that allows camera-equipped mobile phones to capture check images, and while it has not yet indicated it is working on an adaptation for cards, it introduced this summer a cloud-based version of its system intended to capture a wider array of paper-based documents.
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Meanwhile, card.io is sticking to its knitting. “We’ve focused on mobile, where there’s a big need and high friction [for payments],” says Mettler. As for demand, developers are apparently knocking on the door. On top of the iOS adoption so far, Android developers may welcome the new version. “It was a requested solution [among Android developers],” Mettler says. “There’s a really big need on Android for a payment solution.”
