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mobilepaymentapps.md

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FIDO in a world owned by proprietary mobile banking and payment apps

It is a fact that banks spend millions of dollars each year on proprietary mobile banking solutions.

These applications typically have multiple uses including payment support. The more advanced of these solutions cover a wide range of payment scenarios, including:

  • On-line (Web)
  • PoS (Point of Sale)
  • P2P (Person to Person)
  • Invoice payments

In addition to that, most of these solutions are also used for login when the user is on a "PC" running a Web version of the on-line bank as well as supporting 3D Secure.

Open Banking introduced yet another function for mobile banking applications: Strong Customer Authentication (SCA). Current Open Banking APIs are written in such a way that they do not depend on any specific SCA solution.

That is, it is not entirely obvious why banks would switch to FIDO based solutions. However, there is one big difference between banking and payments: while banking systems may be pretty bank-specific, payment solutions targeting external entities like merchants make proprietary systems much less attractive. History shows that only giants like PayPal, Amazon, and AliPay can realistically succeed with such endeavors.

That most digital payments in the physical world are based on an internationally accepted standard, EMV, shows the importance of standards

On-line payments - No (generally accepted) standards

However, in the on-line world things are more complicated because merchants are facing a multitude of quite different payment options. Although mobile banking and "wallet" applications enjoy a high acceptance in many countries, these systems still tend to be regional. While Apple & Google Pay are not constrained by national borders they 1) are not interoperable 2) only support card networks.

FIDO come to rescue?

Banks are understandably highly reluctant taking on yet another system that "does the same thing". There are though a few things that could change the picture:

  • Merchants (including their customers), are probably interested in any standard payment solution if it is good enough
  • Account-2-account schemes like SEPA instant, currently lack support for consumer to merchant payments (C2B). Not only on-line, but in the physical world as well

This is the primary rationale for FIDO Web Pay (FWP), which is a combination of a Browser-resident (built-in) payment application, FIDO, and an enhanced version of EMV. Due to its EMV origin, FWP lends itself to PoS scenarios as well, albeit using QR code invocation.

That banks would drop their mobile banking applications (or rebuild them to use FIDO) seems rather unlikely to happen anytime soon. Supporting a standardized (and popular) payment solution may prove to be a more realistic way to get a foothold in the banking community

Note: whatever payment system you have, it will take considerable time and substantial marketing to hopefully reach the critical mass required.

Version: 2021-03-25