Technology entrepreneur Stafford Masie spent two-and-a-half years working on the Payment Pebble smartphone payment device before it was unveiled last week by retail banking giant Absa.
The device was engineered and built by Masie’s Centurion-based company Thumbzup, which he wants to use as a vehicle to shake up the global online payments space. The company has raised more than R80m in venture capital funding, though Masie says he can’t disclose the source.
The Pebble, which is available exclusively through Absa for the first year, allows merchants to accept both swipe- and chip-and-pin-based payments.
The sub-US$40 device, which is devoid of any cables, uses the 3,5mm audio jack on smartphones to draw charge for its battery and to communicate with a payments application, which is available for the iPhone (iOS 4 and up) as well as certain Android and BlackBerry models.
Although similar, in a way, to a US product called Square, Masie says the Pebble has a number of innovations that are not available on other smartphone-based payment platforms, including swipe and EMV-level chip-and-pin functionality in one device and a patented pin entry method where a software-based scroll wheel and random number generator are used to enhance security. (See the video at the top of this article for a demonstration of the device by Masie. The video has been blurred in places to protect the details of the credit card used in the demo.)
Masie also plans to release both server- and host-side application programming interfaces (APIs) to allow third-party developers to write apps that use the platform. He believes it will offer a way for e-commerce merchants and others to move payments off the Internet into a secure environment on users’ phones.
“Transactions should not be on the Internet. The reason we have PayPal and electronic wallets is we are attempting to solve what is fundamentally flawed transactional enablement on the Internet,” Masie says. “Do you want to buy a ticket for the Lady Gaga concert? If you have a Payment Pebble, plug it in, and buy it using a chip-and-pin transaction. That has never happened before, not in the history of commerce. This is about taking transactions off the Internet.”
Although the Pebble will only be available to merchant account holders, Thumbzup may release the product for person-to-person transactions, too. “It’s on the roadmap,” Masie says.
The design philosophy behind the Pebble was “extreme simplicity”.
“This, for me, is the iPod or iPhone of payments because of its extreme simplicity and mobility,” he says. “The greatest thing Apple ever did was allow people to write apps for the iPhone. The greatest thing about the Pebble is it will allow people to write apps for it.”
Despite the focus on simplicity, though, the security built into the device is complex, adhering to the EMV standard and many other specifications. It’s also possible to activate and deactivate the device remotely if fraud is suspected.
Masie says the device itself has 12 tamper-proofing elements built into it. “If you flick open the Pebble, it self-destructs – it will literally burn circuitry,” he says.
Designed and manufactured in South Africa, Masie says he hopes to keep making the Pebble devices in the country rather than outsourcing this to China or another low-cost manufacturing hub. “Hopefully the government gives us assistance through tax incentives. There’s a lack of incentives to keep it here, so it’s not easy. Yet there’s amazing South African talent involved here.”
Why Absa?
Thumbzup decided to partner with Absa for several reasons, Masie says. One of these was the bank’s “enormous acquiring capability”.
“They are the 800lb acquiring gorilla in South Africa,” he says. “They are the largest in Africa. But what really impressed us about Absa was the people, the ethos and values of the company, their buying into the fact that Thumzup is not a device company. Thumbzup is not throwing a device over the wall.
“I am not Square. [Square founder] Jack Dorsey is an acquirer. I am not that. I am a payments innovation technology company that partners with established financial institutions. I am not a device manufacturer. I make technologies that are physical or virtual. They’re not products for the sake of addressing a market.”
Masie says the relationship with Absa is exclusive because it’s Thumbzup’s first implementation. However, he says he is talking to the “largest financial acquirers worldwide” and to the “largest banks in Europe, Asia-Pacific and Latin America”. — (c) 2012 NewsCentral Media