We have another mobile wallet in the ecosystem, and this time it’s from Microsoft. Microsoft will be bringing NFC payments to Windows 10 Mobile devices on a limited basis in the United States, the company announced on its’s blog. This wallet will be available only for devices on Windows Insiders.
So far, the Lumia 950, 950 XL and 650 have been enabled payments via NFC. Microsoft has partnered with card payment networks Visa and MasterCard for the wallet and can be used in over a million retail locations. Users can make payments where there is a contactless payment symbol or the Microsoft Wallet logo at the point of sale.
Microsoft’s Wallet is currently supported by banks such as Bank of America and Chase Bank A full list of banks and credit unions supporting them can be seen here.
The wallet will allow users to store their credit and debit cards, similar to Android Pay and Apple Pay. Users need tap their phone on a NFC payment terminal, and the default credit or debit card is charged. The wallet sends a one-time transaction number and encrypted security code that won’t work for any other device, person, or purchase.
If a phone is stolen or lost, others can’t use the wallet as a phone PIN and card numbers are not stored on the app i.e. the app uses tokenization, again similar to Android Pay and Apple Pay.
Why it won’t work in India
There are a number of hurdles for why Android Pay, Apple Pay, Samsung Pay and now Microsoft Wallet will not work in India. The United States is quite lax in terms of card security and for the longest time most cards used magnetic stripes which could be easily cloned (the US is still migrating to EMV chip based cards while almost all cards in India have migrated already).
Hence, the idea of tokenization, the process of substituting a sensitive data element with a non-sensitive equivalent, on wallets such as Apple Pay added a layer of security for for users. This was a big draw to these payment systems where user could tap-and-pay on terminals without worrying about their cards being compromised.
In India, the payment systems from Apple, Android, Samsung and Microsoft will require many tie-ups with banks. Besides, these payments systems are directly linked to cards and they would probably treated as card-not-present transactions for which the RBI insists on two-factors of authentication. What’s the point of tap-and-go payments if you have to enter a PIN or and keep authenticating transactions?
There are some exceptions in India, such as ICICI Bank’s pockets which has NFC payments through a mobile app. However, it also uses tokenization for NFC payments, but it needs a card issued by the bank and other banks cards will not work on the app.
Which is why we have semi-closed wallets such as Paytm and MobiKwik which allows users to store a small amount of the money and bypass the additional factor of authentication.