Alternative Payments and the Internet of Things

Payments Leader

Posted on September 18, 2014

injectable payment chip technology

In the first two parts of our “Rise of Alternative Payment Types” series, we’ve taken a look at some burgeoning payment technologies that offer benefits to both consumers and financial institutions. In this third installment, we’ll focus on some mind-boggling, futuristic payment technologies, including wearables, injectables and other advanced payment technologies, which have already begun to find a niche in some form or another.

The Future of Payments Is Now

While mobile wallet providers attempt to simplify and hasten the payment process by taking physical plastic cards out of the mix, others are looking even further toward an era where virtually all things are connected. Dubbed “The Internet of Things,” this concept describes a world where most every electronic device is developed with an Internet connection, making it easier for the payment process to become more seamless and virtually invisible.

From Bluetooth wearable devices, syringe-injectable microchip implants, to embedded chips, advancing payment technologies are beginning to sound like something from an Isaac Asimov novel. That said, although it may sound like science fiction, these futuristic payment technologies are already among us:

Wearables Technology

It may not be too long before we see wearable payment devices on the runway. Over the last couple of years, there has been an explosion of wearable technology available on the market. As accessories once reserved for fashion begin to combine with technology, consumers can find armbands, rings, bracelets, glasses and more with internet connectivity. The possibilities are truly endless for what this could mean for the consumer as well as what services companies can provide. Apple recently unveiled its smartwatch, Apple Watch, which opens the gateway to new innovations well beyond telling time that include fitness monitoring, taking calls and messaging. What will the next wearable be?

Injectables

The American technology company Applied Digital Solutions has spent the last decade perfecting syringe-injectable microchip implants for humans, that are designed as fraud-proof payment solutions for cash and credit card transactions. According to the developer, the chip’s biometric “under-the-skin format” will make it a veritable “loss-proof solution” that can put an end to identity fraud.

Implantations

Recently approved by the FDA, RIFD chip implantation has been used throughout the world for a wide variety of reasons. Mexico’s organized crime investigation division requires its workers to wear the chips for security purposes. RIFD implantation is also used to record and provide information related to a wearer’s medical history, including drug allergies and other key details. At the same time, these half-inch implants are being targeted as useful payment methods. In fact, in Spain, Rotterdam and the Netherlands, people can already use them to avoid long lines and pay for drinks at a few exclusive clubs.

Risks and Implications

In effect, implanted microchips serve to make the physical body machine-readable to make payments easier and more secure. At the same time, because these devices transfer data through the wireless non-contact use of radio-frequency electromagnetic fields, they’re susceptible to the same malicious attacks as non-implanted chips. These attacks include hacking, cloning and the uploading of viruses. This risk was made clear when researchers at University of Reading were able to successfully upload a virus to an implanted RFID transponder. As the virus took control, it didn’t just comprise the data on the RIFD implant, it was able to use the transponder to copy and spread itself to computer systems within secure infrastructures that played host to the wearer.

Since RIFD implants can be used to locate a person or tap key information, such as medical and financial histories, there are also ethical questions related to privacy. In fact, these concerns are so substantial, industry experts and consumer advocates are warning that the risks related to RIFD implantation outweigh the benefits, since they believe the technology can never be made adequately secure.

An Unstoppable Movement?

Even as experts sound alarm bells, it appears implantation is the next step in the evolution of modern payment technologies. The RFID business has quickly grown into a billion-dollar industry that’s captured the attention of modern consumers, who like the idea of enhanced convenience. Although they may be difficult for financial institutions and merchants to manage, injectables and other “Internet of Things” payment types appear to loom on the horizon in one form or another.

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Payments Leader

Payments Leader from FIS provides insights on credit, loyalty, fraud and emerging payments strategies through blog posts from our industry experienced authors.