A new payments service from Bling Nation offers local banks the chance to provide a low-cost closed-loop payments system within their local community. Smart stickers attached to customers' mobile phones and low-cost 'BlingTag' readers are at the heart of the system and NFC-based services will be added once handsets become widely available.
A new payments platform from Bling Nation aims to enable local banks to provide a low-cost payments service to consumers and merchants within their community.
Because it is designed purely for local transactions Bling's closed loop payments solution can save money by cutting out the usual middle men involved in debit transactions (acquirers, processors and network operators). Part of this saving is then passed on to merchants, in the form of lower transaction fees (typically 1.5% instead of 3%), and part is kept by the bank, which could expect to keep 38 cents on a US$40 transaction instead of nine cents with a mainstream debit card.
The company's core technology, in development for the last three years, is a real-time integrated issuing and acquiring processing platform designed specifically for local and regional banks.
At the heart of the solution are smart stickers, called 'Bling Tags', issued to consumers for attaching to their mobile phones. To make a purchase at participating merchants, the customer can then simply tap their phone at the dedicated Bling Tag Reader located in the store (currently this is a proprietary point-of-sale device but the company expects to see its reader integrated into existing contactless readers during the course of the next year).
Transaction details are then forwarded to the central 'Bling Link' processor which approves the transaction, debits the consumer's account and credits the merchants account — all in real time — and then sends the consumer an SMS text message confirming the transaction details.
Because this is a real-time platform, the consumer also receives up-to-date information on the balance of their account and a loyalty programme is also available that lets the bank add points to a customer's account every time they carry out a transaction, and then redeem those points at any participating merchant.
Will it work? Near Field Communications World spoke with Bling Nation's vice president of sales and business development, Bjorn Ovick, and chief technology officer Federico Murrone about the founders' backgrounds, the security built into the system, the reception the company has had so far from local banks and future developments, particularly with regard to NFC:
- Two venture capital firms, Lightspeed Venture Partners and Campventures, invested $13 million in Bling Nation during September 2008.
- The team behind the system has a pretty impressive pedigree. The company's advisory board includes John Reed, a former chairman of Citibank and of the New York Stock Exchange and Jeff Stiefler, a former chairman of Digital Insight and a former president of American Express. Co-CEOs Wences Casares and Meyer Malka have an impressive track record too, having founded Banco Lemon, a Brazilian retail bank, and Patagon, the largest online brokerage in Latin America.
- The smart stickers are based on the Mifare protocol and are manufactured for Bling Nation in China.
- Security is based around "proprietary algorithms based on industry standards".
- The Bling Tags contain two identifiers, one static and one dynamic, enabling the system to work out which account is to be debited — they do not themselves include any account or personal data.
- The real-time nature of the system means that any apparent spending abnormalities can prompt a request to the customer to enter their PIN for security.
- With regards to NFC, "we will be taking advantage of it when it is deployed," says the team.
- The company's technical team has already developed additional NFC-based functionality that could go live as soon as NFC handsets become available. The capability to offer both person-to-person payments and targeted marketing messages are already available, coupon delivery and redemption and the option of choosing between several accounts at the point--of-sale are under development.
Bling Nation is set to go live with its first pilot in the US during the first quarter of 2009. The company is in discussion with five interested banks and is currently in the process of choosing which one of the banks to partner with in one US community for the pilot.