August 19, 2016
No Wallet, No Phone, No Card Required – But Ya Gotta Have Heart
By D.J. Murphy, Editor-in-Chief, CardNotPresent.com
The emerging trend of fitness wearables, a passion for taking friction out of payment transactions and melted chocolate coalesced over the past year into a startup that hopes you never have to take a wallet—or a phone—out of your pocket to pay for things ever again.
FitPay, a California-based company, was conceived when CEO Michael Orlando, a payments veteran from CyberSource and authentication technology company Jumio, went on a bike ride. Orlando and a friend planned a long ride with a stop for refreshments, so he took along a pouch with his phone, a credit card and a chocolate energy bar. When the pair finished their ride on the hot California day, Orlando’s hopes for a cold beer were dashed when he opened the pouch and his energy bar had melted over his phone and the card, rendering both of them useless.
“Why,” he thought, “do I need all this stuff?”
Discussions commenced that day on a solution for payment that would enable a consumer to wear a device that recognized and authenticated the user immediately upon entering a store and enabled payment based on that authentication without the consumer ever lifting a finger other than to pick up his or her purchase off the shelf. When Orlando found wearable technology that authenticated the user by their electrocardiograph (ECG) signature and paired it with beacon technology gaining traction in retail environments, FitPay was born.
“Current mobile payment platforms haven’t transformed the user experience. It’s not any easier to pull out my phone, open an app, scan a QR code, tap the device on a terminal while trying to capture my fingerprint or whatever else they’re asking us to do today than it is to use a credit card. So, consumers don’t care,” he explains. “But, if you can create that environment where they don’t have to do anything, they’re identified automatically and everyone involved in the transaction has confidence in the authentication methodology that is used, then you have something that is really cool.”
For the wearable and the secure authentication technology behind it, the company is partnering with leading biometric experts who developed the band and an algorithm that translates a person’s ECG into a unique authentication key that is broadcast securely via low-energy Bluetooth (BLE).
“It’s very different than other biometrics that are more on demand,” Orlando notes. “A fingerprint needs to be authenticated every time. If someone else were to put it on and touch the sensor to try to authenticate, their ECG wouldn’t match and they would not be authenticated. This, you put it on in the morning and you are authenticated until you take it off.”
With the authentication piece taken care of by licensing the band, Orlando brought his payment expertise to bear on the other half of the equation: a frictionless consumer experience in the store. Since the authentication is persistent, all FitPay needed was a way to enable payment without requiring the user to do anything—and that included extending a hand to tap the device on a receiver, so NFC was out.
Beacons, however, are gaining steam in retail environments, so Orlando included the ability for the band to be detected via BLE. Using beacons, the consumer is identified immediately upon walking into a store. An integration with the merchant’s point-of-sale ensures the POS recognizes FitPay users and, once a clerk initiates a FitPay transaction, the company processes the transaction using cloud-based, tokenized payment information stored by the user and provides an authorization back to the merchant. No digging for a card or a wallet, no swiping, no tapping, no scanning, no signing. And no payment data is shared with the POS, so both the consumer and merchant are protected, Orlando says. The customer walks out with their purchase and a receipt is delivered to their phone.
FitPay is early stage. The company has a handful of angel investors and currently is assembling a seed round. Orlando says partnerships with iOS and Android tablet-based POS providers is its initial focus. At the moment, Orlando says the plan is to charge consumers for the band (which contains an accelerometer and will be integrated with fitness apps in the future), but he envisions other partnerships with major retailers “or other ecosystems” that would underwrite the cost of the wearable. In the end, he says, it’s not about a piece of hardware strapped to your wrist.
“The goal isn’t the device,” Orlando says. “The goal is to get the platform out there so that we become an access point for wearable users to conduct frictionless payment transactions.”