After years of securing data, Rambus eyes mobile payments

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Rambus has provided the data technology under the hood of Nintendo and PlayStation games since the 1990s, and later became a global token service provider. The next logical progression is mobile payments.

The Sunnyvale, Calif.-based company plans to enter the mobile market with a product-scanning, in-the-aisle checkout mobile platform available through application interfaces and software development kits for large merchants, and as a turnkey product for acquirers to deliver to smaller retailers.

Rambus' acquisitions of BellID and Ecebs in 2016 provided the technology the company needed to start its move into retail mobile payments. It leveraged its tokenization services with BellID's embedded semiconductor security and proficiency in host card emulation (HCE) capabilities that could initiate contactless payments through the cloud without using the secure element on a handset.

With Ecebs, Rambus was able to enter the mobile ticketing market, which is often seen as a precursor to more advanced mobile payment scenarios.

It also helped that BellID, already a provider of government ID credentials at airports and other European organizations, aided the EMV chip card migration in 2004 by providing key management, data preparation and personalization of the chips.

"This is a continually disruptive space, and we started to ask how do we fit in for viable growth in looking at the adoption or lack of adoption for mobile payments," said Jerome Nadel, senior vice president and chief marketing officer for Rambus. "The company was having some success in Canada, Australia and Japan, and it wasn't about the technology or solution; it was about adoption and resistance to adoption."

In Canada, Rambus provided the tokenization service for Samsung Pay's support of Interac debit transactions in Canada. In Australia, it was tokenization for HCE-based debit transactions through Android Pay.

That sort of work was possible because "both systems had a level of collaboration that made what would potentially be difficult relationships to turn out working," said David Worthington, vice president of strategic business development at Rambus. "Whereas, in other environments, like the U.S. for example, quite a lot of money was being spent but the level of commercial agreement could not be made to make it actually work."

However, with the HCE technology and mobile wallets making their debut, arrangements for mobile payments availability began to fall into place, Worthington said.

Mobile payment pilots took on many forms, from HCE and hardware-driven solutions, to embedded secure elements on an Apple handset, and various other software configurations for banks developing their own wallets.

"We were a token service provider and had the ability to match those to payment cards and credentials, as well as secure element management," Worthington added. "It was a way to offer payment credentials and move into payments."

Rambus now touts its Unified Payment Platform that addresses all tiers of retailer needs, as well as the opportunity for the company to work with merchant acquirers in delivering the turnkey mobile payments software.

Ultimately, it's the scan-and-go technology Rambus wants to bring to the retail space, providing a way for consumers to pick items, scan them and build a virtual cart that the merchant can monitor through a web portal.

"We sort of shifted from infrastructure software focusing on secure transactions to things like: How can we help increase cart size or lifetime value, and how do we provide a consumable set of software that integrates for a large merchant and is more turnkey for a smaller merchant?" Nadel said.

Rambus plans to grow by leveraging what it currently does for banks and payment processors in providing software-as-a-service for secure transactions in retail, but also focusing more on the consumer-facing aspects of the product.

In that manner, Rambus' white-label application takes a page out of the Amazon Go playbook, but simplifies it, Nadel said. The Amazon Go cashierless store opened to the public in January, using mobile technology and cameras to determine which items had been removed from the store for purchase.

"Amazon Go requires a lot of infrastructure because every shelf is 'smart' with the items," Nadel said. "This is a much simpler framework to deploy, just by making the consumer do a little more work in doing the scanning."

Such a change for Rambus makes sense, but it will face some challenges with retailers who are locked in with older equipment and networks, said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group.

"It is a logical extension of what they have," Sloane said. "But you could have a large retailer that has a 15-year-old NCR point of sale system sitting on a desk taking transactions. So how do you change all of the things the merchant has done on these old platforms, some of which they can't afford to replace?"

Still, Rambus will garner interest from merchants starting from scratch or those intent on replacing older equipment with systems capable of handling modern mobile payments, Sloane added.

"If you believe the concept that software is eating the world, you could say that any software expertise can be applied to new areas," Sloane said. "It appears Rambus has taken its hardware expertise into software expertise and moving it into multiple different areas."

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Mobile payments Tokenization Host card emulation