The days of the add-on mobile card reader may be numbered, as recent developments around software-based approaches gain strong momentum.
It's not just about Card.io, which works with its new owner PayPal Inc. to allow users to accept card payments by scanning plastic cards with a smartphone's camera. Companies such as Jumio, which recently signed a deal with JMango to broaden its imaging technology's reach to more mobile devices, and check-imaging company Mitek are also gaining more of a presence on mobile devices.
PayPal's deal to acquire Card.io "validates the technology," Daniel Mattes, Jumio CEO and founder, said in a July 19 interview.
He views mobile card readers popularized by Square Inc. as a "bridge solution" merchants and others use to accept payment cards. (A Square representative did not reply to a request to comment on Mattes' view by deadline.)
The phone's camera is a better choice, he says, because "a camera is part of the phone; you don't need any [extra] hardware."
Either technology is valuable only as long as consumers use cards. "Almost everyone has a credit card, and it will [be around for] a long time," Mattes says. But new mobile-payment options are being developed at a rapid pace.
Card.io, Jumio and Mitek all offer examples of efforts to use a phone's camera to facilitate card acceptance for merchants. "But they also can facilitate the onboarding of information into (digital) wallets," notes Gil Luria, senior vice president at Los Angeles-based Wedbush Securities LLC.
One Card.io client, Lemon, uses the camera for just that: it allows users to scan a card with the phone's camera and then it creates a digital image and bar code based on the card data for later use.
"Within five years you will see cards mostly transitioned away from plastic," Luria says. "The end game isn't that nothing physical will be issued to us; it will be issued electronically into the wallet. The plastic will go away one way or another."
Though it just launched last summer, Jumio has experienced success financially. Mattes expects the company to earn $100 million in revenue this year. Some 2,000 developers are using Jumio's software-developer kit, up to 80% of which are based in the U.S., Mattes says.
Image-capture technology is very accurate, Mattes says. Only one out of every 1 million reads with a mobile camera results in an improper card validation, he says.
Jumio supports card imaging from devices that run Apple's iOS, and it expects soon to make its platform available for phones using Google's Android operating system.
Through its deal with JMango, Jumio can add phones that use Microsoft's Windows, Research in Motion's BlackBerry and the Symbian operating systems within the next couple of months, Ilan Oosting, JMango CEO, said in an interview.
JMango just opened a sales office in California and plans to begin reselling Jumio's verification technology as its own platform makes a name for itself with "all the bells and whistles" in the Asian and European markets, he says.
"The moment I met Daniel (Mattes), I knew this was going to be a huge business," Oosting said.
Mattes says he expects card-image capturing to be viable for a long time. "In five years it will be normal to capture a credit card, an ID or a face" with a phone's camera for authentication, he says.
That is, if banks are still issuing plastic.