Leader in cashless payment solutions says NFC has got a booster dose

Oti (On Track Innovations, Ltd.) executives, Shlomi Eytan, Chief Sales and Marketing Officer, and Ori Reshef, Product Line Manager, share their views with LetsTalkPayments team about the current trends in contactless payments.

Topic: What are the solutions that oti offers to the market?

Response: oti was founded 24 years ago in Israel. We are one of the first pioneers in contactless smart-card technology.

Throughout our 24 years in business we have gathered knowledge and expertise in contactless and NFC technologies. Today, we have approximately 100 patents protecting our unique intellectual property.

Over the years, oti has implemented its underlying technologies into a variety of payment solutions: from card readers to contactless payment solutions in self-service categories such as vending machines, transit ticketing, parking, cashless fuel fill-ups and more. If you look at oti today, you’ll see we are not only a technology provider, but also a full solutions provider in the cashless payment market.

Topic: In which geographic regions has OTI increased and decreased focus?

Response: We have customers in geographies all around the world, with prominent presence in the United States, Poland, South Africa, Israel, Hong Kong and more. Our global presence is enhanced by our fully-owned subsidiaries and strong partnerships.

Where we’ve seen the biggest increase in demand for our products in recent months has been the North American and Asia-Pacific markets.

Topic: How are you targeting different customer segments like banks, retail, etc., with your solutions?

Response: Our cashless payment solutions portfolio today serves four major markets:

  1. Retail: In this market we offer our portfolio of NFC readers and a new approach to secure NFC communications like payments, secure authentication etc., with a cross-platform mobile add-on secure element.

We offer three types of readers. The first, and our biggest seller, is our reader for the unattended market, which includes vending machines, laundry machines, car washing facilities and essentially anything in the self-service market. As an example, there are approximately 30 million vending machines around the world today and the majority of them accept only coins and bills. With the emergence of the EMV smart cards and especially NFC payments, these vending machines need a retrofit reader so people can use them no matter how they want to pay, including contactless or contact cashless payments. We have filled that need in the market and during the last two years have seen significant growth in our sales of this solution. We provide the complete technological solution or the full product, which is a retrofit from other companies -- mainly vending machine operators -- fit into their existing vending machines. There is huge market potential here for us, and we already are serving vending machine operators around the world and some of the largest ones in the North American market with our solutions.

For the mobile add-on secure element product line, we came out with a new product a year ago which we call WAVE. The oti WAVE is a small audio jack plug-in device in the form of a key fob. The fob disassembles into two parts: one part remains attached to the key ring; while the other plugs into the audio jack of a smart phone, making any smartphone NFC-enabled with an onboard secure element. That’s a huge benefit for users of the iPhone, for example, because it is not NFC-enabled today. iPhone users can use the oti WAVE device to make their non-NFC phones work to perform NFC payments. With this solution, we’ve hit the ground running, signing on a large consortium of banks in South East Asia -- including Hong Kong, Macau, and Taiwan. The banking consortium will use the oti WAVE to gain control of the NFC transaction from start to finish, so they will not be dependent on mobile operators or mobile carriers when they perform NFC transactions. With our WAVE solution, users can bypass the smartphone’s internal NFC or the SIM card to make their transactions more secure. They also can use it simply to NFC-enable phones without native NFC. The oti WAVE is gaining a great deal of interest across various industries and especially among financial institutions, mass transit operators, and from university and college campuses.

  1. Vehicle refueling is another interesting niche market for payment solutions. Using the contactless nature of magnetic fields, we have created a ring that encircles the fuel inlet. When used in conjunction with a reader fitted onto the nozzle, the user drives up, begins fueling, and drives away. The contactless payment ring provides the user’s payment data to the fuel pump and completes the transaction with no effort on the part of the user. The ring solution has been deployed by oti for the last 15 years and has customers in more than 40 countries, including British Petroleum, and a variety of fleet management companies. Since mid-2013, oti has signed strategic agreements with two of the three largest pump manufacturers for gas stations.
  1. Parking is another significant vertical for us, particularly the on-street parking industry. We have created an NFC device with an LCD screen and four keypads. The device, an e-purse solution, is pre-loaded with cash and is then used like an in-vehicle parking meter or, if you wish, a personal parking meter. This means the driver does not need to exit the vehicle to search for a central parking payment machine.

With our parking solution, the user simply selects the city and zone, pushes the button to activate payment, and is all set. The user simply hangs the device in the window of the vehicle from the inside and a meter-reader patrolling the area will see the parking has been paid. The benefit for drivers is they pay only for the time used. They simply turn off the device and the meter stops running. That means no-more overfeeding of parking meters.

We’ve already deployed this solution in about 160 cities around the world, including several in the United States, and sold more than one million of our in-vehicle meters over the years.

  1. Mass transit ticketing is our other main vertical through our wholly owned subsidiary, ASEC, which operates tickets vending machines in different cities throughout Poland.

That's a high level review of our four lines of business.

Topic: Moving toward technology, there is a lot going on with NFC that people are not aware of such as applications in transportation, mobile wallet payments and even healthcare. NFC has adoption problems though. HCE is also looked up to as a ray of hope. How are you targeting such technical trends?

Response: NFC did not take off as quickly as expected but new developments like HCE will free many of the barriers that NFC payment technology is having today; mainly the control over the secure element. The fact that HCE can be cloud-based will encourage developers to develop such HCE software-based cards and HCE should help fuel the contactless payments market.

Finally, we keep working on new patents to keep up with the rate of technological innovation. Our solutions are designed to industry standards and are protected through patents. We currently hold more than 100 patents and patent applications worldwide. One of our recent patents issued is ‘Multi-Application Contactless Smart Card,’ which again strengthens our position in the contactless payment market.

Topic: How is OTI growing? How are you looking at growth opportunities? How is customer acquisition?

Response: Since 2012 and 2013, we have seen growth specifically in the cashless business. We are targeting market development around the iPhone, as well as the transit market. Our WAVE products have passed the very rigorous certification process and have been certified by Visa and MasterCard which gives us the opportunity to target more markets. We expect a rise in consumer adoption as our solutions earn approvals from such ventures.

Topic: oti has won numerous contracts recently. Does this imply that the market is improving in 2014 or is it that the efforts that you made in 2013 are paying off well?

Response: Both scenarios are accurate. Currently, there is significant growth in contactless and NFC which has helped us in targeting such projects. For example, we acquired a $10 Million NFC order in the USA which shows the growth of NFC in such markets. Our past solutions have also gained recognition. Our EasyPark solution received the ‘most innovative new mobile app’ award in Bermuda in 2013. Such recognition has paved the way for adoption of other solutions as well. For example, we extended the implementation of our MediSmart solution to new markets with 200,000 cards already in hand from Smart Applications International (SMART). Our WAVE product is poised for large-scale implementation with future projects since it is now certified by two of the world’s largest payment networks, Visa and MasterCard.

Topic: Looking at the overall trend in cashless payments, consumer adoption has not been that encouraging. What has your experience been?

Response: That may be partially true in the U.S., but globally, consumer adoption of cashless payments has been growing rapidly. For instance, there is a rise in adoption of smart cards and non-cash payments in Canada. Consumers in China are moving away from cash-oriented payments. Hong Kong is witnessing the advent of a 100% cashless society. Other nations showing similar trends include the UK, France, Belgium, Poland, Taiwan and Malaysia.

There is huge potential in the USA. By 2016, there will be wide-scale infrastructure development especially for EMV at point-of-sale systems. Issuing banks are bringing in EMV cards. The USA is becoming the tipping point of cardless and cashless innovation.