- Mobile Money


Published on's white-paper, outlining the key issues to consider when creating a mobile money app, from the very basics, to complexities in mobile security.
As one of the leading mobile application development teams are the UK's leading authority on mobile money, mobile wallet and mobile payment system applications.
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  1. 1. White PaperMobile Money:Seven considerationsbefore you buildan appJanuary 2013 Share this White Paper
  2. 2. ContentsIntroduction 31. An app is not enough: understanding the mobile 4 money ecosystem 2. Build or buy: the pros and cons of 6 off-the-peg apps 3. What your customers want: robust security 8 plus ready access 4. The vault: understanding the secure element 105. What is a wallet? And is it what your 12 customers need? 6. From the app backwards: minimising 14 PCI exposure 7. How creativity can overcome 16 standards conservatism Next steps 172
  3. 3. IntroductionMoney is inherently mobile, but it is only a recent innovationthat has seen money handled on a mobile phone. With therapid growth of the smartphone, it has become an obviousadvance for many companies to give their customers accessto services via their mobile device. From banking to bills,purchasing to payments, apps are appearing to manage manyof the financial aspects of our daily lives.Producing a successful, secure money application This white paper provides a guide to seven ofis not a simple business. It’s not a feat that can be the key areas of successful mobile money appachieved by a simple app developer working in development that Penrillian has come toisolation. A successful mobile money app requires understand through extensive experience in thethe input and support of multiple suppliers and space. It’s not an exhaustive checklist, but addressstakeholders from across the mobile money these key issues and you will be well on the way toecosystem. And it requires many different aspects creating an application that is successful for yourof design and technology to be addressed. business and appreciated by your customers. ‘Producing a successful, secure money application is not a simple business. It’s not a feat that can be achieved by a simple app developer working in isolation.’3
  4. 4. 1. App is not enough: understanding An the Mobile Money ecosystemThink about the water that comes out of your tap. It has had apretty fantastic journey to get there. Just starting from the fallingraindrop, you have to consider a journey that takes in a river, areservoir, processing, pumping, miles of pipe and householdplumbing, plus the companies that own and operate thesevarious elements. Were it not for all this hidden effort, your tapis going to deliver very little.What is true for the tap is also true for mobile money Some of the key parties and components toapps. If anything the mobile money ecosystem is consider include:more complex than that which delivers fresh water. • etwork operator – Carries the traffic two and NBuilding a successful mobile money application from the phone, and usually has a primary billingmeans navigating this ecosystem and ensuring relationship with the phone ownerthat all of the relevant parties work together. Orhaving a partner who can do this on your behalf. • IM provider – Controls the technology on S board the card that the operator uses to securely govern access to the network • ecure element – The location in which secure S payment data is stored on the device, be it part of the handset, or the SIM, or a dedicated SD card • ayment cardlet (e.g. Mobile MasterCard P PayPass) – The underlying application logic behind the making of a payment on the device • rusted Service Manager (TSM) – A secure T delivery system connecting the Secure Element to the service operator Card/Payment Provider – the financial institution handling the transactions and accounts • ecurity Advisors and Authorities – A selection S of advisors and approvals will be required before a mobile money service can be (safely) launched4
  5. 5. 1. (Continued) An App is not enough:understanding the Mobile Money ecosystemIn many cases while the interfaces between these ‘When you can’t demand aproviders may be available in theory, in practicemuch work is needed to make them communicate complete rebuild of a partner’seffectively. For example, one issue Penrillian has infrastructure, you need to findfaced is that Application Programming Interfaces(APIs) have often been constructed with the ways to negotiate betweendesktop web in mind. different standards with theThe differences between the desktop environment requisite level of performanceand mobile in terms of browser capabilities,connection speeds and reliability means these are and security.’usually unsuitable for the mobile environment.When you can’t demand a complete rebuild of apartner’s infrastructure, you need to find ways tonegotiate between different standards with therequisite level of performance and security.This is where a partner like Penrillian can help, butthe key message here is this: no one partner in thisecosystem can deliver a successful mobileapplication on their own. All parties must collaborateeffectively to meet the customer’s expectations. ‘In many cases while the interfaces between these providers may be available in theory, in practice much work is needed to make them communicate effectively.’5
  6. 6. 2. uild or buy: the pros and cons of B off-the-peg appsWhen shopping for a new suit, few people consider a tailor overthe high street these days. The upfront cost and productiontime may be off-putting when set against the instant gratificationof an off-the-peg purchase.But a tailored suit will always be a better fit to your The next risk is security: a recent study by Leibnizshape, can be adapted as that shape changes, University in Hannover and Philipps University ofand will most likely be made from higher quality Marburg found more than a thousand Androidmaterials. In the long term, the tailored suit can applications with serious security flaws out of aprove to be better value. sample of 13,000. 17% of the apps that used the secure socket layer (SSL) standard had it wronglyThe same rules apply when it comes to developing implemented, leading to significant security applications, particularly in the field of mobilemoney. Off-the-peg applications are available,provided by a third party with some elements ofthe ecosystem already in place, and a skinnableapplication that can have you up and runningquickly.If your needs are fairly straightforward and matchthe capabilities of the application available, thenthis is a reasonable route forward. But it is notwithout its risks: handing over this level of control toa third party limits a number of your powers.The first of these is the ability to make changes: if athird party is catering for multiple customers on thesame platform, their development is always goingto be focused on the needs of the many, not yourneeds specifically. Development can be slowerand more costly as a result. ‘17% of Android apps that use SSL have it wrongly implemented, leading to significant security risks.’6
  7. 7. 2. (Continued) Build or buy: the pros and cons ofoff-the-peg appsThe final issue to consider is lock-in: if it is not just While the mobile money ecosystem is complex, ityour app, but the entire supporting ecosystem that is navigable. Off-the-peg solutions do haveis dependent on a third party, there is no opportunity benefits but in the long term, a bespoke platformto chop and change components, or connect to can offer significant financial and operationaladditional services without their say-so. As time advantages.passes, it’s possible that your requirements andthe service on offer will drift further and furtherapart. And all the while, you will be paying thelicence costs on the intellectual property retainedby the solution provider.Consider the alternative. For one of the majorEuropean network operators Penrillian constructedan entirely bespoke application and gateway tointerface with the payment partner’s systems. Thedelivery time was comparable with an off-the-shelfsolution, and calculated over the first two years ofthe service’s life, so were the costs. The operatornow has its own intellectual property, and an appand gateway that it controls. It can switch paymentproviders or add other partners into the system onits timetable, rather than lobbying a third party todeliver. ‘...Penrillian constructed an entirely bespoke application and gateway to interface with the payment partner’s systems. The delivery time was comparable with an off-the-shelf solution, and calculated over the first two years of the service’s life, so were the costs.’7
  8. 8. 3. hat your customers want: W robust security plus ready accessWhen it comes to handling their money, consumers are rightlyconcerned about security. But they will balance this concernwith usability: what good is mobile money if you can’t access itwhen you need to? Striking this balance is a major challenge forthe app designer.Consider the primary ways of paying before mobile Mobile money applications need to offer users themoney: cash or card. same gradations of security. For small transactions we want the readiness of cash. For largerFor small transactions cash is very convenient. transactions, the protected flexibility of a card. ByGrab a note or a handful of change and hand it over tiering security features such as maximumand you’re done. There’s always the risk that you transaction values and PIN confirmations, to matchmight lose that cash (or have it stolen) but the the transaction value, it is possible to offer users aconvenience means that we all keep a small well-structured balance between security andamount to hand most of the time. And we can tailor usability.our level of risk by choosing how much cash tocarry.The risks of the card are very different. If a card istruly compromised the losses can be large but theywill usually be losses to the bank not us asindividuals. If cards are lost we can cancel themremotely and fraudulent transactions can becharged back. Cards are much more convenientthan large bundles of cash for larger transactions. ‘The risks of the card are very different. If a card is truly compromised the losses can be large but they will usually be losses to the bank not us as individuals.’8
  9. 9. 3. (Continued) What your customers want:robust security plus ready accessThere is another aspect to security to consider, and ‘Cash is convenient, but cards areit is one that very much concerns users: personaldata. By their very nature, mobile money more secure for large transactions.’applications collect a colossal amount of veryintimate detail about our personal lives. We don’tjust need to protect users’ money; we need toprotect the knowledge of how they spend it fromexternal access and improper use.The GSM Association has produced guidelines onprivacy that address the issues associated with thecollection and retention of personal data byapplications, based on international data protectionlaw ( Under these guidelines financialtransaction data falls under the strictest level ofcontrol, since it arguably touches every aspect of aperson’s life, including their health (an area ofparticular sensitivity).Ensuring compliance with these guidelines, andproviding the appropriate level of security andusability, comes down to careful design of thewhole application and supporting infrastructure. ‘The GSM Association has produced guidelines on privacy that address the issues associated with the collection and retention of personal data by applications, based on international data protection law.’9
  10. 10. 4. he vault: understanding the T secure elementOne opportunity for money applications on mobile devices isthe actual replacement of cash via Near Field Communication(NFC)-enabled devices. There’s a great appeal in the simplicityof swiping your phone over a terminal to pay for goods, andmanaging the money available in your virtual wallet using thephone’s interface.For a start you would never need to go hunting for a The Secure Element typically runs as a nativecash point again. But this simplicity of use needs to application on a smartcard. These applications,be balanced against security, and so the NFC known as ‘Cardlets’, use the Java Card formatarchitecture defines a means for keeping the designed for very low powered computing devices.payment data secure. The smartcard may be:The ‘Secure Element’ is the smart vault on your • uilt into a device – an approach that has been Bmobile device that handles this task. A dedicated taken by the likes of Samsung and Google withchip designed for the purpose of storing encrypted their recent phones.card information and running secure applications, • art of the SIM card – a relatively trusted Pthe Secure Element sits apart from the rest of the environment in its own right – adopted by somedevice, safe from the risks that users take with their mobile operators.smartphones every day: open social networks,untrusted websites and dodgy applications. • standalone plugin card for the device in the A common SD card format. ‘The ‘Secure Element’ is the smart vault on your mobile device that handles this task.’10
  11. 11. 4. The vault:understanding the secure elementThe device interfaces with the Secure Element via ‘Secure NFC payments could an API specific to the handset operating system, and each takes a slightly different approach to mean the end for cash points.’ security. Android has the SmartCard API for Android, secured via user permissions: an application can only access the Secure Element if the user explicitly gives it permission on installation. By contrast, RIM’s Blackberry requires all applications requiring smartcard access to be‘signed’ with code keys requested from RIM by the developer.The main thing to understand is that the smartcardis distinct from the handset operating system, andthat access to it and the Cardlets running on it, isprotected. In this manner the Secure Element canremain secure and trusted by the rest of thepayment ecosystem. ‘The device interfaces with the Secure Element via an API specific to the handset operating system, and each takes a slightly different approach to security. Android has the SmartCard API for Android, secured via user permissions: an application can only access the Secure Element if the user explicitly gives it permission on installation.’11
  12. 12. 5. hat is a wallet? and is it what your W customers need?When a new technology begins to displace an old one, it’stempting to use the old terminology to help familiarise peoplewith the new. Hence the term ‘wallet’ has become rather popularwhen referring to mobile money. But what is a ‘wallet’ in digitalterms, and what should it be?Both O2 and Google have called their mobile moneyapplications ‘Wallet’ but the two applications arevery different.• 2’s wallet relies on you, the user, loading money O onto O2’s own payment platform – essentially a pre-pay card – before you can make payments. This is a wallet in the pure cash sense: you are effectively loading up your purse with cash from your account before going out shopping.• oogle’s Wallet is much more like the one in G your back pocket: it contains all of your different accounts and cards, enabling you to select the right one for each purchase. But it achieves this through a little sleight of hand – all the transactions actually take place through a single MasterCard account created when you sign up for the wallet, and are then rebilled to the relevant card. ‘Not everyone is going to like the idea of creating yet another account, and certainly not all of the major card issuers are happy at the prospect of being a further step removed from the transaction.’12
  13. 13. 5. (Continued) What is a wallet?And is it what your customers need?Not everyone is going to like the idea of creating yet ‘A true mobile wallet enables theanother account, and certainly not all of the majorcard issuers are happy at the prospect of being a user to choose the right paymentfurther step removed from the transaction. It would card for each transaction.’seem like the ideal wallet is one that securelymanages the various payment options at the user’sdisposal but allows each to natively make thepayment when it is selected. This adds convenienceand security, and unifies access to the underlyinghardware required to make NFC payments happen.In technical terms this means controlling thedownload and installation of new paymentapplications and their associated Cardlets on theSecure Element.One example of such a wallet is the ISIS scheme inthe US ( It is this type of wallet that needs to be taken into consideration when planning your mobile money application. Consumers will continue to use multiple methods of payment, and will expect their payment applications to make it easy for them to choose the right option at the right time. Your application needs to be designed today to be discoverable and manageable by a standardised‘Wallet’. As standards for mobile wallets emerge,you will need to keep pace by updating your app. ‘...the term ‘wallet’ has become rather popular when referring to mobile money. But what is a ‘wallet’ in digital terms, and what should it be?’13
  14. 14. 6. rom the app backwards: F minimising PCI exposureThe payment industry is understandably strict about securingthe movement of money. The card schemes enforce control onalmost every aspect of the mobile money ecosystem, and partof that control comes in the form of the Payment Card IndustryData Security Standard or PCI DSS.These six letters strike fear into the hearts of many Fundamentally, complying with PCI DSS meansapplication developers. Horror stories of long, avoiding the loss of account data – be it names,expensive testing and approval processes and addresses, numbers, or PIN codes – at any point.worse, failures, abound. But PCI DSS does not So the more you can avoid the need to accept,need to be burdensome. In fact its impact on a new store and transmit account data, the less you willmobile money application can be minimised, need to do in order to achieve compliance.without compromising security.To understand how, you need to understand inbasic terms what the standard is setting out toavoid. The PCI Security Council defines three keyobjectives with regards to securing mobile moneyapplications:• bjective 1: Prevent account data from being O intercepted when entered into a mobile device• Objective 2: Prevent account data from compromise while processed or stored within the mobile device• bjective 3: Prevent account data from O interception upon transmission out of the mobile device ‘...PCI DSS does not need to be burdensome. In fact its impact on a new mobile money application can be minimised, without compromising security.’14
  15. 15. 6. (Continued) From the app backwards:minimising PCI exposureWith regards to storing data, the Secure Element Careful design can pare back the requirements forprovides much of the answer here. This highly data entry and transmission to a minimum, limitingsecure vault on the phone should contain every the opportunity for interception and capture. Butpiece of account data that we need to complete a there is one more source of data that needs to betransaction. Everything else that is stored should addressed when protecting a mobile moneyexist behind the walls of the web service with which application, and it is one that is rarely considered:the application interacts – often already tested and error messages and error logs. Detailed errorapproved. So our focus needs to be on minimising messages explaining why an interaction with thethe entry and transmission of data. application, or the web services behind it, has failed, are useful in development. But they are alsoThis focus fits very well with the goals for any mobile useful to those trying to crack the system.application: nobody wants to enter reams of data Restricting these error messages and logs to aon a small screen. And moving large amounts of bare minimum further reduces the opportunity fordata back and forth over the airwaves is slow and attack.expensive. So ensuring that data entry andtransmission is minimised not only adds to the Keep the flow and storage of data across thesecurity of the application, it adds to its efficiency application and its back end to an absoluteand performance. minimum, and you can also minimise the pain of PCI compliance. ‘Detailed error messages explaining why an interaction with the application, or the web services behind it, has failed, are useful in development. But they are also useful to those trying to crack the system. Restricting these error messages and logs to a bare minimum further reduces the opportunity for attack.’15
  16. 16. 7. How creativity can overcome standards conservatismUnless you are an investment banker, it’s natural to be a littleconservative when dealing with other people’s money. Thatnatural conservatism can lead to very procedural thinking. Ifthere are standards: follow them. If something has been donebefore that worked: do it again.The problem with this approach is that while it is On this basis, standards need to be treated rather‘safe’ it is likely to lead to unremarkable results. And like the rules of football. They have to be obeyed in a fresh, new, but already competitive market like but they leave plenty of opportunity for flair play, for mobile money, remarkable is exactly what you those that are capable. need to be. To be anything else is far from safe. ‘... in a fresh, new, but already competitive market like mobile money, remarkable is exactly what you need to be.’16
  17. 17. Next stepsThe smartphone will replace the physical wallet. As morepayment options and other smartcards for loyalty points andtravel move over to the mobile, the physical wallet will becomeredundant. This presents an opportunity for companies toestablish patterns of consumer behaviour, as people choosetheir new preferred payment options.There are barriers to entering the market today but About Penrillianas we have aimed to show with this paper, they are Founded in 2000, Penrillian is now one of thefar from insurmountable. And working with a most experienced specialist mobile softwarepartner like Penrillian that knows the market space development companies in the world.intimately, it’s possible to overcome them rapidly atreasonable cost. We develop bespoke software solutions and over the years we have developed an impressive rangeNot only that: there is room for innovation. Few of of applications and software for some of thethe true opportunities for mobile money have yet leading brands in mobile. For example:been explored. Standards do not have to be seenas restrictions: rather they just define the rules If you’ve ever used a Vodafone data dongle,within which creativity can take place. Off the peg purchased goods using your phone, bought 2-for-1applications may tick the box today but they leave cinema tickets on Orange Wednesdays from alittle room for competitive advantage in the longer BlackBerry, or managed a T-Mobile account fromterm. a phone, chances are we created the software. Nowadays, we are helping our customers remain at the forefront of technology by creating the next generation of secure mobile services and payment apps for operators, banking, payment providers, and financial services. Working with clients across multiple business sectors, our software is helping to engage users and drive revenue and retention. If you are considering an entry into the mobile money market, talk to Penrillian today on 44 (0) 1768 21440017
  18. 18. PenrillianClint MillCornmarketPenrithCA11 7HWUnited KingdomEmail: enquires@penrillian.comTel: 44 (0) 1768 214400Web:© 2013 Penrillian mobile phone software developers - All rights reserved. Follow us