By George Peabody,Director, Mercator’s Emerging Technologies
A new player in the mobileP2P and merchant acquiring space has arrived: Cimbal. An “allsoftware” POS and P2P solution, it uses 2D barcodes as themechanism for identifying the payment transaction. Cimbal membersprovide their bank account credentials to Cimbal, and payment ismade via the ACH network. Cimbal’s targeting the top 3,000retailers for its POS business and they will be the sole source ofits revenue, promising a 50 percent or greater reduction intransaction fees compared to the card networks.
Its marketing departmentdeserves kudos for adroitly mixing terminology to drive interest inits press release, glibly including the oxymoron “Software-BasedNFC Payment Network” onto the new wire. Plenty of search engineswill find NFC but Cimbal’s solution has nothing to do with NFC. Anall software solution by definition cannot be NFC-based, but youhave to hand it to them.
That major nit dispensedwith, the Cimbal solution looks interesting. Leveraging the camerasin smartphones, initially the iPhone, to do a lot of the work isanother example of the growing shift of POS functionality to theconsumer’s handset. At the POS, the merchant’s system displays the2D barcode that represents the transaction. No new hardware, suchas an image scanner, is required. That’s an interesting use for thegraphical screens now found on POS terminals or secondary screen ofthe electronic POS terminal.
At the POS, a PIN is used to”confirm” the payment to the merchant. Of interest is the fact thatCimbal does not charge anything for a mobile P2P payment. Ofcourse, both sides have to be enrolled with Cimbal to make apayment using the Cimbal network and that naturally adds friction.It also affirms that Cimbal doesn’t see a lot of revenue from themobile P2P space. (Neither does Mercator Advisory Group, see ourupcoming report on Mobile P2P).
Because Cimbal is allsoftware, the firm claims its approach is “viral.” That’s anotherover-the-top claim as there’s nothing viral about adding a newpayment mechanism to a merchant’s POS terminal estate and back endprocessing platforms. It’s going to take work on the merchant’spart, an exceptionally strong set of APIs, and the professionalservices power to employ them to ease the merchant acquiring task.Saving 50 percent on transaction costs is a powerful incentive butit’s still got to be uncomplicated to get it done.
And then there’s the simpleassumption that consumers will download it because they can. Freemobile P2P is not the most compelling use case. Those 3,000merchants will have to offer some incentives to the consumer to usethe Cimbal payment method. And that will cost them somemoney.
Once Cimbal reaches somecritical mass threshold, it’s reasonable to expect that Cimbal willprovide merchandising, coupons, and advertising opportunities,too.
“Cimbal, Inc., the developerof the world’s first software-based near field communicationpayment network announced today its
Cimbal® enables securepayment using a smartphone instead of a plastic card,providing
active security in the handsof the consumer. Person-to-person payments are availableon
iPhones today, with Androidand BlackBerry following soon. For transactions, aCimbal
user creates a paymentrequest on his phone or the Web. Cimbal’s system producesa
single use 2-D barcode tokenthat does not include the transaction details or other
sensitive data. The payerlaunches Cimbal on their mobile phone, enters a PIN, andscans
the 2-D barcode. Cimbalauthenticates both parties and prompts them to confirmeach
The system authorizesavailable funds and clears the transaction in
seconds. Both parties receiveconfirmation receipts on their device and in theirCimbal
account history. Cimbal isbuilt around a highly secure platform. No confidential
information is ever sent overthe unencrypted channels or stored on a user’s mobile
“Cimbalreplaces cash, debitand credit cards with a secure electronic paymentsolution.”