Jumio Turns Smartphones Into Credit Card Readers, Without the Dongle

Mobile payments startup Jumio wants to disrupt the way transactions are made with a smartphone. What Jumio does is enable smartphone users to take a picture of a credit or debit card and charge an item to that card. Think of it like Square or Intuit’s GoPayment, without the dongle.

Jumio’s take on mobile payments is unique and a sign of what smartphones are going to be able to do in the near future. Developers are working on ways to take the sensory data that a phone can aggregate, like sound or visuals, and turn it into an action. Jumio ties a smartphone camera to a backend payment system and is on the forefront of how the mobile industry will evolve over the coming years.

The use case for Jumio is the same as the dongle vertical for mobile payments. The notion is to bring credit card payments to the masses. The use case that we often cite is the farmer’s market where local merchants can use their smartphones to replace cash and increase sales. This morning at the CTIA Enterprise and Apps Day 3 keynote, Jumio CEO Daniel Mattes showed off Jumio as an example of buying a pizza.

Jumio launched its camera feature in July with a focus on using a computer’s webcam for processing payments. The idea is to cut down on credit card fraud online by ensuring that the physical credit card is present at the time of the transaction. Called Netswipe, the mobile version will be officially available on October 28. See our coverage of the launch of Netswipe for full details.

Jumio CEO Daniel Mattes on stage at CTIA Enterprise and Apps 2011 in San Diego

Over the last week in San Diego for CTIA I have taken a lot of cabs in and around the city. Taxis are the perfect example of how the smartphone as a card reader can disrupt how an industry fundamentally accepts payments. Twice this week a cab driver has taken out an old-fashioned carbon paper credit card reader and made a physical imprint of my card. This will soon change as smartphones become more ubiquitous and industries and individuals learn there are more efficient ways to take payments.

The technology behind Jumio is interesting but the concept is not groundbreaking. Fraud prevention is a good angle for Jumio to take because of the depth of the problem in the financial industry. Jumio is going to have an uphill battle to break into the mass of the mobile payments industry, which is still dominated by the likes of PayPal and direct-to-carrier billing coming from Zong (which is owned by PayPal) and PaymentOne. There is a lot of white space to move around in the industry and Jumio will no doubt find its niche and will benefit as the entire ecosystem grows. Yet, do not look for Jumio to become the ubiquitous option in smartphone payments. Like Square, it will have its place, and make a decent living from it.

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