WHITE PAPER. Bluetooth 4 LE: the only viable solution for next generation payments

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1 WHITE PAPER Bluetooth 4 LE: the only viable solution for next generation payments

2 2 Introduction As the IoT and connected devices become more prevalent, our smartphones are becoming increasingly connected to the world around us. Smart portable, mobile and wearable devices use a number of different wireless communications technologies, including Wi-Fi, NFC and Bluetooth. To be successful, a next generation payment technology needs to be widely adopted, scalable, interoperable, secure, wireless, low-power and low-cost. While Wi-Fi and NFC meet some of these requirements, only Bluetooth ticks all the boxes. Widely adopted All three technologies are in wide use, with Bluetooth topping the list at some 8 billion devices, closely followed by Wi-Fi with over 7 billion and NFC a distant third at over 1 billion. But when you deduct fixed devices, like routers and TVs, from the Wi-Fi number, the market dominance of Bluetooth on mobile devices is very clear. And compared with NFC, Bluetooth is integrated into a much broader range of products. And in case you re still not convinced about the global penetration of Bluetooth, the Bluetooth SIG has over 30,000 members (mainly manufacturers) and Bluetooth is recognized and trusted by some 92% of consumers around the globe. So much so that Bluetooth is now automatically turned on whenever a user upgrades their ios device. NFC limitations NFC is mainly used for contactless payments (e.g. EMV chips on credit cards and e-wallets like Apple Pay), which also places minimal load on the device battery. However, NFC employs a master and slave communication protocol with a limited instruction set. Although NFC is practical for cards you don t interact with a card during a payment next generation payment technologies need to be programmable to support user interaction. The 4 cm NFC range limit is impractical for user interactions, especially when compared with the broader range capabilities of Bluetooth. Wi-Fi limitations While Bluetooth and NFC technologies are designed for single user interactions, Wi-Fi is designed to enable multiple devices to be networked together, which isn t exactly what you want when you are designing a secure wireless payments system. And because Wfi-Fi is designed to work over a broader area about ten times the range of Bluetooth Wi-Fi consumes more than 20 times the power of Bluetooth. Wi-Fi has its uses, but mobile payments isn t one of them.

3 3 Bluetooth 4 Classic, HS and LE Bluetooth has been around for nearly two decades (the SIG was formed in 1998) and is constantly updated. The latest Bluetooth 4 standard is actually three different protocols: Classic Bluetooth, Bluetooth High Speed and Bluetooth Low Energy. The first release of Bluetooth 4 on a mobile device was in October By 2018, it is expected that over 90% of Bluetooth-enabled devices will support Bluetooth 4. Smart two-way communications But it is the two-way communications capabilities of Bluetooth that really sets it apart from alternative technologies, especially NFC. Only Bluetooth has the range, low power consumption, low cost and programmability needed for truly secure and reliable mobile payments. Cost And because Bluetooth is so widely accepted, it is a cheaper option for merchants, who can use existing point-of-sale (POS) tablets or bringyour-own-devices (BYODs) instead of purchasing dedicated and expensive payment terminals. Energy and speed The true power of Bluetooth 4 is revealed when you look at what it can accomplish using a lowenergy signal to broadcast from device-to-device or beacon-to-device. Without depleting the battery of your mobile phone, tablet or wearable, Bluetooth enables smart two-way data transfer at speeds that are more than double what NFC can achieve. Bluetooth Low Energy conserves battery life while maintaining an always-on state by remaining dormant unless data is being shared. Once a device is connected, the connection remains active only while in use a feature that wasn t available in earlier generations of Bluetooth technology due to pairing difficulties with some Bluetooth-ready devices. Bluechain and Bluetooth In Bluechain mobile payments, merchants request payment via Bluetooth to be paid into their merchant bank account. The request is sent to a customer device to pay from a selected card or bank account. While the two devices communicate, the phone experiences minimal battery loss. Once the transfer is complete, Bluetooth enters stand-by mode. Throughout the process the devices do not need to pair. Nor does the consumer have to accept to use Bluetooth transmissions, the communications between the devices are unattended communications.

4 4 FAQ Are there problems with connecting devices by Bluetooth? Admittedly, some users have expressed concerns about using Bluetooth for payments because they have experienced problems in the past with connecting mobile phones to some devices, such as speakers. These connection problems are, however, restricted to pairing devices for continuous communications or Classic Bluetooth (version 3). Bluechain employs Bluetooth version 4 LE (Low Energy), which does not attempt to pair the devices and so connectivity is highly reliable. Does Bluetooth drain the battery? Modern Bluetooth specifications (Bluetooth Low Energy, Bluetooth Smart or Bluetooth 4.x and above) have made massive improvements to the impact of Bluetooth on battery life. So much so that, over the course of a day, the impact on battery life is about usually under 2%. Is Bluetooth secure? Bluetooth version 4 LE does not attempt to pair the devices and so connectivity is highly reliable. Bluetooth is a communications protocol, so security depends entirely on how it s used. For example, when a Bluechain merchant transmits a payment request via Bluetooth, it is picked up by any Bluechainenabled device within range (it is intentionally not secured). But when a customer accepts the request, all subsequent communications are encrypted using an encryption key that is unique to that payment session between that merchant and that customer (it is completely secure). But isn t NFC the standard for payments? NFC is just one of the communication protocols available in a smart mobile device. NFC was selected for card payments because the payments industry was able to leverage existing NFC-enabled devices. However, with NFC, mobile apps like Apple Pay, simply emulate the card slave. As such, there is no scope for smartphones to introduce new or more advanced capabilities to NFC interactions. Also, the operational range of NFC was limited to 4 cm to ensure that only the consumer presenting the card was debited. Because there is no interaction, this range cannot be extended: if the power is increased in a terminal, the card with the most powerful antenna would be debited, which might not be the card nearest the terminal. So while NFC met the needs of the old card-based technology, it falls well short of what is needed for the next generation of payments technologies.

5 5 Bluetooth payments NFC payments Supports short range communications for proximity payments (contactless terminals) Supports medium range communications for smart communications Open technology not restricted by manufacturer (e.g. Apple on ios devices) Available on all smart devices (phones, tablets, PCs, etc. ) Any smart device can be a reader or transmitter Minimal impact on battery life when used frequently Smart two-way data communications Speed (megabits per second) 1 Mbit/s 0.4 Mbit/s Read current (milliamps) < 15 ma 15 ma Transmit current (milliamps) < 15 ma Set-up time (milliseconds) < 6 ms < 100 ms Could be supported if bi-directional mode was enabled. However, the current payment infrastructure has no way of utilising this mode. The limited range enforced would also cripple its viability The Corporate logo and Bluechain are [registered] trademarks of Bluechain Pty Ltd. All other trademarks are the property of their respective owners Bluechain Pty Ltd. All rights reserved.