UbiPay: Minimizing transaction costs with smart mobile payments

Implementing an electronic payment system involves striking a balance between usability and security. Systems that allow payments to be completed with little effort on the part of the consumer, such as smart cards, carry a higher probability of incorrect payments. Systems that eliminate the possibility of incorrect payments by requiring explicit approval from the consumer, such as credit cards, make the system too cumbersome for small payments. In this paper, we model the usability and security tradeoff as a problem of minimizing the transaction cost imposed by the payment system on the consumer. We propose a mobile payment scheme called UbiPay that attempts to push this transaction cost towards zero by offering a range of user interaction modes and choosing the minimum sufficient one based on context data. The aim is to make paying like breathing: something we are only peripherally aware of unless we exert our resources beyond the usual. Results from a user study on a prototype system suggest that the concept is feasible. The idea has powerful implications for the economic organization of everyday life.