Would you use your mobile phone to make payments?
Yes, according to a 2007 survey commissioned by the GSM Association that surveyed 2,500 consumers in 17 countries across Europe, Asia and North America. Two-thirds said they expected to use their phones to pay at point-of-sale within two years of the service becoming available.
Of these, 76% said they use their phone to pay for mass transit tickets, 71% for weekly supermarket shopping and 69% for restaurant bills and these were the top three payments using the GSM Association’s (GSMA’s) Pay-Buy-Mobile ( www.gsmworld.com/pbm) concept.
Their top benefits for making payments with their phones were convenience, speed and security. Moreover, half of the 240 merchants across 10 countries surveyed saw promotional opportunities in using mobile phones to make payments.
Prior to NFC, mobile payments based on proprietary technologies have been very successful in several countries.
One good example is the Osaifu-Keitai (Mobile Wallet) electronic money, public transit and credit card application. NTT DoCoMo had over 20 million Osaifu-Keitai equipped devices in the market and this system has gone on to become a de facto standard in Japan.
South Korea has been dabbling in mobile payment for a while and finally decided to go with the NFC standard. KT Freetel (KTF) and SK Telecom began in 2002 with mobile payments using non-standard infra-red technology and embedded radio-frequency chips to make transport payments.
The following year, LG Telecom and Kookmin Bank collaborated on a banking service using the first contactless chip in a mobile device. Then in 2007, contactless USIMs were used to support mobile payment applications and today, KTF champions the GSMA’s Pay-Buy-Mobile project.
Last November, mobile operators, Bouygues Telecom, NRJ Mobile, Orange and SFR collaborated with six major French banks, MasterCard Worldwide and Visa Europe on the Payez Mobile Project, a large scale, cross operator field trial to test mobile contactless payment with 1,000 customers and 200 sales outlets across the French cities of Caen and Strasbourg.
This trial was based upon the payment application embedded in the customer’s SIM card and on NFC technology.
Is this region ready?
So how ready are we for mobile payment? Well, many of us are already familiar with making payment using contactless smartcards – namely, Touch ‘n Go cards to pay our tolls, LRT fares, bus fares and parking, while in Singapore, its counterpart, the ezlink card is also used to pay for coffee, purchases in some convenience stores and others.
There currently are about 2.6 million active Touch ‘n Go cards in Malaysia and over 3,000 payment points in Rapid KL’s LRT, Monorail and bus systems; KTM Commuter, toll plazas and 25 parking sites in Kuala Lumpur.
Both Touch ‘n Go and ezlink are short-range, contactless smartcards based on proprietary MIFARE technology by NXP Semiconductors, reportedly the most widely used contactless smartcard or proximity card technology, with 500 million smartcard chips and five million reader modules sold worldwide.
These RFID (Radio Frequency Identification) cards contain an embedded memory, control circuitry and an antenna. They have no power source of their own and so are powered by electromagnetic induction by an unlicensed 13.56MHz signal from the card reader, which acts like an electricity generator and temporarily energises cards brought within 10 cm of it, enabling it to read and write to the card’s memory such as when making deductions in these micro transactions.
Another emerging type of RFID technology is Near Field Communications or NFC.
Mainly for phones
NFC is a short-range technology similar to MIFARE, except that it’s primarily intended for use in mobile phones and besides interacting with NFC tags and card readers, NFC-enabled devices can also interact with each other, such as to exchange contacts.
NFC is an open standard defined in ISO/IEC 18092 (International Organisation of Standards/International Electrotechnical Commission) and ECMA-340 (European Computer Manufacturers Association). It also incorporates several pre-existing standards.
NFC is backed by the NFC Forum ( www.nfc-forum.org), a non-profit industry association founded by NXP Semiconductors, Sony and Nokia to standardize and advance the use of NFC in consumer electronics, mobile devices and PCs.
In April, 2006, Nokia, Philips, Vodafone and the Rhein-Main-Verkehrsverbund (RMV), the regional public transport authority in Germany announced successful completion of a 10-month NFC trial by 160 participants of the city of Hanau, armed with Nokia 3220 phones fitted with NFC-shells.
This announcement also marked the commercial launch of application, potentially enabling about 95,000 residents of Hanau to pay for public transport with their phones, which could also be used as loyalty cards for discounts at local retail outlets and attractions.
Closer to home, Maxis Communications has been heavily involved in developing NFC-based mobile payment methods in collaboration with credit card companies, banks, technology, solution and equipment providers.
In April, 2006, it announced Mobile Visa payWave Pilot -- the world’s first EMV-based (Europay, MasterCard and Visa) mobile payment pilot trials where 200 Maxis and Maybank customers were provided with a Nokia 3220 NFC phone fitted with an NFC shell and customised with embedded Visa Wave and NFC chips, enabling them to be used to make purchases via any Visa Wave reader in Malaysia.
There are about 800,000 Visa payWave cards, 4,000 readers and 3,300 merchants accepting them nationwide, including San Francisco Coffee, Sushi King, Carrefour, Tower Records, Golden Screen Cinemas and Baskin Robbins ice cream.
There’s also a similarly extensive availability of MasterCard Paypass facilities.
In May last year, Maxis introduced Maxis M-Money in collaboration with Maybank, enabling domestic funds transfer and purchases of cinema tickets, pizza, mobile downloads from Maxis and from myzone, Maybank2u.com’s teen portal.
That same month, Maxis also introduced the world’s first international mobile remittance with Globe Telecom in the Philippines, enabling funds transfers between Malaysia and the Philippines.
Last November, Maxis announced NFC trials with Maybank, Visa, Nokia, Touch ‘n Go and Rapid KL, in which about 100 internal participants from Maxis and Maybank were each given a Nokia 6131 NFC phone – the world’s first commercial NFC phone - which they used to make purchases using Visa payWave throughout Malaysia and to pay toll, LRT and bus fares with reloads via Maxis M-Money and all other Touch ‘n Go reload channels.
That trial was concluded on February and Maxis has plans to launch the NFC application commercially in the second half of 2008. It plans to expand the application to read smart posters implanted with NFC chips, enabling users to obtain bus routes and timetables, special offers and coupons at selected retail outlets with their mobile phones.
Also last November, Maxis participated in the interoperable NFC mobile payments system initiated by the GSM Association (GSMA) and in 2007 & 2008, participated in trials of the GSMA’s Pay-Buy-Mobile project, together with KTF in Korea, Orange & SFR in France, SingTel in Singapore, Smart in the Philippines, AT&T in the US, Telefonica & O2 in Ireland, Telenor in Norway, Telstra in Australia and Turkcell in Turkey.
NFC benefits
According to Nokia, NFC has the potential to be integrated into every mobile handset worldwide, enabling users to access a number of new handsets using their phones.
NFC is easy to use, since one just needs to touch two NFC-enabled devices for them to communicate and NFC can simplify many tasks such as open the phones WAP/Web browser, automatically pairing two Bluetooth devices and accessing wireless hotspots easily.
It’s also secure in that it requires users to take positive action such as waving their NFC device before a reader or another NFC device and multiple security layers can be built into the device. Unlike traditional tickets or payment cards, with NFC in phones, users can check their credit balance over-the-air and top up their credit if required.
NFC is also compatible with the current contactless infrastructure used as a platform for ticketing, transportation and increasingly for making payments worldwide.
|
