Held annually in May under the auspices of
industry body the Smart Card Alliance, the CTST conference is the
largest event in the US dedicated to advanced payment and
identification technology. This year the highlight of the
conference was the outstanding results achieved by pilot programmes
involving mobile phones equipped with near field communication
(NFC) contactless payments technology.
industry body the Smart Card Alliance, the CTST conference is the
largest event in the US dedicated to advanced payment and
identification technology. This year the highlight of the
conference was the outstanding results achieved by pilot programmes
involving mobile phones equipped with near field communication
(NFC) contactless payments technology.
Speaking enthusiastically on one pilot
programme Steve Davidson, wireless service operator Cellular
South’s mobile commerce product manager, summed up the results as:
“Consumers loved it.” He was referring to WirelessWallet, a trial
conducted in the US cities of Jackson and Memphis from April to
September 2007 by Cellular South. In the trial, which also involved
Bank of America and contactless payments technology developer
ViVOtech, 100 people tested NFC equipped mobile handsets supplied
by US manufacturer Kyocera Wireless.
programme Steve Davidson, wireless service operator Cellular
South’s mobile commerce product manager, summed up the results as:
“Consumers loved it.” He was referring to WirelessWallet, a trial
conducted in the US cities of Jackson and Memphis from April to
September 2007 by Cellular South. In the trial, which also involved
Bank of America and contactless payments technology developer
ViVOtech, 100 people tested NFC equipped mobile handsets supplied
by US manufacturer Kyocera Wireless.
Davidson added that despite initial misgivings
about security, participants ranked security as the number one
primary attribute of mobile payment, ahead of payment speed and
convenience. He explained that this was because Cellular South
required a PIN entry or a fingerprint biometric verification on the
mobile handset to make a payment.
about security, participants ranked security as the number one
primary attribute of mobile payment, ahead of payment speed and
convenience. He explained that this was because Cellular South
required a PIN entry or a fingerprint biometric verification on the
mobile handset to make a payment.
A post trial survey commissioned by Cellular
South found that 75 percent of testers were satisfied with their
WirelessWallet transactions and an even higher 87 percent were
interested in using the mobile payment technology.
South found that 75 percent of testers were satisfied with their
WirelessWallet transactions and an even higher 87 percent were
interested in using the mobile payment technology.
Josh McKay, senior vice president of US bank
Citi’s Mobile Financial Services, underscored Davidson’s view that
consumers value mobile NFC proximity payment. “When we tested it in
New York City, we saw the same thing. People who saw it asked where
they could get it,” he said.
Citi’s Mobile Financial Services, underscored Davidson’s view that
consumers value mobile NFC proximity payment. “When we tested it in
New York City, we saw the same thing. People who saw it asked where
they could get it,” he said.
The Citi trial was conducted in conjunction
with MasterCard, mobile phone manufacturer Nokia,
telecommunications Company AT&T, New York City Transit and
ViVOtech. Phones used supported over-the-air downloading of
cardholder information needed for commercial rollout of NFC based
mobile services. The six month trial was held in the first half of
2007.
with MasterCard, mobile phone manufacturer Nokia,
telecommunications Company AT&T, New York City Transit and
ViVOtech. Phones used supported over-the-air downloading of
cardholder information needed for commercial rollout of NFC based
mobile services. The six month trial was held in the first half of
2007.
However, presenters at the conference also
stressed that before NFC mobile payment becomes a reality there are
challenges that must be overcome, especially the commercial
viability of the technology for banks and mobile service
providers.
stressed that before NFC mobile payment becomes a reality there are
challenges that must be overcome, especially the commercial
viability of the technology for banks and mobile service
providers.
Davidson believes a comprehensive mobile
commerce wallet is essential for a viable revenue model for mobile
operators. He cited a range of possible revenue-generating
activities in addition to payment, such as what he termed a wallet
“mall” in the phone where merchants rent space.
commerce wallet is essential for a viable revenue model for mobile
operators. He cited a range of possible revenue-generating
activities in addition to payment, such as what he termed a wallet
“mall” in the phone where merchants rent space.
Other revenue sources suggested by Davidson are
commissions on sales made via the phone, advertising revenue, and
mobile ticketing fees.
commissions on sales made via the phone, advertising revenue, and
mobile ticketing fees.
Research firm TowerGroup’s research director
Virginia Garcia, said the main reason mobile operators are
interested in NFC payment is to fight customer churn, which she
described as “horrific.”
Virginia Garcia, said the main reason mobile operators are
interested in NFC payment is to fight customer churn, which she
described as “horrific.”
For banks she believes their motivation is new
account acquisition and finding a way to add value to their
customer that differentiates them from their competitors.
Concurring with her, McKay said “As banks, we’re interested in cash
transaction share, deepening our customer relationship and reducing
churn.”
account acquisition and finding a way to add value to their
customer that differentiates them from their competitors.
Concurring with her, McKay said “As banks, we’re interested in cash
transaction share, deepening our customer relationship and reducing
churn.”
Before mobile phone NFC payments become a
commercial reality the uptake of card-based contactless payments
must first gain wider acceptance amongst consumers. This is
certainly happening, as Ed Kountz, senior analyst for payments at
research firm JupiterResearch noted.
commercial reality the uptake of card-based contactless payments
must first gain wider acceptance amongst consumers. This is
certainly happening, as Ed Kountz, senior analyst for payments at
research firm JupiterResearch noted.
According to Kountz, in the US the total open
network contactless cards in issue reached 35 million in 2007,
almost double the 19 million in issue at the end of 2006. Usage is
on the rise too, especially with younger consumers according to
consumer research Kountz presented. Of all respondents surveyed in
the 25 to 34-year-old age group, 9.4 percent already use
contactless payment once a week or more.
network contactless cards in issue reached 35 million in 2007,
almost double the 19 million in issue at the end of 2006. Usage is
on the rise too, especially with younger consumers according to
consumer research Kountz presented. Of all respondents surveyed in
the 25 to 34-year-old age group, 9.4 percent already use
contactless payment once a week or more.
Growing the pool of accepting merchants is also
a key objective. “The more merchants that come in the better the
value proposition becomes,” said McKay.
a key objective. “The more merchants that come in the better the
value proposition becomes,” said McKay.
To accelerate merchant involvement in
contactless payment, contactless gift cards are a good vehicle said
Garcia who forecast steady growth in contactless payment over the
next four years and a significant uptake of mobile NFC payment in
2012.
contactless payment, contactless gift cards are a good vehicle said
Garcia who forecast steady growth in contactless payment over the
next four years and a significant uptake of mobile NFC payment in
2012.
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