Tuesday, 22 March 2011

Contactless mobile payments coming, everyone wants a cut

Smartphones that can be waved in front of a merchant terminal to buy everything from groceries to gas aren’t widely available yet, but that’s not stopping phone companies, credit card giants, banks, loyalty programs and even Google from fighting for a piece of the action.
The global value of mobile payments reached an estimated $170 billion last year, according to Juniper Research, and could grow to $630 billion by 2014 as new phones are designed to bypass the Internet to directly charge or debit an account.
 REUTERS/Shannon Stapleton
Just as the online shopping boom saw the rise of companies like PayPal, the advent of mobile proximity payments will could see telecommunications companies take a front seat in the payments industry for the first time.
In the U.S. telecom rivals AT&T and Verizon have reportedly teamed up to find ways to replace traditional plastic credit cards with smartphones.
In Canada, Rogers Communications has been working toward mobile proximity payments for five years, primarily through the GSM Association’s “Pay by Mobile” initiative.
The group has been working on getting globally accepted payment methods such as Visa, MasterCard and American Express to work on GSM smartphones via Near Field Communications (NFC) technology.
NFC phones send out short-wave radio messages, similar to contactless credit and debit cards.
Rogers plans to distribute contactless payment chips in NFC phones, said Rogers Wireless vice-president, new business planning, David Robinson.
The wireless provider will basically become the middleman in the mobile payments sphere, acting somewhere between the issuing bank and payment processor.
Robinson said mobile contactless payments will no doubt be an all-new revenue stream for Rogers.
“It’s not going to be a huge business for us, but it will be a meaningful business. I think that’s all I can say.”
Derek Colfer, business leader for global mobile product innovation at Visa Canada said there are other ways to equip NFC phones with contactless payment information.
The data can be stored on a micro SD card that can be inserted into the phone or manufacturers can embed the chips into the device itself.
Which method of equipping NFC phones will emerge as the most common?
“That’s the million-dollar question,” Cofler said.
Rogers has issued a bill of NFC requirements through the GSM Association to handset manufactures.
“Now (NFC) handsets are starting to show up on the near-term roadmaps,” Robinson said, adding that Rogers is already considering bringing some onboard. He would not name the handset makers up for consideration.
Google’s Nexus S phones enable contactless payments and upcoming RIM BlackBerrys are expected to do the same.
By 2015, Rogers expects virtually every Canadian with a smartphone will be able to pay with proximity devices at many large retailers.
Interac, an association working on behalf of Canada’s big banks, is already in the contactless payment business with its Flash debit cards.
“We believe that consumers are going to gravitate from a card based product, in some situations, to a mobile phone based product,” said Allen Wright, Interac’s vice-president of products. He sees its flash product as a stepping-stone to mobile payments.
“We think it’s very important for our future.”
“What we are waiting for frankly is for the mobile phone industry to sort of catch up,” he said.


No comments:

Post a Comment