Near field communication (NFC) payment systems in New Zealand will fail if the telcos and payment companies do not adopt common technology standards, says Snapper CEO Miki Szikszai.
The number of operational NFC payment systems in New Zealand is still relatively low, but this is not due to a lack of interest from Kiwi consumers. The results of the 2012 TNS Mobile Life survey found 42 percent of New Zealanders are interested in using mobile wallets, including NFC, with six percent already using them.
Szikszai says it is important for telcos and payment providers to agree on common technology standards for NFC while it is still in its infancy .
“What I’m hearing from the industry is they [Telecom, Vodafone] won’t be ready to deliver until sometime next year, so there is plenty of time to get things right, but there’s only one chance to start off on the right step, and that is to go with open standards,” says Szikszai.
Last year Vodafone and BNZ began a trial into an NFC mobile wallet system in Auckland, and at a media briefing Telecom chief marketing officer Jason Paris hinted at possible NFC systems for the telco next year. Szikszai says these trials are unlikely to move beyond that if they do not incorporate a nationwide set of standards, available for all players in the market to use.
“I understand they are in some form of procurement at the moment, but Telecom and Vodafone don’t get NFC yet,” says Sziskai.
“There are a lot of pilots with what is happening with mobile NFC, but they never get quite beyond a pilot because they’re using proprietary things which just don’t scale.”
Snapper is focusing on three NFC technologies to standardise in New Zealand. Java Card Open Platform (JCOP) for the NFC SIM card firmware; Single Wire Protocol (SWP) which connects the SIM card to the NFC antenna; SIMalliance’s Open Mobile API to show credit and balance information from the SIM card layer to the user.
With the joint venture between Vodafone, Telecom, 2degrees and Paymark to use a common trusted service manager (TSM), Sziskai says there is some work being done towards standards-based technology. However, he is wary that it is currently being led by a competing vendor.
“You’ve got this Paymark-led work around what they’re trying to do around the TSM. What we’re saying is we’re happy to contribute to that, and share what we’ve got, but let’s make it work for everyone instead of making it a vendor specific implementation,” says Szikszai.
“We’re trying to engage through this TSM process because that’s where most of the activity seems to happen.”
Vodafone and standards
“I completely agree with Miki, and I would add on top of that that we need to line up with global standards,” says Steve Rieger, GM of wholesale and new business at Vodafone.
Of particular importance to Vodafone is having NFC interoperability with New Zealand’s top trading partner Australia, says Rieger.
Rieger says he believes this view is shared at competing telcos.
“Everyone in the industry is fully in agreement what is exactly required, and that is using interoperable standards,” says Rieger.
Although Vodafone says it supports open standards, technology used in its recent NFC payments trial seems to indicate otherwise.
Vodafone’s NFC payments trial with BNZ, Paymark, and Visa concluded in March. The phones used SWP, but the NFC SIM cards were installed with Visa’s proprietary Paywave software.
Rieger admits that standards for payment and standards for public transport could be “fractured” but he says that if possible the best bet for the telcos, payment providers, and customers will be to stick with interoperable technology.
“There is a lot of investment and intent in creating these standards, and a lot of that work will follow on the back of what we’re doing with the shared TSM. Again I agree with Miki, we want every manufacturer and every developer able to use this technology easily,” says Rieger.
Snapper in Auckland
Snapper has been involved in its share of standards-based technology problems. In January, Auckland Transport announced more than 100,000 NFC tickets (or HOP cards) needed replacement as they were only compatible with NZ Bus services. NZ Bus and Snapper are both owned by investment company Infratil.
Security company Thales, which was initially brought on board to provide the region with an integrated system, blamed Snapper for failing to “deliver a functional bus system that meets the ratified standard”.
“The comments that it was Snapper’s fault did not come from Auckland Transport, or NZ Bus, so that only really leaves a competitor that would benefit from giving us bad press,” says Szikszai.
Szikszai refused to comment further.
In Wellington, where Snapper has been available on public buses and taxis for four years, Szikszai says 80 percent of fares are paid with the system. In its first year in Auckland, Szikszai says that figure is already at 50 percent.
Snapper has partnered with 2degrees mobile to offer NFC payments using NFC-enabled mobile phones. The Touch2Pay system is fully enabled in Wellington, including on the much hyped Samsung Galaxy S III Android smartphone.
Szikszai says he is unable to reveal the official launch date of Touch2Pay outside of Wellington, but did demonstrate making a purchase using a 2degrees LG phone at an Auckland cafe, going on to say any Touch2Pay phone purchased in Wellington should work with Snapper units in Auckland.