Vodafone and Bank of New Zealand have begun an in-house trial using near field communications (NFC) to enable payments via a mobile device.
NFC is a short-range wireless technology similar to RFID. Vodafone claims it is the first time in New Zealand a “secure credit account element” has been embedded into a SIM card - the Secure Element (SE) is equivalent to the 'chip' on a chip credit card.
The trial involves 44 staff members from both companies and runs until the end of February. Also taking part are Visa and Paymark. Participating retailers are cafes located inside Vodafone’s headquarters in Auckland and BNZ’s headquarters in Wellington, hence the codename, ‘Project Espresso’.
Today Vodafone mobile marketing innovations manager Bridget Gallen bought Computerworld a coffee using her NFC- enabled Samsung Galaxy SII handset (these handsets have been sourced especially for the trial).
Gallen pointed the back of the device at the electronic reader, the transaction was accepted and about a minute later a pop-up alerted her to the fact that a virtual receipt was now electronically stored in the ‘mobile wallet’ app.
Gallen says Vodafone expects to go to market with the technology in 2013 when NFC-enabled devices become more common.
“NFC devices will become much more readily available in 2012 and beyond,” she says. “RIM, Samsung and Nokia, [have] all been talking about NFC being in their device roadmaps.”
Vodafone general manager for wholesale and business development Steve Rieger says that Vodafone NZ is among half a dozen divisions in the Vodafone group internationally to be trialling NFC devices.
Experiences overseas show that its necessary to create an ecosystem around NFC devices, to ensure ubiquitous standards, he says.
“Standards are really important for this to take off, we as telcos need to speak the same language to the banks,” he says, and build “a single application that goes across all handsets regardless of what network you’re on, but [it must] also follow standards from overseas.”
“New Zealand is too small for multiple ecosystems because the cost of integration will be significant, so the general belief is - and it's being played out around the world – we all agree a set of standards as to how an ecosystem looks.”
He says in the Netherlands an industry-wide partnership between three telcos and three banks has been formed to launch mobile NFC.
So has Vodafone spoken to Telecom and 2degrees in New Zealand?
“As an industry we chat about things all of the time, it hasn’t got mega traction,” he says.
Vodafone has teamed up with BNZ for the trial because it holds the Vodafone corporate account, but Rieger says he would like to see other banks get involved as NFC will enable faster transaction speeds and will lower the cost of delivering credit card services.
Rieger says that because the payment transaction isn’t carried across Vodafone’s network the telco can’t bill for the service.
So why get involved in it?
“It creates mobile centricity,” he says, that is, the more uses for a mobile the better it is for a telco.
However, the real opportunity for Vodafone is in mobile commerce. Rieger says a new revenue stream will be in the peripheral opportunities, such as the discount coupons that merchants will text their loyal customers.
In addition to paying for items via a credit card account, in time people are may have loyalty cards, gym memberships, office security access, transport payment methods such as Snapper – everything that is currently carried around in a wallet, will be an app on the mobile phone.
If the device is lost, a customer would only need to make one phone call to automatically disable all accounts.
“By having it in the SIM we [telcos] can manage security over the air - turn people on and off, update them and add new applications,” Rieger says.