Yesterday a colleague made me aware of this Ericsson's IPX SMS based payment system that looks like a competitor to the NFC technology and doesn't involve any additional chip/hardware. Here is a video:
Ericsson Internet Payment Exchange (IPX) is a leading mobile aggregator, providing delivery and billing services, via SMS, MMS, web and online mobile billing, to more than 2 billion mobile subscribers across 26 countries. Ericsson IPX also brokers location information in selected countries and Ericsson IPX Messaging provides reach to 96% of all mobile subscribers worldwide with SMS. Ericsson IPX customers are companies who offer digital content, mobile voting & directory information and enterprises offering mobile marketing, communities and banking.
Now, we all love SMS and we have to admit that its the simplest of technology and even the most primitive phone nowadays support it but there could be scenarios when this can be a bit of a problem:
1. SMS can sometimes be delayed if a particular cell is overloaded, etc. So how long do we have to stand in front of the machine?
2. If say for 2-3 mins we do not receive an indication that the machine has a cash, do we send another SMS to cancel the transaction?
3. If we have a problem, do we have a support number to call to? How much will that cost?
4. If there is a queue of people and someone else wants to purchase something as well, does the next person has to wait till the person before has received the item?
5. If two people have sent an SMS, how do they know whose cash is in the machine now? Do we start putting a Pin as well ?
I agree, this technology could be really useful if you have run out of cash (even if you have NFC chip) and you need to purchase something small.
The other obvious advantage is that you can target advertisement at regular users who are at a particular place at a particular time to make them buy something. Also you can get statistics like what time people tend to purchase, what do they purchase, where, etc.
Anyway, hard for me to see this take off big time.
With some much talk (and hype) surrounding NFC and Mobile payments, it looks quite possible that m-payments will enter mainstream in the Western world in the forthcoming year. Though mobile payments have become norm in developing countries like Kenya, Senegal and India, its yet to catch on in UK and the USA.
The mobile transaction market is so huge it offers room for multiple players. Yearly worldwide electronic transactions total $7-$10 TRILLION
Competitors are generally local to each country or region leaving plenty of open territory for mobile payment service and technology companies. Companies that win in their markets will be those that understand customer needs.
PayPal in the U.S., which has traditionally catered to merchant accounts, most likely will adopt a similar mobile strategy. (Both Obopay and PayPal are service providers–not technology companies like Fundamo in South Africa that provides software solutions for service companies.)
“The competition is cash”–not the other players in this market space
In five to ten years, mobile payments will achieve high adoption among consumers in developing and developed countries.
Brazil, Russia, China and Mexico offer growth opportunities for players that understand these markets
According to Portio Research, by 2011 mobile commerce payments are estimated to climb to $86.6 billion
Nielsen predicts 27% of all U.S. payments by 2012 will still be cash
Some forms of mobile payments already exist. Phone applications like PayPal Mobile support person-to-person (P2P) payments. SMS-based transactions are used for car parking tickets and mobile commerce allows online shopping through mobile phone browsers.
Contactless cards are also in circulation for credit cards, transport tickets and are used in some food stores. The industry is looking next at near-field communication (NFC) mobile handsets. NFC allows 'tap-and-go' style payments using mobile phones at in-store terminals by incorporating contactless card technology into handsets. Alternatively, micro-SD cards with NFC-enabled chips can be inserted into mobile phones.
The Global System for Mobile Association (GSMA) has launched a Pay-Buy-Mobile project to enable consumers to pay for goods and services via their mobile phones. "By storing a consumer's credit or debit card within the SIM card and employing NFC technology, the mobile phone can be passed near a contactless Point Of Sale (POS) terminal to complete transactions," said Nav Bains, GSMA's senior director of mobile money.
GSMA has been collaborating with standardisation bodies; the European Payments Council, EMVCo, which manages card specifications and smartcard infrastructure standards body, Global Platform. The consortium is developing the Trusted Service Manager requirements document and a certification process to accelerate the commercialisation of mobile NFC services. But some experts believe NFC is a long way from a mass market roll-out in the UK.
The biggest breakthrough in the mobile payment market have been in developing countries, providing bank services via mobile phones for people who have traditionally not had bank accounts. Visa Europe recently launched Europe's first micro-SD based mobile payment systems in Turkey. But it is unclear when such a system will be introduced in the UK. says Juniper Research senior analyst, Howard Wilcox.
The number of contactless terminals in the UK is approximately 26,500 and the UK Card Association predict 14 million contactless cards will have been issued with contactless functionality by the end of 2010. "We're not expecting to give a launch date any time soon," continues Swain. "Globally, there's a lot of discussion but the UK is one of the only areas where we already have the infrastructure that would accept contactless mobile payments," he adds. UK-based mobile banking firm, Monitise, has also recently launched a joint venture with Visa in India to accelerate the delivery of mobile financial services such as banking, bill payments, mass transit ticketing and mobile top-up to Indian customers. More than infrastructure, Monitise group strategy director, Richard Johnson, believes banks and mobile network operators need to work together. "Banks are where most people keep their money. It's about mobilising bank accounts rather than creating new accounts with network operators. Tap-and-go really requires collaboration," he says.
Industry expert consortium, Mobey Forum, hopes to bring banks, mobile network operators, acquirers and merchants together to build the relationships needed to progress the mobile payments industry.
Gerhard Romen, Mobey Forum marketing chair and director of mobile financial services at Nokia, believes the NFC trials have proved the consumer demand and, by 2011, all of Nokia's new smartphones will be NFC-enabled. "Once people work together, it'll provide simplicity for the user" he says. "A phone with NFC can do more than just behave like a card - it has a display, keyboard and internet connection - and becomes more interactive," he adds.
Today we have credit, debit and, perhaps, contactless cards. Tomorrow banks and mobile network operators hope to provide a mobile wallet. The next step will be introducing tap-and-go into the mainstream market and, despite slow progress, industry experts are increasingly certain it will happen "soon".
Google and Apple are both making moves to ensure smooth financial transactions on their mobile platforms.
Last week news bubbled up that Google and PayPal were brokering a deal to let the search engine use the e-commerce service as a payment option for applications purchased through Google's Android Market.
Apple, meanwhile, hired an expert in near field communication (NFC) technology as its new product manager for mobile commerce and has published a number of NFC-related patents in recent months.
Google's e-commerce infrastructure is poor compared with that of Apple. Users may only purchase applications for their Android smartphones from the Android Market in 13 countries.
By way of comparison, consumers may purchase apps from iPhone's App Store in 90 countries all over the world. PayPal would be a welcome addition to Google Checkout and credit cards as payment options in the Android Market.
Gartner has said the market for mobile apps will be $6.2 billion this year, making it an obvious sector for Google and Apple to attack with gusto.
Bay Area businesses like Bling Nation and eBay Inc.'s PayPal division are rolling out products that allow people to hand over money to stores, restaurants, coffee shops or friends with the tap of a mobile device. No credit cards, checks or cash are necessary.
Meanwhile, reports suggest that other major companies, including Apple Inc., AT&T Inc. and Verizon Wireless are planning or negotiating to provide similar services.
"What I see is all these distinct initiatives coming together and merging at some point in the not-too-distant future," said Aaron McPherson, practice director at IDC Financial Insights. "All together, they add up to significant change."
Bling Nation, a Palo Alto startup founded in 2007, is among the furthest along in this emerging field, with more than 1,000 retailers nationwide accepting its payment system. The company provides so-called Bling tags, or small stickers, that affix to the back of a mobile phone and transmit data using a wireless standard known as Near Field Communication.
When users tap the tag on a proprietary reader at participating retailers, it pulls money from their PayPal account. For security, users have to enter a personal identification number for purchases over a certain amount, or when transactions occur at an unusual frequency or location.
Merchants pay for or rent the reader and are charged 1.5 percent of the total of every transaction, which is well below the average transaction rate for accepting credit cards. The additional advantage for merchants is that they can analyze customer data in a more fine-grained manner than is permitted through the credit card system. This allows them, for instance, to target sales offers to regular customers or those who haven't been into the shop in a while.
"They enjoy cheaper fees and analytics that can help them issue coupons and make more money," said co-founder Meyer Malka, adding that the advantages are turning businesses into proselytizers on Bling's behalf.
A little more than a month ago, the company began an aggressive push in partnership with PayPal to expand its footprint in downtown Palo Alto. It included giving away thousands of tags preloaded with $20 in credit to customers. There are now more than 50 retailers in the city accepting the payments.
As I mentioned last week, with heavyweights like Nokia, Apple and Google all coming closer to NFC and M-Payments, it should be a winning formula for the end consumers. We will possibly see more use of m-payments in the developed world. Lets not mention about security just yet.
Its been over couple of years since I blogged about what NFC is. In fact successful trials in London occurred around that time but it seems the operators always had doubts.
Couple of months back, Nokia announced that from 2011, it will roll out NFC in all it phones. Here is an extract from the Register:
Nokia has announced that from next year every Nokia smartphone will have NFC, regardless of fact that the technology lacks a business model or any market demand. The commitment was made during a speech by Nokia's VP for markets, Anssi Vanjoki to the Moby Forum, as reported by NFC World. Vanjoki wouldn't be drawn on the company's smartphone plans, but did explain that every smartphone launched by Nokia would have an NFC component supporting the Single Wire Protocol (SWP) and MicroSD security, and probably a Nokia secure module too.
Once NFC is in a handset then one can do some interesting things with remote control of home electronics and Bluetooth pairing-by-tap, but none of that is the killer feature that NFC needs to make it viable.
Of course, the mobile industry isn't used to waiting for customer demand – no one ever requested a camera, or Bluetooth, those were pushed into punters' hands by operators (to sell MMS) and retailers (to sell headsets) respectively. But those were done by the network operators (which explains the popularity of Bluetooth in Europe, where operators own retailers). Nokia, which has extensive IP in NFC, has spent a fortune trying to convince operators to back the technology, funding extensive trials and backing supportive research, but no matter how hard it tries, NFC just isn't desirable (at least until Apple puts it into an iPhone).
That was till last week. This week the news is out that Apple is testing NFC in iPhones. The following news from CNET:
Apple raised some eyebrows over the weekend when news spread it had hired an expert in mobile payments. But now there's a report that says the company is already testing a prototype iPhone with near-field communication (NFC) chips inside, which could pave the way for using future iPhones as a mobile wallet. TechCrunch heard from an unnamed source that on Tuesday Apple is testing an iPhone with NFC chips it's ordered from NXP Semiconductor. It's not clear what kind of tests, and it could be very preliminary in nature. But coupled with the hire of Benjamin Vigier from mFoundry as mobile payments product manager, it does seem possible that Apple could be planning to open up its premier product to the world of commerce outside of iTunes.
In fact you may be able to do much more than mobile payments if Apple gets its way. You may be able to sync devices by touching each other. You can sync your MAC to iPhone or iPod. Here is a video showing some iPhone RFID demo, courtesy NFC world.
78% want to use contactless services on their mobile phone
Nine out of ten trialists were happy using NFC technology on a mobile phone
Interest in having Oyster on their mobile phones was particularly strong with 89% of trialists saying they were interested in taking this up
Over two-thirds of trialists also said that they would be interested in having the Barclaycard Visa payWave feature on their mobile in the future.
Having Oyster on their mobile phone actually increased trialists use of public transport. One in five (22%) trialists using Pay as You Go Oyster reported that they increased the number of journeys they made on public transport during the trial.
Overall, almost 50,000 tube journeys took place using the O2 Wallet during the six month trial.
67% said that they found it more convenient to use than a standard Oyster card.
87% said that availability of the service would be likely to influence their purchase of a new mobile phone.
From Guardian again, In Japan, such phones have been in use for more than four years. The Japanese railway network has been using the technology since 2001 and millions of cards have been issued. But the technology used in Japan is based on Sony's FeliCa chip technology, which is different from that used in the O2 trial and by Transport for London for the Oyster card.
Philip Makinson, at industry experts Greenwich Consulting, said mobile wallets had fallen down in the past because of the number of people needed to make any system viable.
"It requires cooperation, not just between handset manufacturers and network operators but third parties such as Visa or Mastercard and banks and retailers. To reach critical mass you really need to have at least three of the big operators to be involved or there is not enough in it for the likes of Transport for London or Nokia," said Makinson.
Several of the UK's five mobile phone networks are understood to be interested in mobile wallets.
"There does seem to be consumer demand for it, people are saying they want to carry less stuff around with them," said Makinson. The results of the O2 trial show that people like using a mobile phone to do more than send texts and talk.
Saw this posted on Forum Oxford. Very good introductory article on NFC:
Near-field Communication (NFC) is characterized as a very short-range radio communication technology with a lot of potential, especially when applied to mobile handsets. Imagine yourself using your cellphone to interact with posters, magazines, and even with products while at the store, and with such interaction initiating a request or search for related information in real-time. Other usages of NFC include the electronic wallet to make payments using your handset, the same way you do with your credit card. With NFC all this is possible. But NFC is still a young technology. That said, NFC-enabled handsets are being introduced into the market, and deployments and pilots around the world are occurring.
Near-field Communication or NFC is a standard defined by the NFC Forum, a global consortium of hardware, software/application, credit card companies, banking, network-providers, and others who are interested in the advancement and standardization of this promising technology.
NFC is a short-range radio technology that operates on the 13.56 MHz frequency, with data transfers of up to 424 kilobits per second. NFC communication is triggered when two NFC-compatible devices are brought within close proximity, around four centimeters. Because the transmission range is so short, NFC-based transactions are inherently secure; more on this shortly.
When compared to the other short-range radio technologies, NFC is extremely short ranged and what I call people-centric. Some of the other short-range communication technologies have similar characteristics, for example RFID, while others are completely different yet complimentary to NFC; for example Bluetooth and Infrared. A good scenario of such compliment is the combination of NFC and Bluetooth, where NFC is used for pairing (authenticating) a Bluetooth session used for the transfer of data.