M-Commerce in the News
A Digital Wallet Now Available on Some Smartphones
NY Times
Good news for people suffering from discomfort caused by sitting on a thick wallet full of credit cards and credit card receipts for a long duration: Visa, the credit card company, said it supported making wireless payments through some smartphones, though it would replace the plastic Visa cards issued by banks.
Visa last week announced some phones from Samsung, Research In Motion and LG would work with a technology called near field communications, a wireless system that enables payments to be made between mobile devices and merchants’ terminals. So rather than yank a credit card out of your wallet, you’d wave your phone over a terminal to make a payment.
For Visa-certified near field phones, a security application called PayWave is embedded in a phone’s SIM card, chipset or memory card, according to Visa. A merchant with a PayWave-compatible terminal would be able to accept payments from these phones. Visa’s certified products include the Samsung Galaxy S II, LG Optimus NET NFC, the BlackBerry Curve and the BlackBerry Bold.
Although near field technology is commonplace overseas, it has been slow to enter the mainstream American market. It has been difficult for the all the various interested parties — credit-card companies, banks, technology manufacturers, software makers and carriers — to agree on standards and work together. In September, Google introduced Google Wallet, a near field system for some Android phones, and rumors abound that Apple has been planning similar wireless payment methods for iPhones.
Wireless Visa payments will initially work at only 150,000 retail locations in the United States, according to Visa. More than 8 million merchants accept Visa in the United States. But Visa said it was optimistic that near field communications would soon accelerate in the United States as more customers, vendors and technology companies take interest in the wireless payment method.
“We’re just now seeing all the elements come into place that’s going to make it take off,” said Bill Gajda, Visa’s global head of mobile product.He said near field communications was spreading quickly in Canada, Singapore and in Hong Kong, which should help pique interest among banks and vendors in the American market.
But what’s wrong with traditional plastic for payments in the first place? Nothing, says Mr. Gajda, but near field-equipped smartphones can do things that credit cards can’t, like account for electronic coupons or include social-networking tools that let you automatically share what you buy with friends.
And what’s in it for Visa? The credit-card company likes near field-equipped smartphones because it can combine information collected on customers with retailer data to deliver more personalized offers.
“That’s a new business for Visa,” Mr. Gajda said. “We’re working with GAP and a number of other retailers to make their marketing programs and loyalty programs more targeted, more relevant and more real-time by marrying the data they have and the data we have.”
He noted, however, that credit card companies could already gain access to this type of information if a credit card was added to a third-party app on a phone.
Amex’s Digital Wallet Serve Opens a Door in China
American Banker
American Express Co. has begun licensing its digital wallet, Serve, in China.
Amex is expected to announce Wednesday that it is licensing its digital wallet to Lianlian Group to expand its reach into the coveted Chinese market. Lianlian operates its own mobile payment business, Lianlian Pay, in China.
Serve is a digital wallet the New York card network designed to reach consumers who normally might not qualify for a high-end Amex credit card. Lianlian is licensing Amex's technology but it may not use the Serve brand.
Amex considers the Lianlian partnership "the next step in the evolution of the Serve platform," says Dan Schulman, Amex's group president for enterprise growth. "It's really our first global expansion."
Serve was formerly Revolution Money, which Amex bought in 2009. From early on, analysts viewed Serve as a product Amex could use to expand overseas.
"China … has proved to be a difficult market to enter for many Western payments players," says Zil Bareisis, a senior analyst for the research firm Celent. "The market has a huge potential for growth."
As a part of the partnership with the Lianlian Group, Amex has made a $125 million equity investment in Lianlian Pay. Amex also plans to open an office in Hangzhou, China, to support Lianlian Group.
Schulman says that Serve will eventually roll out into other markets.
"We are not discussing what's on the road map, obviously," he says. "But I think it's a huge world out there … This can go anywhere from Latin America to the Middle East, to various countries within Asia."
The Lianlian deal follows other groundwork Amex has been building in China. In 2010, China Merchants Bank announced it was issuing a dual-currency Amex card aimed at international travelers. And last year Amex inked a deal with online payment provider Tenpay, a unit of Tencent Holdings Ltd., that allows users to access websites based outside China and make online payments using their Amex cards.
The Lianlian deal is nevertheless a departure for Amex, which has a typically focused on issuing cards and acquiring merchants.
Lianlian Pay is primarily used by the underbanked to pay bills and buy airline tickets. An agent takes cash from a consumer to pay a bill using the agent's mobile phone on the customer's behalf. After that, Lianlian sends a text message to the user to confirm the payment. Lianlian operates over a network of about 300,000 agents.
Serve will expand Lianlian's range of services, Schulman says.
Lianlian users will be able to fund the digital wallet through an agent. The mobile wallet can then be used to top up mobile-phone minutes, pay bills and make purchases, he says.
"We have to think beyond plastic cards," says Schulman. "We think that a lot of places are going to go straight from cash to mobile payments and skip right over the checks and plastic that we are so familiar with."
The Chinese mobile payment market appears to be making good progress in mobile payments. Still, there is an opportunity for Amex.
"I would hesitate to call any aspect of the Chinese payments market mature, especially mobile, so I think the opportunity is still there for the right mix of customer value proposition, technology and delivery model," says Bareisis.
But there are risks in doing business in China, as evidenced by Yahoo Inc.'s recent troubles. Last year, Alibaba Group Holding Ltd., an Asian e-commerce company in which Yahoo owns a stake, transferred the ownership of its payments unit Alipay to a different company. Yahoo claimed not to know about the transfer, which was done to satisfy payments rules in China.
"Hopefully they will have more luck than Yahoo did," says Brian Riley, a research director in the bank cards practice at Towergroup. "It will be a test of American Express' mettle."
Sprint announces more Google Wallet phones
NFC World
-The US carrier has revealed it will be adding two further NFC phones to its line up, the Galaxy Nexus and the LG Viper, and more are on their way.
US mobile network operator Sprint has announced it will be adding two 4G NFC phones to its range, to complement its existing 4G version of the Nexus S, currently the only phone to provide official support for Google Wallet.
The new devices are the Samsung-built Google Galaxy Nexus and a new NFC handset, the LG Viper.
The eco-friendly LG Viper 4G runs Android 2.3 Gingerbread and boasts a 4-inch 800 by 480 pixel screen, 1.2GHz processor, 5-megapixel rear camera and a VGA front facing camera. The phone includes NFC hardware and, says Sprint, is "capable of providing Google Wallet".
Both handsets are due to be introduced in 2012 with prices to be announced closer to each product's release date.
The carrier now also plans to include NFC in all its LTE smartphones, except for low-end devices, Trevor Van Norman, Sprint's director of consumer product marketing, told Light Reading at the CES show last week. Sprint will receive a cut from Google for coupons or Google Offers redeemed via Google Wallet, he added.
Enabling mobile payments
Financial Times
Since mobile phones first became popular, technologists have been looking for ways to turn them into electronic wallets. The aim is to let customers leave cash and plastic cards at home by enabling them to use their handsets to buy anything from a cup of coffee to a new car.
Several technologies have emerged to facilitate payment, including simple text messaging, infra red, and radio frequency systems such as Bluetooth and near field communication (NFC).
The problem is uncertainty over which will predominate. As with video recording in the 1980s, the myriad companies keen to participate in mobile payments are worried about making the wrong technical choice. They don’t want to be a Betamax equivalent in a world of VHS.
“It is still early days, and the lack of services using existing standards is making mobile payments relatively slow to take off,” says Ted Bissell, managing consultant at PA Consulting in New York.
NFC, the most technically advanced option, stores relevant information on a chip and has been installed on some Android handsets for three years. Yet relatively few customers have used it because most service providers have not yet activated the chip for financial products.
Meanwhile, Apple’s iPhone does not include NFC, and the company remains publicly uncommitted as to whether it will be built into iPhones in future.
There has been some progress. Last year saw: the launch of Google’s Android-based eWallet and MasterCard’s PayPass in the US, while in the UK Starbucks trialled the Quick Tap PayPass service, and in France BNP Paribas and Orange introduced NFC mobile payments.
But with industry practices not yet established, it is unclear whether customers would easily be able to switch between services and suppliers. “The operators are still bickering about who will control the mobile wallet,” says Mr Bissell.
“Many customers may not want to be ‘locked in’ to one company or consortium. Legislators are looking at it, to the discomfort of participants such as mobile operators,” he adds.
One mobile payment technology based on well established standards is M-PESA, which is has proved hugely popular in Kenya and Tanzania. It enables people without bank accounts to settle bills and transfer funds via text message.
The funds are held in accounts managed by the mobile operator Safaricom. “Some 80 per cent of the population adopted M-PESA within five years of launch, and similar uptake is expected in Bangladesh, Pakistan and South America,” Mr Bissell says.
In these regions, there is a lack of banking infrastructure and text-based payments work well because they are more secure than cash. However, they are unlikely to be approved by regulators in more developed regions.
Even NFC is not seen as particularly secure, says Keith Brown, chief executive of Paythru, which enables people to transfer funds via the cloud for applications such as parking charges.
The maximum budget limit of £100 for NFC transactions has not been increased in the three years since it was introduced. This suggests not much progress has been made on security, says Mr Brown.
“By using the cloud, nothing is stored on the phone, making the system much more safe and secure.” People will authenticate themselves with biometrics such as fingerprint or voice identification, he says.
One reason why mobile payment has not taken off in the developed world is that there is no compelling reason to use it, says Benjamin Ensor, a director at Forrester Research. “There are no payments that you can only use mobile for. It lacks the sort of trigger that PayPal had on eBay.
The fact that there are always alternatives means people will use the system they are familiar with, Mr Ensor says.
He believes one of the biggest opportunities could be creating an easy way to pay small traders such as taxi drivers, music teachers or sports clubs, for which cheques are typically used. Companies focused on this market include US-based Square, and iZettle, headquartered in Sweden.
As for establishing a standard, Mr Ensor says there is no reason why only one technology should dominate or be the winner; there could be several approaches.
“The danger of financial institutions focusing too much on standards is in missing the boat. It increases the likelihood of an outsider such as Apple, Google or PayPal coming in and catalysing the business, leaving the banks flat-footed behind.”
Another impetus could be the ability to offer real time vouchers and coupons relevant to people’s location.
Technology is accelerating and unleashing creativity, Mr Ensor says. “In the past two years, we have seen a lot of change and we think there is quite a big chance for a disrupter to come in, perhaps using existing processes and networks in a new way that is faster, cheaper and better.”
The list of companies competing for a slice of what most believe will be a huge market, is formidable. It includes mobile operators, banks, handset manufacturers, operating system suppliers, e-commerce companies, retailers and social networks.
There need to be standards, says Mr Ensor. The last thing anybody wants is systems that are not interoperable.
“But whereas we only needed one way to record TV, VHS or Betamax, there is no reason why we shouldn’t have several standards to make mobile payments depending, for example, on whether we are buying petrol at the pump, paying a utilities bill, or shopping online.”
NFC smartphones by Samsung, RIM and LG get Visa certification
The Inquirer
-Mobile payments system set to take off in 2012
NFC smartphones made by Samsung, RIM and LG have been certified for use with Visa's mobile application for payments at point of sale, called Visa Paywave.
The Samsung Galaxy SII, LG Optimus NET NFC, Blackberry Bold 9900, Blackberry Bold 9790, Blackberry Curve 9360 and Blackberry Curve 9380 have been added to the list of Visa compliant payment products available for commercial deployment by financial institutions.
All the devices certified by Visa host the Visa Paywave application on a secure Sim card and feature near field communications (NFC) technology that allows users to pay for goods at a 'wave and pay' terminal.
Visa Europe head of mobile business unit and innovation Sandra Alzetta said, "The players are now in place for mobile payments to become a reality. We are working with our member banks, mobile network operators and key handset partners to ensure that future payment technologies are as easy, intuitive and secure as card-based transactions are today."
She added, "Today's announcement plays a significant role in getting those new technologies into the hands of the consumer. It is a very exciting time for us all."
Nick Holland, a senior analyst at Yankee Group, said, "Today's announcement is another example of the momentum we are seeing behind NFC as an industry standard for mobile payments. Yankee Group predicts that the value of NFC-based transactions will grow significantly, from $27m in 2010 to $40bn in 2014."
NFC has so far failed to take off due to a lack of enabled devices in the UK and worries about security. However, experts say that 2012 will be the year that the technology will move into the mainstream, fuelled by the London 2012 Olympics.
Moneto makes any Android smartphone an NFC device
BGR (Boy Genius Report)
This month, DeviceFidelity and Spring Card Systems announced moneto, a new independent NFC payment solution. The service delivers NFC capabilities to any Android device with a microSD card. The card contains an NFC radio and antenna that are encrypted together to deliver MasterCard PayPass technology to any Android smartphone. Additionally, moneto has created a unique iPhone case to deliver the service to iOS users as well. The moneto case is currently available for $80, which includes $10.00 of pre-loaded funds. The Android microSD card is expected to be available within two to three weeks, and will sell for $30. All you have to do to use it, is insert the card, attach a small NFC sticker to the inside of your battery case — it helps with the NFC signal — and you’re on your way to credit card-less mobile payments.
Sony unveils Xperia NFC phones and tags
NFC World
Sony has announced two Xperia NFC smartphones, the Xperia Ion which is exclusive to AT&T in the US and the Xperia S which will be available worldwide this quarter, as well as read-only NFC Xperia SmartTags.
Sony Ericsson, the phone manufacturing joint venture in the process of becoming 100% owned by Sony, has unveiled its first NFC smartphones, the Xperia Ion and Xperia S. Xperia SmartTags, read-only NFC tags that will ship with selected Xperia phones, have also been announced.
The Xperia S is the first of a new generation of NXT series smartphones and includes a 4.3-inch HD screen, 12MP camera and 1.5GHz dual core processor as well as NFC. The phone is also Playstation-certified, enabling it to access the PlayStation games store as well as a range of other Sony entertainment assets including music, movies and TV shows. The Xperia S will begin shipping globally with Android 2.3 Gingerbread this quarter and will be upgraded to Ice Cream Sandwich during the second quarter of 2012.
The Xperia Ion is an LTE version of the Xperia S that features a larger 4.6-inch screen but otherwise shares the same specifications. The device is exclusive to AT&T in the US and will ship with NFC pairing and tag reading functionality switched on.
To accompany the launch of the new phones, Sony has also launched a range of NFC tags packaged as stylish round tokens and marketed as Xperia SmartTags. The read-only SmartTags store an ID number and users can set the action that should take place when a tag is read using the LiveWare Manager application on their phone. "This means that reading the tag will have a result that is specific for your phone," the company explains. "Reading the same tag with a differently configured phone will give another result."
PayPal trials mobile wallet at Home Depot Stores
FierceMobile Content
PayPal confirmed reports it is trialing new mobile wallet services at select Home Depot stores, enabling consumers to pay for items at checkout via mobile device or a special PayPal card.
eBay-owned PayPal first revealed its brick-and-mortar payment plans in September, promising to introduce digital commerce solutions optimized across all devices, not just mobile phones, and encompassing funding options including cash, credit and installments. In addition to mobile and point-of-sale payments, PayPal will roll out geo-targeted mobile advertising campaigns, barcode scanning tools, real-time inventory data and a virtual wallet concept.
"Home Depot is the first retailer to roll out a limited pilot program for our new POS technologies," writes PayPal director of communications Anuj Nayar on the PayPal Blog. "We frequently run trials with our retail partners. The Home Depot pilot is currently being run in five stores and involves a small number of PayPal employees."
PayPal boasts more than 104 million active users in 190 countries, with more than 8 million merchant partners. PayPal handled more than $3.5 billion in mobile payments in 2011.
"We believe a full Home Depot rollout would increase PayPal's addressable market by more than 35 percent overnight," wrote Wedbush analyst Gil Luria in a note to investors on Friday. "Although penetration would start at zero, we believe that by adding value to consumers and merchants, PayPal may eventually approach penetration rates comparable to its online presence."
PayPal's expansion into new markets coincides with its search for new leadership: Last week, PayPal president Scott Thompson was named CEO of Yahoo.
Near field communication the next mobile boost?
USA Today/CNBC
You may not have heard of it, but near field communication (NFC) is the technology that major companies are betting will become a central part of every mobile phone user's life.
Interested in digital wallets, gaming, or social media? You'll soon be acquainted with NFC — which could transform the way we shop, pay, save, and interact with other mobile device users and even with physical objects.
NFC is the technology that enables smartphones and other devices to establish a radio connection by touching them together or coming within close proximity.
NFC technology has not been heavily adopted in the U.S. yet, but according to some analysts' estimates there will be a greater push for mobile users to adopt the technology in the next few years. John Devlin, a NFC analyst at ABI Research, said that he expects the number of NFC handsets to increase from about 34 million this year to about 80 million next year. Mark Hung, an analyst for Gartner, sees the growth in handsets exceeding 100 million in 2012.
There are many ways NFC technology can be put to use, but according to those who work in the industry and industry analysts, there are a few specific ways they expect the technology to be most widely adopted.
Here's a look at how NFC is catching on and some of the companies expected to be major players in the space.
Mobile Wallets
Using NFC technology to pay for goods is one of the ways companies are experimenting. The technology works by allowing consumers to use their NFC-enabled phone to pay for goods by tapping their phone at the point of checkout.
Currently, Google is one of the major players in this field with its Android mobile application Google Wallet, which the company launched earlier this year.
Google partnered with Citibank, Mastercard, First Data, VeriFone, Samsung and Sprint among other companies, to make the wallet possible. Currently, though, consumers can only pay with Citi Mastercards and the app is only compatible with the Nexus S 4G by Google, available on Sprint. But Google intends to support more cards and phones eventually.
Although Google got its foot in the door first in the U.S. with its payment platform Google Wallet, competition is coming.
AT&T, T-Mobile, and Verizon have partnered to create Isis, a virtual wallet and payment system, set to launch in 2012. ISIS will be open to all merchants, banks and carriers, according to its website. Isis aims to "eliminate the need to carry cash, credit cards and debit cards, reward cards, coupons, tickets and transit passes," the website states.
Verifone has also recently completed its acquisition of Point, a company that provides payment services that make NFC technology possible.
"The acquisition gives us a great footprint with European merchants to introduce and integrate NFC in alternative payments with existing infrastructure," said Pete Bartolik, a spokesman for Verifone. "We have an intense focus on mobile payment at this point in time. We are working with all traditional and alternative players in the space to find ways to utilize mobile techonology and payments."
With mobile operators and financial institutions pairing up to make mobile wallets a reality via NFC, companies that provide the hardware and provide the security management services for payment transactions over NFC are seeing a greater demand for their products and services.
Gartner estimates that 50 percent of smartphones will have NFC capability by 2015, and the NFC semiconductor revenue will be more than $1 billion.
"There is a real explosion in the handsets coming out," said Jeff Miles, vice president of mobile transactions for NXP Semiconductors "We're going to see the number of handsets reach critical mass in the next year or two."
NXP provides the "secure element," or the encrypted chips that store the users' personal information to make payments. NXP is one of the major providers for secure elements and NFC chips, said Hung.
NXP chips can be found in Google Wallet, the Nexus S, Microsoft's Windows 8 tablet coming out next year and future smartphones from Sony Ericsson.
Another major player in providing the secure element for NFC enabled devices is Inside Secure, said Devlin.
Inside Secure announced in mid-December that it would provide its NFC products and services to Intel In October the company also said it would ship more than 10 million NFC chips; however, the company did not report who the recipients are.
Other companies that are major players in the NFC technology space are Gemlato and Oberthur, which are trusted service managers (TSM) that provide digital security for the secure element. Isis announced in December that Gemalto will provide TSM service for the mobile platform.
Although mobile wallets are being hyped lately, they probably won't be the first way NFC technology is adopted, Devlin said. That's because companies are still developing business models for mobile wallets and because there is a lack of infrastructure needed to implement mobile payments.
"The technology is there, but it's also an issue of control, influence and branding," Devlin said. "There are additional security requirements and different business relationship issues as well for mobile payment to work. There are the issues of who controls it, who manages it, who owns the customer and who can charge for part of the service."
One way NFC technology could potentially be adopted first is in gaming because it does not require the secure element required for payments, Devlin said.
Gaming and Entertainment
NFC technology in games is an untapped market, but it could catch on quickly, Miles said.
One way NFC could change the way gamers use mobile devices is by allowing them to interact with one another and with physical objects that have NFC tags.
Rovio Entertainment Company, the maker of the game Angry Birds, is already using this technology on Nokia's NFC enabled phones.
Gamers playing Angry Birds Magic with the an enabled Nokia C7 device can open new levels by tapping on another gamer's NFC-enabled phone. Rovio is also working on putting NFC tags in its Angry Birds toys so that new levels can be unlocked when gamers taps their phones on the toy.
NFC technology can also be used for 'pairing,' Hung said. In gaming, 'pairing' consists of joining a game with another player, either playing with or against them by tapping the phones together.
NFC could also be used to pair mobile devices with accessories, such as speakers with NFC tags in them or even a TV with NFC technology, Hung said. Once the mobile device is tapped to another NFC enabled device the media streaming on the phone, such as music or other media, would play on the accessory that's tapped.
Social Media and Marketing
Facebook, LinkedIn , Foursquare, and other social networking sites are likely to use NFC technology in the realm of location-based services, Devlin said.
Instead of running an application on a mobile device to "like" something on Facebook or "check in" on Foursquare, mobile users will be able to tap their phones on a NFC tag wherever they are and the task will be complete, Devlin said.
Mobile users could also "friend" people on Facebook or share personal content by tapping each other's NFC-enabled phones together, Hung, said.
Foursquare has already rolled out this technology to some degree. Foursquare on the Symbian operating system for Nokia smartphones is NFC-enabled and allows for quick check-ins by tapping the phone to a NFC tag where available.
"It becomes a more convenient way of interacting with objects," said Miles. "It also becomes a way for people to interact with brands."
Mobile users could soon be able to tap on a product that has a NFC tag on it with their NFC-enabled phones while inside a store and receive information instantly about the product. Mobile users could also interact with brands by tapping a tag to "like" a product.
"The best way to think about NFC is as if it's a physical 'cookie' for the real world," Hung said. "You know cookies keeps track of where you go online, you leave a footprint, you can be tracked. NFC allows merchants to see a physical cookie in the real world. It can identify who you are, what your interests are based on where you go. It provides an incentive for a retailer when you check in at a physical store because it lets them know a little bit about you so that they can better target your interests."
Besides "check-ins," when a consumer makes a purchase with NFC technology via a mobile wallet, the retailer can also treat the mobile device as a loyalty card, offering the consumer deals.
Using NFC technology at the point of sale for marketing purposes could also be a saving grace for mobile wallets' struggling business model, Devlin said.
"There may not be huge money to be made on payments itself right now, but loyalty, retail and marketing may generate revenue," said Devlin. "What people are searching for and how they are searching — that is a strong way to target them in advertising, which they effectively select, that gives them a much more valuable service that they can offer to a potential partner."
Expect focus on virtual wallets in 2012
London Free Press
Here are some tech developments to look out for in 2012.
The proposed amendments to Pipeda, the Canadian federal-privacy legislation, will be passed. Several of the amendments are long overdue, and will give some practical relief to business, without any compromise to personal privacy.
The change with the most visible effect will be the requirement for a business that experiences certain privacy breaches to report the breach to the privacy commissioner or to the individuals whose information may have been compromised.
The federal anti-spam legislation expected to be in force in 2011 is still waiting for regulations to be passed before coming into force.
The draft regulations received a lot of criticism, and may be revised prior to the act coming into force. The act will be a compliance headache for many organizations, unless the regulations effectively narrow the broad definition of spam.
The act is intended to provide tools to stop what we all understand to be spam. But the act defines spam to include e-mails that many businesses or charities routinely send that the recipients probably would not consider to be spam.
The smartphone and tablet revolution will continue. Whether you are a fan of Apple, Android, or Windows Phone 7 (yes, Microsoft is still in the phone game with a new operating system that has been favourably reviewed), there will be new choices to buy. This always-connected, location-aware, augmented-reality world will lead to challenges to privacy, advertising and business models.
We will start to hear more about digital wallets and near-field communications (NFC). Our smartphones will eventually become our wallets and credit cards, allowing us to pay at stores like a tap-and-go card.
North America lags behind other parts of the world in near-field communications, but expect to see more phones with this ability on the market this year. There is some speculation there could be some near-field communications wallet promotion around the Olympic Summer Games in London, England.
The players in this field may extend beyond the traditional banks and credit-card companies. Companies such as Google and cellphone carriers are trying to get a part of this business. If we have choices, we need to watch to ensure we get the same protections for lost or compromised phones as we now get for lost cards.
Another buzzphrase we will hear more is "the Internet of things." Sensor technology, and electronics in general, are becoming more pervasive and cheaper. So in addition to connecting to people and websites on the Internet, we will increasingly be able to connect to things such as our home thermostats and appliances. At the same time, voice control and gesture control will lead to new ways to interact with our devices.
Getting Customers and Merchants to Adopt Mobile Payments
PC World
Along with mobile payment systems come worries about fraud, identity theft, and merchant liability. What are mobile payment providers doing to alleviate these concerns?
You may increasingly pay for things in 2012 with a smartphone, thanks to NFC technology and mobile payment systems like Square Card Case. But both consumer confidence and merchant adoption need a boost before the masses use iPhones to pay for their morning Starbucks.
The Merchant Liability Question
Online merchants have been used to assuming the liability from cardless transactions for some time. This means that if someone purchases a product and you ship it as an online merchant, you have little recourse in the event of a chargeback, and are at the mercy of the credit card company.
According to the credit companies, a mobile NFC payment is a card-not-present transaction, and the liability rests with the merchant, something that retail businesses aren't used to. Square addresses this by making itself the merchant of record, and PayPal offers a Seller Protection program offering to go to bat for merchants that have been subjected to fraudulent chargebacks.
This makes the question about adoption of mobile payment systems a multi-pronged one; consumers may still be protected, but will traditional merchants want to accept the liability that they currently don't have?
PayPal
If you walk into select Starbucks cafes today, you can use your PayPal account to pay for coffee using your Starbucks mobile app. That's about as far as it goes, and there is no NFC involved in that transaction yet. If trials in Sweden work out with PayPal InStore, that may change. PayPal currently extends Seller Protection to all of its U.S. sellers, through which it covers unauthorized transactions. PayPal advises merchants that they should get a signature for payments over $250, and it's too early to say if that will change with PayPal InStore.
For mobile safety, lock down your phone with a password when it isn't in use. PayPal doesn't save any of your information on your device, so your financials are never shared. You log in with your email and password, and you don't pass along your credit card information at any point. If you lost your phone, someone wouldn't have access to your data.
Square
Square offers an innovative concept that lets you send and receive payments with a smartphone. Merchants can purchase Square's Card Reader, and pay Square 2.75 percent per swipe of a credit card. This is attractive to micro-businesses that may not otherwise accept credit cards, but for existing retail businesses the processing rate is a full percentage point above the best bids I could find at feefighters.com. Unlike those services, there are no potential hidden costs or monthly fees with Square, and payouts come the next day rather than taking weeks.
If you and your customers both have the Card Case app installed, customers can pay through the application on their handheld, and fund the purchase behind the scenes; no dollars change hands until put into the merchant's account by Square.
Google Wallet
Google Wallet works with Citi Mastercard or a Google Prepaid Card that you can fund with any other payment card on the client side, and a Mastercard PayPass on the merchant side. Google Wallet forces a password on the app so that your information is kept secure.
On the merchant side, you need a tap-and-pay (NFC) terminal to take advantage of Google Wallet. Google Payments offers merchants a deal on upgrading to a tap-and-pay terminal and does not charge merchants for using Google Wallet, since it works in conjunction with your current point-of-sale system.
We're not at the point where we can pay for just anything with our smartphones yet. It may be an entire generation before physical credit and debit cards become extinct. But when they do, hopefully it will be more convenient for merchants and consumers.
Global Sales of NFC Phones to Surge 128% in 2012
Taiwan Economic News
Fueled by increasing usage of mobile payment services in developed countries of the world, global sales of NFC (near field communication)-enabled phones are estimated to total 80 million units in 2012 for a 128% growth compared to 2011, according to the global market analyst IMS Research.
NFC technology, in fact, has been heavily promoted by telecom service companies worldwide since several years ago, but has yet to become as sought-after as expected. For instance, the NFC-based service i-Mode Felica, the world’s first mobile payment service incorporating card key verifications launched by NTT DoCoMo, one of Japan’s leading telecoms in cooperation with Sony, proved a failure in many countries excluding Japan.
IMS Research indicated that one reason why NFC-based services, despite years of promotions, remain globally unpopular with handset users is the technological obstacle to fusion for comparatively bulky NFC chipsets with feature phones, which is especially significant when market trends have moved towards smaller-sized, thin and light handsets over the past years.
Besides, the market researcher noted, financial firms’ inertia in adopting mobile payment systems inaugurated by telecom companies is also another hindrance to the commercialization of NFC technology. Therefore, development of the market for NFC-based services and related phones has progressed very slowly as a result.
However, the market seems to simmer starting in 2011, as Google has actively promoted its Google Wallet, a NFC-based mobile payment system built in Android, and intended to improve it with a system for recognition of user’s biological patterns for better online payment security.
Perhaps following Google’s footstep, U.S.’s big three telecom service providers, namely AT&T, Verizon and Sprint, have also announced the joint development of ISIS, a mobile commerce network that is enabled for NFC-based mobile payments via smartphones and scheduled to be operational on a trial basis in the first half of 2012. Riding on the wave, the world’s major smartphone developers, including Samsung, Nokia, RIM and HTC, have also launched a number of NFC-enabled phones over the past year.
In regard of the uptrend, IMS Research projected sales of over 35 million NFC-enabled smartphones for 2011. The market researcher furthered that the number may sharply surge to 80 million units in 2012, partly because of the launch of ISIS in the U.S., and partly because of the opening of London Olympics, which will provide a venue for the newest NFC technology and applications from different companies and organizations, including Telefonica UK, Samsung and Visa.
Docomo, KDDI, Softbank establish Japan NFC consortium
TelecomPaper
Japanese mobile operators NTT Docomo, KDDI and Softbank Mobile established the Japan Mobile NFC Consortium to coordinate the adoption of multiple international standards for near field communication (NFC) technologies incorporated in their mobile devices and services. Japan's three mobile operators already offer Osaifu-Keitai (wallet phone) mobile services based on the contactless-IC smartcard called FeliCa. Overseas, however, mobile operators and service providers are increasingly adopting Type A and Type B standards to develop growing markets for NFC services.
In view of this worldwide trend, the consortium intends to work with mobile industry groups in Japan, including service suppliers and handset manufacturers, to incorporate compatibility with the Type A and B standards in the Japanese mobile ecosystem. By ensuring compatibility with multiple NFC standards, the consortium aims to free mobile users in Japan, both residents and international travellers, from having to concern themselves about different NFC service standards. At the same time, it seeks to create an environment in Japan where service providers can offer efficient, low-cost NFC services based on common standards and rules adopted by the three mobile operators.
PayPal Tests NFC Payment App in Sweden
Wall Street Journal
Near field communication payments are seen by many as the route to replacing cash for many transactions. The idea is that the consumer waves a device such as suitably-equipped cellphone at a reader to make a payment Mobile Payments Today reports that not everybody is equally enthusiastic: Earlier this year, John Donahoe, CEO of PayPal’s parent company, eBay, dissed NFC by saying the acronym stands for “not for commerce,” and NFC was notably absent from the offline strategy PayPal unveiled last month.
But it looks like PayPal isn’t completely opposed to NFC for offline commerce.
PayPal has announced today that it will be testing a new NFC mobile payment application in Sweden over the Christmas holidays to bring NFC payments to the point of sale. As a part of the test, PayPal is partnering with two Swedish retailers: Alpingaraget, a leading retailer of ski and sports equipment and the electronics store, Webhallen.
While an NFC-pilot program may sound surprising given PayPal’s apparent ambivalence toward the technology, [PayPal's Head of Consumer Engagement Marketing in Northern, Central and Eastern Europe, Catrine] Rhenberg said the In-store effort is a part of PayPal’s overall strategy.”
Considering all the new technology being used today and the changing consumer behavior, there is no doubt that retailers need to have a true multichannel strategy,” Rhenberg said in an announcement about the program. She added that PayPal is dedicated to supporting merchants making the most of the effort.