Mobile Payment Magazine

Contactless Payments Landscape

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By John Rozek —

Contactless cards have been hailed as the “next big thing” in the payments industry. With more than 17 million contactless cards already in circulation and 75,000 points of sale across the UK, it’s easy to see why many in the industry believe we are reaching a ‘tipping point’.

According to Visa, 2012 is the year that contactless will become a mainstream payment method in the UK. This will be fuelled, at least in part, by the 2012 London Olympics—the “cashless games.” More and more UK retailers, including big brands like Tesco and Boots, are now rolling-out contactless across their stores and many now believe that contactless—almost seven years after it was first introduced by the card schemes—is finally on the cusp of really taking off.

Some industry experts, however, believe that celebrating the success of contactless adoption is premature. They also believe that, despite the hype, there is still a lot of work to be done before cardholders really embrace this new method of payment.

Tipping point for contactless?
For the majority of cardholders, Chip and PIN is an ideal source of payment as it is secure and can be used in all locations; contactless gives them virtually no additional benefits. In addition, many do not know which of their cards actually support contactless, or which retailers accept it as a means of payment.

As many checkout operators are not trained in contactless they are less likely to promote it, and if terminals are damaged or not working properly it further hinders mass adoption.  And although the speed at point of sale (POS) of contactless is undoubtedly a positive, the benefit is largely aimed towards the retailer rather than the cardholder.

Contactless also has a £15 maximum spend limit which experts argue is too low; many shops have a £5 card minimum spend limit, which means that cardholders need to ensure that their purchases cost between £5 and £15. Raising the contactless spend limit would certainly help increase its popularity. Larger retailers do not have a minimum limit, so in many instances cardholders will be able to use contactless most times they visit certain stores.

London 2012
While there has been much talk to suggest that the London Olympics 2012 will drive contactless adoption, experts believe that the extent to which this will happen has been exaggerated. For those lucky enough to have secured Olympic tickets, it is unlikely that they will have access to more than one session, during which they will be far more focused on the event in hand than using contactless. Due to the scarcity of tickets the majority of people will have to settle for watching the Olympics on TV, further reducing the impact the events will have on contactless adoption.

Near Field Communication (NFC) will open up contactless payments to an adoption group keen to use technology on their mobiles, but again, many believe that contactless on its own does not have the same appeal. Smart phone users expect functionally rich apps to enhance their shopping experience and are used to one-touch payments over the internet for iTunes, Amazon, Google and so on; it would be very difficult for contactless to compete with this experience.

However, NFC is widely expected to enable “higher value payments,” where the customer is able to enter their PIN via their mobile.   Industry announcements are widely expected next year, really opening up the way to contactless payments via the mobile phone.

Mobile wallets will offer dramatically more exciting options than simple contactless. Not only do they allow users on the move to access financial accounts, but they also play an integral part in the development of digital commerce and banking. Initiatives such as Barclay’s launch of Pingit will drive person to person mobile payments and experts anticipate that the winning mobile wallet offerings will go viral!

Going forward
For contactless to be truly successful it needs to be part of a wider solution and not used in isolation. It needs to be convenient and quickly become mainstream. More importantly however, it needs to be promoted by well known and trusted industries such as public transport, where people can be assured and encouraged to use it as a convenient and safe alternative to cash.

About the Author

John Rozek

John Rozek of payment consultancy, Polar Moment.

John Rozek has over 16 years of experience working at the forefront of the payments industry. Working with Royal Bank of Scotland and NatWest, John led an industry leading cross-border implementation and ATM service delivery programme. He also led the team that introduced Chip and PIN to over 120,000 points of sale across UK. John was one of the founding members of Polar Moment and has played a key role in developing the organisation to become a leading provider of payments consultancy. He is a recognised name across the sector, delivering payment industry consultancy and business development services.

Garanti and Turkish Mobile Launch First Nationwide NFC SIM Mobile Payment Program

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Garanti and Turkish mobile network operator Avea recently moved from pilot phase to general commercial availability of their system to adapt existing mobile phones for NFC payments.

VeriFone Systems’ NFC contactless payment acceptance systems are a key interface between merchants and consumers’ mobile phones in Garanti Bank’s first-in-world rollout of a nationwide integrated NFC SIM mobile payment program.

Consumers can purchase and install NFC capable SIM cards that allow them to use their mobile phones for electronic payment at NFC contactless acceptance devices in merchant locations. VeriFone has supplied 10,000 NFC-capable devices to Garanti for merchant use.

“Garanti demonstrated that NFC is now commercially viable,” said Soner Casur, vice president and general manager of VeriFone South East Europe. “The merchant/consumer interface is crucial to success of NFC mobile payment adoption and VeriFone is thrilled to provide key payment acceptance solutions that make it easy to transition to this new era of mobile payments.”

VeriFone is one of the main suppliers of payment solutions to Garanti, with more than 150,000 systems implemented throughout Turkey. For NFC mobile payments, VeriFone’s PINpad 1000SE currently provide merchants and consumers with a field-ready solution for implementation of mobile payments.

VeriFone systems have been in use for Garanti’s existing Bonus Trink contactless payment system, which has provided bank customers with the ability to make payments using a credit card, key fob, watch or the Bonus Trink contactless sticker.

With the new add-on SIM card with antenna from Gemalto and Garanti pre-paid MasterCard PayPass that is loaded in the SIM manufacturing stage, consumers can immediately adapt existing and new mobiles for NFC mobile payments. This product is the first commercial add-on NFC SIM that supports open platform payment system around the world.

Source: Business Wire

Visa and Wireless Dynamics to Introduce iPhone Contactless Payment Solution for Europe

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Visa Europe and Wireless Dynamics Inc. have developed a mobile contactless payment solution that will bring Visa contactless payments to iPhone users across Europe.

The solution relies on Wireless Dynamic’s iCarte accesory. iPhone users simply attach the Wireless Dynamics iCarte, available through their bank or mobile operator, to their iPhone and download the companion Visa Mobile application for iCarte App from the App Store.

The iCarte accessory contains an antenna and an embedded Secure Element where the Visa mobile card is safely stored. This “card”, in turn, works with an app from the App Store to enable payments on the iPhone. Once the Visa mobile card is activated, consumers can start making purchases by simply launching the app and touching their iPhone on any contactless-enabled point of sale terminal across Europe, without the need to enter their PIN.

The iCarte accessory is designed to equip iPhone users with the tools they need to buy goods using mobile contactless technology from a growing number of European retailers. Visa Europe’s first deployment has been launched in collaboration with Yapi Kredi bank and Turkey’s largest mobile operator, Turkcell. Yapi Kredi customers equipped with a Turkcell mobile plan will be the first who can purchase directly from their iPhone at 40,000 contactless point of sale terminals in Turkey using their iCarte payment accessory.

The product is also being used in the UK with Visa staff in London with partners FIS, a leading provider of prepaid platforms, and Coventry Building Society. To further commercialize the accessory, Visa Europe will engage its member banks and partner mobile operators in Italy, France, Poland, Spain, Switzerland, Turkey and the UK, all of which have rapidly maturing contactless payment infrastructure.

Sandra Alzetta, SVP, Head of Innovation at Visa Europe said: “It’s clear from trials across Europe that mobile contactless payment is a strong and compelling customer proposition. Visa recognizes that consumers who use smart phones like iPhone are more likely to be early adopters of advanced payment technology. Given that the availability of a wide range of mobile devices supporting contactless services remains a key hurdle for take-up, we are overcoming this obstacle by bringing the capability to the iPhones already in their pockets.”

Ambrose Tam, President and CEO at Wireless Dynamics commented: “Working with Visa Europe to commercialize our iCarte accessories is a leap forward in increasing the number and types of mobile payment solutions. We’ve worked hard to design and build a feature-rich and appealing product for our partners and iPhone users across Europe.”

Recent consumer research of 4,200 people across Turkey, the UK, Italy and Poland confirms strong consumer demand for mobile contactless payments with 41 per cent of respondents stating that they “definitely would” or “probably would” sign up to use Visa mobile payments. Critically, this percentage increased to 57 per cent when directed to iPhone users, which demonstrates that the device is the ideal cross-over of target mobile users and consumers with positive attitudes to new payment technologies. The research also indicated that 87 per cent of this iPhone users surveyed would be willing to use an accessory to enable their device for mobile contactless payments.

The Wireless Dynamics iCarte accessory is compatible with iPhone 4, iPhone 3GS and iPhone3G on iOS 3.1 or higher. The iCarte Secure Element can be associated with multiple Visa accounts.

Source: Wireless Dynamics, Inc.

Discover Issues Contactless Payment Cards and Stickers to Members

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Discover card has announced that it will issue contactless credit cards and stickers, targeted at early adopters of its mobile technology. The cards, called Discover Zip were sent out to select cardholders during the first two weeks of November. More cards and stickers will be sent to additional cardmembers starting in January 2011.

Discover Zip is an payment solution that enables quick, secure transactions using contactless technology. Consumers simply touch a payment device, which is in the form of either a plastic card or a sticker that can be applied to a mobile phone or any other item, to a Zip-enabled contactless reader to make a payment.

According to Discover, there are more than 100,000 U.S. merchants that offer contactless readers that accept Zip transactions at the point-of-sale, including quick service restaurants, gas station and convenient stores, retailers and pharmacies, and public transit agencies.

“At Discover, we put a high bar on value to the customer, and are always evaluating technology solutions that make things faster, safer, and more convenient for our cardmembers,” said Mark Scarborough, senior vice president of cardmember marketing at Discover. “Given how tied consumers are to their mobile devices, we know they will appreciate the tremendous value and convenience Discover Zip contactless cards and stickers provide.”

Source: Business Wire

HID Gobal Announces New Contactless Payment Stickers

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HID Gobal announced today, the addition of a mobile sticker format to its family of contactless payment and identification cards.

HID Global provides solutions for the delivery of secure identity. The new stickers make it easier to add closed-loop payment and loyalty systems to existing automatic fare collection or retail systems, or to augment campus identification systems with new access control capabilities. They also can be affixed to mobile phones as a bridge to coming NFC mobile payment services.

“We continue to offer more ways to deliver secure access and conduct cashless transactions, whether with traditional cards or easy-to-use contactless stickers, and each of our credential form factors plays an important role as consumers seek more reliable and convenient secure identity solutions.”

Unlike other stickers, HID’s sturdy, adhesive-backed stickers include an internal ferrite layer that shields electronics from interference even when attached to items containing metal, such as mobile phones.

They come in a breakout ID-1 card format and can be printed with customer information including serial numbers, activation codes, messages, brand elements and/or promotional text and artwork.

HID Global offers print customization in low quantities, providing companies with an economical way to extend their brand presence. To meet existing customer environments, HID’s contactless payment and identification stickers are available with DESFire, MIFARE and iCLASS technologies.

“Contactless payment stickers enable users to experience the convenience and reliability of next-generation NFC-enabled mobile payment, now, by simply attaching them to mobile phones, MP3 players or other frequently carried items,” said David Nichols, Product Marketing Director, Credentials, with HID Global. “We continue to offer more ways to deliver secure access and conduct cashless transactions, whether with traditional cards or easy-to-use contactless stickers, and each of our credential form factors plays an important role as consumers seek more reliable and convenient secure identity solutions.”

HID Global’s contactless payment and identification stickers are available in both volume and sample quantities. HID’s sticker customization program allows customers to choose from a variety of printing, laser engraving, programming, artwork and contactless chip technology options, upon request. In the field, stickers may be printed with brand elements, custom designs or other information using desktop card printers such as the Fargo line of financial card printers with patented High Definition Printing (HDP™) technology. The single-use part can be discarded by the end-user after receipt.

Source: Business Wire

Commidea Processes 80% of Contactless Transactions in UK

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Commidea, a leading card payment processing solution provider in the UK, has announced that one million contactless transactions with a total value of more than £4 million have been processed using Commidea solutions so far this year. This means that over 80% of contactless transactions in the UK are processed by Commidea.

As Commidea and industry numbers indicate, contactless payments are on the rise. More consumers are ‘tapping’ their contactless cards at convenience retail and food outlets to pay for transactions under £15. The transactions take less than half a second and eliminate the need for handling cash, therefore reducing queue times and helping to increase sales.

In addition to the emerging trend of contactless payments, customer transaction volumes across Commidea’s systems as a whole have increased by 60% from this time last year. An average of approximately eight million transactions are carried out each week using Commidea’s card payment processing systems online and at customer locations including Blockbuster, EAT, TGI FRiDAYS, Lush and Thomas Cook.

These statistics illustrate Commidea’s growing customer base and the continuing trend of consumers using contactless, credit and debit cards instead of cash for everyday transactions.

“Contactless payments are on the rise particularly in the convenience payment sector and the figures show Commidea’s technology is at the forefront of facilitating this trend,” said Ian Rutland, Director of Marketing and Communication at Commidea. “We have always provided secure, easy-to-use technology for our customers across the retail and hospitality industry and this commitment continues in new payment types such as contactless. Our solutions help retailers to meet customer demand for convenience by accepting card payments for items ranging from smaller ‘impulse’ buys up to luxury and holiday purchases.”

Source: RealWire

DeviceFidelity

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DeviceFidelity solution suite works by simply plugging into a customer’s mobile device. Issuers don’t need to change a thing, allowing them to offer a simple contactless function to their customers.

Once activated, the customer taps any merchant’s contactless terminal with the phone. Transactions are conducted and approved over existing contactless networks utilizing the networks approved standards. Issuers can rely on their preferred networks for security, speed and reliability.

The entire user experience is controlled by the issuing financial institution and allows the issuer to offer value added services on top and connected to the contactless function.

Open Application Platform

DeviceFidelity provides a portable application distribution platform that is designed to integrate with current and future issuer applications.

  • Open API for application integration.
  • Simple web based design for platform independence.
  • Updateable through mobile web or PC.
  • Fully customizable user interface.

More information: DeviceFidelity