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NFC: Why 2012 is looking like the start for Mobile payment and Wallets
This is the second post in a series that NFCdog are writing about NFC for Clove Technology (first one here).
As mentioned in the first post, one of the key drivers for NFC has always been mobile payment and it now looks like 2012 will be the year when all of the work undertaken by the mobile and finance industries will finally come to fruition. The likes of Barclaycard (PayTag), Visa (Paywave) and Mastercard (Paypass) are all now extremely active in bringing this to their consumers. Paypal and Google Wallet have recently NFC enabled their applications and Apple have also filed patents for iWallet which is expected in 2013.
For the consumer, mobile payment can simply be seen as an evolutionary step from what many people have been doing online with services provided by their banks, credit card providers and others such as Paypal. Put simply it allows you to make payments from your mobile phone by having your credit/debit/online wallet details stored securely within your handset or perhaps on another device you always have with in your possession such as a wristwatch.
In practice the concept is very simple, to pay you simply tap a reader at a checkout with your NFC enabled device in a similar way that you would insert your card currently. For smaller amounts (less than £10-£15) this is all you would likely need to do, for larger amounts you would be prompted to enter your pin code as you would today for verification.
So why has this taken so long to come to market?
Firstly – Security, the first handsets that reached the market had one key component (known as the secure element) embedded in the device. The secure element provides the location for payment applications to be installed. However, by embedding this as part of the phones hardware this meant is if you switched phones then it would be more difficult to take your details with you.
A lot of the standardisation work occurring from 2007 onwards centred around moving the secure element to the SIM card. This allowed the mobile operators to be the trusted provisioner and also form partnerships with the main payment providers, such as those mentioned above.
Setting this up in terms of a whole end to end system takes a lot of time and proof of concept trials were needed as everything required extensive testing. No Payment provider would risk launching a service that they weren’t confident in or consumers weren’t comfortable or willing to use.
There are still some mobile wallet challenges in the UK as a proposed Joint Venture between Vodafone, Telefonica and Deutsche Telekom to develop an operator centric mobile wallet standard has been referred to the EU Commission as 3 and Orange complained it might infringe on fair competition. This however is likely to be resolved during the second half of 2012. Only this week O2 UK have announced their mobile wallet product which will be NFC enabled at a later date and Visa have announced their V.me wallet which would be available in the UK, France and Spain during Autumn 2012.
So, it looks like 2012 will finally start to see mobile contactless payment and wallets as a reality, also expect Microsoft and Apple to join Google in offering their own mobile wallet solutions in 2013, but it’s now safe to say the shift has now started.
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