Insight
M-Commerce NewEra
Ringing in a
By: Chris Brown
oose change. Shrapnel. Smash. Whatever you call it, it might soon be a thing of the past. The latest buzz in the payments industry is about how to transform the mobile phone into an everyday payment device capable of replac- ing traditional plastic cards or even cash. Card issuers and retailers, as well as unconventional players like mobile phone networks and retail- ers, are forging partnerships or becoming com- petitors for the first time. The constant rollout of new technologies in the area of communications, the growing saturation of the global mobile phone market and the increasing affordability of infor- mation technology and associated devices are al- lowing for the expansion of m-commerce. M-commerce now has the potential to revolu- tionise the way consumers do their shopping while allowing businesses to extend their mar- keting reach to a ready client base. There are several major stakeholders driving mobile payment approaches. Banks have the ex- perience to develop payment products and are trusted as payment experts. Card operators like Visa and MasterCard have a big interest in the development of m-commerce and as their pay- ment schemes are already present at many point-of-sale locations, they are likely to be es- sential contributors to the development of m- commerce. Mobile network operators are seeking new revenue streams, and they can be significant contributor to m-commerce because they have a consumer base, control the mobile
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networks and can load the required applications and functionality onto smart-phones. Near field communication (NFC) is consid- ered the technology most likely to replace the customer’s wallet with a mobile phone. Phones containing the built-in NFC chip can communi- cate purchase information wirelessly at point- of-sale terminals. A significant advantage of NFC mobile payment is the speed of the trans- action. Customers just tap or wave their phone and payments are transferred instantly. NFC now would appear to have the capacity to re- place cash in locations characterised by high- frequency, low-cost transactions. NFC is appearing in more and more high-end phones like the Samsung Galaxy S3. Samsung and partner Visa tested NFC pay- ment during the 2012 London Olympics. Every Olympic athlete was issued with a Galaxy S3 with in-built Visa PayWave and every Olympic venue was stocked with tills where payment was possible with just a flourish of the phone. The phone’s NFC technology talks to the specially- equipped NFC tills. The phone and the NFC ter- minal don't even need to touch to make a payment: users just tap the Visa icon on their phone and hold the phone to the till. Transac- tions over £20 require a pass code and past transactions and account balance can be checked on the phone. The money comes from any spec- ified debit or credit card. Users associate a credit or debit card with the Visa Contactless Payments app and every time they touch the phone on a
till, that card is charged. The general public will be able to use the S3 and PayWave to pay for things eventually, but in summer 2012, the facil- ity was restricted to Olympic athletes. Peter Ayliffe, CEO of Visa Europe, predicts that the rapid development of the technology around cashless payments will mean that m-commerce will overtake more conventional payment meth- ods within ten years. This means putting in place an entire new set of financial infrastructure at banks and retailers to facilitate the new way to pay. Ayliffe says that Visa is trying to enable this by getting retailers to change their front-end systems so they can accept contactless payment. He also maintains that it is necessary to get banks to start issuing contactless cards and work with the mo- bile-phone operators and hand-set providers to put the entire infrastructure in place.
Orange has just become the first network in the UK to introduce NFC technology to allow customers to make payments using their mobile phones. Users need a MasterCard or Visa debit or credit card to add credit onto their Orange Quick Tap account. They then use the Quick Tap App on their phone to manage the top-up process and keep track of all transactions. Or- ange says that there are plenty of places that accept its contactless payments, including restaurants like Little Chef and McDonalds, cafes Pret and Sub- way and bars like the Slug and Lettuce. The Quick Tap App allows users to add only £100 credit at a time and the maximum amount that can be spent in one transaction is £20.
New European Economy
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