The mass adoption of NFC (Near Field Communications) or contactless payments using a mobile phone will take time, but ‘the ecosystem is ready’ Orange’s VP of strategy and business development Daniel Gurrola told Mobile at a press event in Nice this week.
Just over a year after the launch of its Cityzi contactless payment service in Nice, Orange Group is now embarking on the commercial rollout of NFC across several cities in France and the UK during 2011 and 2012.
Orange Group intends to spearhead the gradual rollout of international NFC services by introducing more NFC-enabled devices to its portfolio. The company is aiming to get the majority of its customers onto the mobile payments service by next year.
Gurrola concedes that even though the technology may take time to gain mass adoption, it is a worthwhile investment.
He says: ‘NFC is not a product, it is an ecosystem and the ecosystem is ready. These institutions are realising the power that mobile has. They see the ability to reach customers wherever and whenever they want to and to have a deeper customer relationship. Mobile is the new channel that will enable enriched services and I think we are coming at the right time.’
Orange was the first European operator to market with NFC after the launch of the Cityzi in Nice, in May 2010. The system enables retailers, service providers and advertisers to offer NFC services such as payments, tram tickets and mobile promotions in the form of NFC tags using the platform.
Despite industry speculation over whether NFC services will make any money in the long run, Everything Everywhere remains optimistic.
Gurrola says: ‘From an Orange perspective our strategy is truly encompassing. We want to deliver services that continue to make Orange relevant in consumers’ lives whatever those services are. We see NFC as being part of that.
‘In terms of the revenue streams we expect, we think that the direct revenues from NFC will be substantial. When you compare NFC with other types of adjacent services, it is one of the largest revenue streams with very healthy margins.’
In a bid to guarantee an accelerated and mass adoption of the NFC technology, the operator plans to introduce attractive NFC-enabled devices to the market and establish the ecosystem further by bringing more partners on board to provide a wide range of offers and services. It will also grow the market to scale by collaborating with service providers, governments, and standards bodies.
The operator intends to team up with operator partners in the UK and across Europe and beyond to make sure that customers fully understand the capabilities of mobile contactless technology.
Everything Everywhere has already joined forces with rival operators O2, and Vodafone in June 2011, to form the UK mCommerce joint venture, which will help to develop NFC technology. The aim is to bring together the expertise and technology of the three operators onto an open platform to accelerate the development and delivery of new mobile marketing and payment services.
According to Everything Everywhere director of mobile payments Jason Rees, the operator is also working closely with a range of a retail partners in the UK in a bid to bring more offers and loyalty cards to the service.
Rees told Mobile: ‘The crucial thing is reaching the standards for services. Consumers need to see more services than just payments. They need to see loyalty, they need to see cashback and they need to see vouchers.’
Meanwhile, when faced with questions over possible security risks relating to hackers targeting bank details stored on the handsets, Gurrola insists that the Sim-based solution is the most secure way to manage NFC services, as details are stored on the SIM card rather than the handset. Once the SIM card has been removed, no sensitive data will remain on the phone.
Gurrola says: ‘The Sim card has proven to be a secure element over time, it continues to be that. Today your everyday credit card and debit card already uses the same technology that we use in Sim cards and of course has enhanced security.’
The Quick Tap service with Barclaycard in the UK allows users to add an additional pin to it, which acts as a further layer of security on top of what Orange already provides. Barclaycard also offers 100% contactless cashback guarantee, so if there is any fraudulent activity, customers can get their money back.
Rees explains: ‘Anything that is associated with fraud gets a 100% money back guarantee. Hackers target the weakest link, but I think that there will be far weaker technologies to target.’
Everything Everywhere is putting a lot of faith into NFC taking off, so will it work?
Rees says: ‘Everything Everywhere promised the investors £150m in incremental revenue by 2015. But for this to happen there needs to be a win for us, there needs to be win for the consumer, and a win for any service provider.’
Barclaycard’s Quick Tap payment service
What is it?
The UK’s first mobile phone contactless payment service launched by Orange in partnership with Barclaycard on 20 May 2011.
How does it work?
The service works via a downloaded app. Customers with a Barclaycard, Barclays debit card or Orange credit card can use the service to make purchases of up to £15 by simply tapping their handset against a contactless payment terminal.
Why use it?
To allow fast and convenient contactless payments throughout the UK.
£10 extra cash on mobile wallet on activation and cashback for three months.
Currently only available in a limited number of shops with payment terminals such as Pret A Manger, EAT, Subway and McDonalds.
Orange’s NFC handset range
Samsung Wave 578
Soon to launch in the UK. This Bada powered handset is currently available in France and Singapore.
LG’s first mass market NFC handset is only available in France, known as the LG Ego.
Better known as the Tocco Lite in the UK, it is the first handset to be offered with Quick Tap services.
Samsung Galaxy S II
The first NFC Android handset, the new variant of the S II is due to launch in France next month.