11/5/2009 4:18:00 PM
Contactless payment by mobile
What is contactless payment by mobile?
Also called touch and go payments, it offers an alternative to cash by allowing you to use your phone for small payments by touching in or swiping it like an Oyster card. It is based on near field communication (NFC) technology of the type already used in some VISA credit cards. This may not sound too enthralling, but it opens up a world of possibilities for services that can be used on, and sold with, a phone – opportunities the whole industry can benefit from.
How does it work?
Contactless payments use NFC technology to allow devices to swap information over very short distances of up to 10cm. A special Sim card holds information about the user’s account, which is passed on via a transmitter in the phone, working over short-range, high frequency radio waves.
How can it be used?
You can buy your coffee, for example, in Starbucks by swiping your phone. When dealing in small amounts, there is no requirement to enter a pin. But to protect users, only a dozen or so small transactions can be made between full-blown transactions requiring a pin. That way, a thief can’t steal your phone and empty your account with a million small transactions.
What other uses are there for the technology?
Applications will be developed for businesses to run loyalty and special offer programmes using this technology. It is going to become a big part of digital marketing as a result. Credit can also be passed from phone to phone – so businesses and tradesmen will be able to take payments in this way – and it will make topping up the kids’ phones (or giving them pocket money), well… child’s play. In countries like Kenya, Vodafone is using this technology to pass large amounts of money between migrant workers and their families, so the opportunities are large as well as small. The Government has set a target to make the 2012 Olympics the first cashless Olympics, using this technology.
Who is going to benefit?
There is going to be a market in selling contactless payment applications to mobile phone subscribers. And the thinking right now is that retailers will play a key role, receiving commissions for their trouble.