Near Field Gains Momentum With Standards Support

Companies are exploring near-field communication (NFC) technology to spur mobile payments using smartphones. While mainstream adoption is still years away, several recent announcements show that the idea is gaining traction despite lingering security concerns.

Research in Motion (RIM) has partnered with Spanish telecommunications giant Telefonica to roll out a pilot programme that would allow employees to make electronic payments and gain physical access to their workplace using their BlackBerry smartphones. Under the pilot, the 350 Telefonica employees will also get automatic account balances and transaction confirmations directly from their banks after making a payment.

Smarter smartphones

The process is similar to other contactless payments in the market, such as MasterCard’s PayPass, where consumers just wave their credit card in front of the reader. Startups such as Square are also rolling out services that would allow smartphones to accept payments.

“We are getting ever closer to the point where our customers will be able to take the contents of their wallets and put them on their mobiles,” said Matthew Key, CEO of Telefonica Digital.

Just last week, Google announced it will phase out the Google Checkout payment platform in favour of the new Google Wallet, a US-only payment service, it launched in September. With the Google Wallet application, users launch the application on their smartphones to activate the near-field communication (NFC) antenna and wave the phone near a payment sensor. The application wirelessly debits funds from linked credit cards. It can also be used for online purchases.

Google Wallet is not yet widely available as the application works only for Nexus S users who also have a Citibank MasterCard or a Google prepaid card. The NFC payments are accepted only at merchants that have installed MasterCard’s PayPass readers.

Google also announced that it will partner with online vendors such as Fandango.com and MovieTickets.com to allow consumers to use Google Wallet as a payment option when checking out.

Some vending machine makers have already moved to take advantage of Google Wallet. Vending machines equipped with Cantaloupe Systems “seed” wireless devices are automatically compatible with Google Wallet, Cantaloupe Systems announced in September. Consumers with an NFC-capable smartphone and Google Wallet application will be able to make purchases by tapping their phones at the machine, Anant Agrawal, chief marketing officer of Cantaloupe Systems, told eWEEK.

Vending machine operators are interested in cashless mobile-payment options to encourage consumers to buy even when they do not have coins. The capabilities are already embedded inside Cantaloupe hardware, making it easy for operators to roll out the new technology. Toward that end, Cantaloupe Systems also plans to accommodate other NFC payment systems on their platform as they come to market, Agrawal said.

NFC adoption slow

Despite the interest in NFC, its adoption lags due to the fact that the technology is still evolving. Merchants are wary of investing a lot of money in readers when there are no standards defined for NFC.

GSMA, a global organisation of wireless carriers operating GSM mobile networks, announced that 45 carriers around the world are supporting standards for NFC payments and have committed to supporting and launching services based on those standards. The group also released handset and SIM specifications for the technology, which would make it more likely that NFC-based services that are interoperable with each other will become widely available.

“The crucial questions now will be whether these carriers stick to their word, and whether handset makers, other infrastructure providers and consumers follow these carriers’ lead,” PaidContent noted.