With Visa and ANZ announcing their four week trial of NFC mobile phone payments this week, it seems that the time is ripe for contactless payments through phones to take off. And according to Director of Innovation at Visa in Australia, Ben Pfisterer, the time for mobile payments may be even sooner than we expect.
“We’ve been working with Telcos and manufacturers around the world to get the technology built into the device, but in the meantime we’ve been working with other vendors to come up with solutions [like the one used in the trial] ,” Pfisterer told us in a phone interview this week.
While it seems like we’ve been waiting an age for NFC mobile payments to roll out across Australia – especially given that the Japanese have been using the technology for years – the infrastructure has actually been rolling out slowly over recent times, which puts us in a pretty good position for the rise of NFC.
“It’s interesting to look at what needs to be done to make [mainstream NFC payments]happen: One is point of sale – there are in excess of 25,000 PayWave readers out there now, and that is growing by the day. Before it becomes ubiquitous you want to see them in every store, so there’s still some growth to happen there.
“Then there’s the handset side of things – so we’re not only seeing the likes of the Galaxy S and the Nexus S coming out with near-field communication, we’re also seeing devices like [the NFC case used in the trial]which helps bridge the gap and enable a phone to pay automatically.
“And the third part is working with all the banks to make sure their systems can work securely and remotely and pair your payment details to your phone. And we know that works, we’ve trialled it before.”
Of all the things mentioned, Australia is in a pretty good position – our NFC point of sale network is rapidly expanding thanks to both the Visa PayWave and the Mastercard PayPass push across retail; the Nexus S smartphone has already launched in Australia, and it’s unlikely the NFC-enabled version of the next Galaxy S won’t include the NFC chip when it launches later this year. Both Nokia and RIM have openly stated they will include NFC in future handsets, and the elephant in the room – Apple – has more NFC rumours swirling around it than the company has fanboys. Finally, the banks all seem to be fairly positive on introducing the technology to cards, so there shouldn’t be too big a gap to bring the same technology to phones.
According to Pfisterer, the next step is seeing whether embedded chips or workaround options are more attractive to consumers:
“The main thing now is to see which horse wins the race about what device is preferred, so whether it’s embedded or whether it’s a solution [like the iPhone case] ”
One of the difficulties Visa acknowledge will restrict the mainstream take up of NFC is the perception of security. But the truth is that using your phone is in many ways more secure than using your credit card.
“This is the optimal level of security you can have on any payment… We all know that as a basic standard we can put pin locks on our phones, but at additional layers you can put additional pin authentication layers before your transaction if that’s what you like. You can also remotely shut the payment application down if your phone is lost.
“And additionally, our research shows that when people lose their phone, they know they’ve lost their phone within 20 minutes. But with a credit card they may take up to 24 hours to realise they’ve lost their wallet or a card within it. So in the end, the security story is perceived an obstacle, but we think it’s one of the best features it has.”
So perceived security risks aside, exactly how long will we have to wait before we can use our Nexus S or other NFC phone to make payments in Australia? Soon, according to Pfisterer.
“We’ll probably see over the next few months people start using it outside of this pilot, and then the commercialisation strategy depends on what happens with handset launches. So over the next 12 months you’ll see a lot of exciting developments.”