Dec 13, 2013Feig Electronics a manufacturer of RFID readers, antennas and passive RFID tags, expects major growth in the electronic-payment market in the United States, following a trend already underway in Europe. To that end, the company is preparing for the growth to follow by relocating its U.S. headquarters to a new, larger facility—dedicated to sales, marketing and technical support—and by increasing its production capacity in Europe. The German company manufactures low-frequency (LF), high-frequency (HF) and ultrahigh-frequency (UHF) passive RFID tags and readers for supply chain management, retail, health-care and payment applications, and has seen some growth in all of those areas, according to Klaus Schoeke, Feig's national sales director. However, he says, the most significant market expansion is in contactless payment systems consisting of Near Field Communication (NFC) RFID readers for deployment at the point of sale (POS), as well as payment cards containing passive NFC RFID inlays. In the future, however, he expects that more often, consumers will not use contactless cards, but instead will simply tap their NFC-enabled phones against POS readers to pay for purchases.
During the past year, the company has released four new OBID HF RFID readers designed specifically for NFC payments, which a number of companies in Europe are currently using for collecting contactless payments, typically at kiosks or vending machines. In Europe, the traditional magnetic-stripe credit card—still in use in the United States—is being replaced by contact smartcards, Schoeke says, while trends in the region point toward major adoption of NFC-based contactless cards within the next two years. Another trend in Europe is the use of a prepaid credit card with a specified amount of money loaded onto the card's chip (either NFC or contact), which then transmits that data to an NFC or contact card reader. The credit card enables users to make payments without carrying cash, while reducing the card's fee to one or two cents per transaction, as opposed to the 20 or more cents charged to vendors by credit card companies when a card is used with an account that must be accessed digitally to authorize a payment. Visa Europe, for example, offers a prepaid card that can be purchased at banks, websites and some retailer locations. The card can be disposable, or it can be reloaded once the balance reaches zero.
The roots of the electronic payments trend are in the Europay, MasterCard and Visa (EMV) global standard for interoperability of chip-based credit and debit payment cards, both contact and contactless, first published in 1995. For the past several years, Europe's credit and payment card industry has primarily been utilizing the contact card compliant with the ISO 7816 standard (as of mid-2012, there were 1.55 billion chip-based contact payment cards in use worldwide).
Schoeke says mag-stripe-based credit and payment cards will not be accepted by many merchants in Europe within the next year or two, and that credit card companies will increasingly offer NFC capabilities in chip-based cards issued on that continent. On the other hand, he says, the United States is poised to skip the contact chip-based phase for credit cards, and will move directly into NFC payment solutions. The reason, he explains, is that NFC offers the opportunity for consumers to also use their mobile phones for payments, as long as the phone includes an NFC reader.
In Europe, the vending machine market has increasingly employed NFC-based solutions, and Feig provides the technology used in those systems. A growing number of Europeans, Schoeke adds, are using preloaded cards (either with contact chips or contactless NFC RFID inlays) as an alternative to standard credit cards. In the United States, he notes, there is still no consensus regarding how banks and credit-card companies will manage the payment data for contact and NFC cards. Although several payment solutions have been deployed, they are limited in scope, and an infrastructure for managing software and financial data has not been created for large solutions that involve multiple banks or credit-card companies. Once financial institutions create that infrastructure, he says, Feig intends to be ready to respond to the growth in demand.
Feig carries out all of its research and development at its Germany facility. Approximately 20 percent of its staff consists of R&D-based employees, with the goal of responding with agility to market changes. This month, the firm also announced that it is working in collaboration with North American business partners as part of their research and development, though it declined to provide specifics.
In addition to its 28 unique NFC readers, Feig sells about 100 different models of UHF and HF RFID readers. These will include a new HF handheld reader for the library market, to be released in spring 2014, as well as a new UHF interrogator for the logistics and retail sectors, intended to fill a gap between large, industrial-styled UHF handhelds and small, more aesthetically pleasing models often preferred for use in stores. The company also supplies custom-designed and -developed electronics with RFID or NFC readers, for use in health care and other markets.
Two of the new HF readers released this year are the OBID myAXXESS flatOne, a contactless-payment device designed to be mounted in ticket kiosks, car-charging stations, ATM machines and vending machines, and the OBID myAXXESS addOn, for retrofitting existing payment terminals in retail stores. Both readers have integrated antennas.
However, Feig expects the greatest growth in demand for its NFC RFID readers to be not only for payments, but also for identification. For instance, several countries in Europe (including Sweden and Germany) are issuing national identity cards for their citizens, containing embedded 13.56 MHz passive HF RFID chips that link a unique ID number to that individual's identity and date of birth. In this way, some vending-machine companies are exploring the possibility of installing cigarette and tobacco-product vending machines in public places that would require an individual to present an ID card to prove his or her age prior to making a purchase.
With the anticipated growth, Schoeke says, the company has also tripled its production capacity in Germany. Although that capacity has not grown sufficiently to match that increased demand, he adds, it has grown steadily.
Earlier this month, Feig's U.S. staff moved into the new, larger facility, located in Duluth, Ga., near Atlanta. The site, which is 20 percent larger than the previous facility, includes additional space at the same location that can be rented, as needed, for administrative purposes. The company declines to indicate how many employees will be housed at the new facility, or how many were located at the previous site. Manufacturing will continue to be performed in Germany, the company reports.
