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Cell Phone Service Providers Start Global NFC Initiative

Members of the GSM Association have already launched trials in France, Taiwan and Turkey in which participants use RFID-enabled phones to pay for goods and services, with plans to add eight additional countries later this year.
By Claire Swedberg
In each pilot, the phones are being utilized in the same way—if the phone is turned on, the participant punches a four-digit password into the keypad at the time of a sales transaction. In France, this process is unnecessary for purchases of less than €20 ($40). If a customer prefers, he or she can use a keypad on the POS terminal to input their password, rather than using the phone keypad. In that case, the mobile phone would not need to be on, or even to have its battery charged, to operate as a payment device. When the sales amount is totaled, the user taps the phone next to the sales terminal, and the approved transaction amount is automatically deducted from the customer's bank account, similar to a debit card system.

In all three countries, the systems have been operating smoothly. "It's working quite well," Betoin says. "There have been no major issues." Although the pilot's primary focus is on testing the technology, the next step for all participants, he notes, is to address the business model, with banks and telecommunications providers agreeing on who would assume the role of service manager between the bank and telecom company. That task could be handled by a third party, the bank or the mobile phone operators, or a combination of all three.

Betoin points out that the telecommunications firms have been waiting more than a decade for contactless payments in mobile phones. Opinion polls of consumers, he says, indicate the system would be well received and also provide convenience.

Although Betoin says it would be hard to measure the time reduction of an NFC phone transaction, compared with a debit card transaction, he says just the convenience of using a cell phone to make purchases, rather than a payment card or cash, makes the system worthwhile for customers.

According to Betoin, Inside Contactless is currently the only company manufacturing NFC chips for mobile phones that meet the requirements of the GSMA for this pilot. Those requirements include the single-wire protocol between the chip and the SIM card, and the battery-off mode allowing the system to operate without power from the mobile phone battery.

RELATED ARTICLES Other companies, meanwhile, are testing the use of NFC phones to make purchases and other types of transactions as well. In Spokane, Wash., an NFC pilot not affiliated with, Pay-Buy-Mobile is being launched this month by U.S. Bank using cellular service from AT&T and T-Mobile. An undisclosed number of cardholders are using Nokia 6131 handsets embedded with NFC chips to make payment transactions at about 70 locations in movie theaters and fast-food restaurants. The phones can also be utilized at some vending machines at Gonzaga University.

In a separate pilot, San Francisco's Bay Area Rapid Transit (BART) mass-transit system, working with Sprint, launched a technology trial enabling subway commuters to use Samsung NFC cell phones to ride trains and purchase food at local Jack in the Box restaurants (see SF's Transit System Offers Commuters Fast Access to Subways and Sandwiches).

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