MasterCard is recruiting customers of 7-Eleven’s Speak Out mobile-phone service for a trial that lets them download a contactless-payment application allowing their phone to function as a PayPass-enabled MasterCard credit card. As participants join the trial—some have joined already—they will each receive a Nokia 3220 mobile phone, along with instructions on how to configure the phone for contactless payments.
Once the phone is set up, the participant can use it to make purchases at any of the 32,000 merchant locations worldwide that accept MasterCard’s PayPass RFID-enabled payments. MasterCard is seeking participants from all over the world, though many will be based in Dallas, home to 7-Eleven’s corporate headquarters and technology partners, including Nokia’s U.S. center.
When functioning as electronic-payment devices, the Nokia 3220 mobile phones used for the trial employ near-field communication (NFC), a high-frequency RFID protocol for mobile electronic devices. The technology has been in development for a number of years, and the industry association NFC Forum has established standards for how NFC tags and readers share data. Early technology trials in Europe and the United States proved that consumers are interested in using NFC-enabled phones to make purchases, as well as for multimedia applications.
For this new trial, MasterCard is working with Giesecke & Devrient, a German firm that develops secure platforms for electronic transactions. The goal is to test the effectiveness of Giesecke & Devrient’s over-the-air NFC account-payment configurations solution, designed to enable consumers to dial up a specified phone number and quickly link a payment account, such as a credit- or debit-card account, to an NFC-enabled phone. This allows them to use the phone just as they would use an RFID-enabled payment card.
To get previous NFC technology trials up and running, project architects configured the payment accounts on behalf of the testers. While this approach made the pilots easy to deploy, it is not one that could scale to a mainstream deployment with thousands or millions of participants.
In a report released last spring (see NFC Is Appealing But Lacks Infrastructure), market-research firm ABI Research pointed to the lack of a streamlined approach to NFC phone-payment initiation as one of the hurdles to wide NFC adoption. In that report, ABI also suggested that support from mobile virtual network operators (MVNOs), which resell wireless services using the network of a mobile-phone operator, could help spur wider deployment of NFC-enabled phones.
MasterCard is working with 7-Eleven to gather the 500 pilot participants it seeks, all of whom will be users of Speak Out, 7-Eleven’s prepaid cell-phone service. Speak Out is an MVNO that is managed, on behalf of 7-Eleven, by Ztar, a Dallas-based mobile virtual network enabler that also administers other similar branded prepaid cell-phone services.
Despite the success of the first NFC trials, such as one conducted in Atlanta last year (see NFC Scores High at Atlanta Arena), the wireless telecommunications industry has yet to throw its weight behind NFC en masse. If the results of the six-month Speak Out trial are positive, mobile-phone operators may spark the demand for NFC-enabled phones that will put them into the hands of millions of U.S. consumers, according to a new report ABI Research issued last week.
“If a mobile operator puts NFC capabilities into the specifications for handsets it wants to buy, then there will be more than enough handset manufacturers to fulfill those orders. But if the operators don’t want to buy NFC-enabled phones, those phones won’t get into the hands of the public,” says Jonathon Collins, senior analyst with ABI Research.
In addition to making sure NFC phones are easy for consumers to configure and utilize, some mobile operators are also waiting for NFC-enabled handsets utilizing the CDMA network to hit the market. At present, only prototypes of such phones exist. Speak Out’s network uses GSM technology, but half of major U.S. mobile-phone operators use CDMA. It’s a chicken-and-egg scenario, with handset manufacturers looking for demand from CDMA mobile-phone operators to increase before they’ll introduce NFC-enabled CDMA phones to the market.