Sep 20, 2004Royal Philips Electronics has teamed up with U.S. RFID payment specialist ViVOtech to develop, test and promote contactless payment applications. The applications will allow U.S. consumers to make cashless purchases from handsets enabled with near field communication (NFC) RFID technology.
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Before the end of the year, the two companies will deploy ViVOtech's contactless payment system in a few undisclosed new markets in the U.S., as well as jointly promote the potential of contactless payments using NFC-enabled mobile phones in those markets. The partners said they also plan to team up with wireless phone vendors, wireless phone companies and digital content providers to promote the new cashless payment system.
NFC-enabled mobile phones contain an RFID tag that operates at 13.56 MHz. According to Philips and ViVOtech, NFC-enabled phones will be available in the U.S. before the end of the year (see Developing RFID-Enabled Phones). Philips is not only developing NFC chips used to make those tags but it is also planning to build those chips into its own wireless phone handsets. The Philips-ViVOtech deployments will allow users of NFC-enabled mobile handsets to communicate with ViVOtech’s contactless payment readers in the same way that ViVOtech’s existing contactless cards already do.
In 2003, the company’s ViVOpay readers and ViVOplatform were deployed in American Express's ExpressPay RFID payment product trials in the Phoenix area (see AmEx Expands RFID Payment Trial) and MasterCard's similar PayPass contactless payment system trials in Orlando, Fla. ViVOtech says it provided 90 percent of the readers for those two trials. In January, ViVOtech launched a contactless gift card payment system (see Gift Cards Go Contactless) that employs its ViVOpay readers and ViVOplatform. Since then, the company says, it has issued a few thousand contactless gift cards.
The ViVOtech reader connects directly or wirelessly to a retailer's point-of-sale (POS) system to enable contactless payments. The reader receives a unique ID number and a security code from the chip in a contactless gift card, credit card or NFC-enabled phone and transmits that data to the retailer's POS system in a format identical to what is generated when credit cards and gift cards with magnetic stripes are swiped at a POS device.
NFC technology in a mobile phone combines RFID technology to recognize and communicate with other devices while interconnecting with the phones’ own software operating system. The technology, pioneered by Philips and Sony, has also won the support of cell phone manufacturers including Nokia and Samsung.
Any user of an NFC-enabled handset should be able to wave the mobile phone an inch or so in front of the ViVOtech reader to securely transfer payment data. “This needn’t mean replacing any contactless card payment but provides the consumer with another form factor to make a cashless payment,” says Jorge Fernandes, CEO and cofounder of ViVOtech, which is based in Santa Clara, Calif.
NFC can also be deployed in phones to support loyalty cards, gift cards and e-coupons, as well as short messaging service (SMS) and multimedia messaging service (MMS) promotions, whereby discount e-coupons or other promotional information can be sent to wireless phones using their text and multimedia messaging capabilities. Customers can carry e-coupons digitally on their phones and use them for purchases and to redeem promotions at any ViVOtech-enabled location.
ViVOtech maintains that the new NFC handsets will be compatible with its existing readers, which operate at 13.56 MHz and adhere to the ISO 14443B standard. Even so, the companies maintain that there is work that has to be done to ensure that the NFC phones and ViVOtech readers can deliver contactless payments.
“While our technology and NFC shares the same RF and the same data standard, the applications still have to be tested,” said Fernandes.
