With so many advances being made today concerning the nature of commerce and how it has been conducted electronically over the past decade, one cannot ignore, but be aware of the ground being covered by smartphones and their capability to facilitate mobile payments. The technology that has enabled the likes of Starbucks and MasterCard to familiarize customers with this convenient form of payment is known as NFC (Near Field Communication). It is a form of “contactless” exchange of information via radio frequency identification transponder (RFID). Although some businesses have used forms of mobile payments in the past, the setback is that they have been unique to their establishment as for instance the Starbucks mobile payment application. NFC however, strives to create an industry-wide standard that can be used at any type of store. In order for NFC to be mainstream, devices (with smartphones being the preferred choice according to MasterCard) will be equipped with an NFC chip and also POS (Point-of-Sale) equipments/readers. With your bank account details synchronized to your smartphone, you can easily make a transaction. So a typical transaction can be placed simply by holding up your smartphone to the reader and immediately, funds will be transferred from your account to that of the merchant’s. For security purposes, a pin will have to be keyed in to curb unauthorized transactions. 
It costs $2 to manufacture an NFC chip and can be practically attached to almost anything (MasterCard experimented with bags, watches, and even keys!) Google in conjunction with Samsung recently launched an NFC capable phone in the US last December 2010 known as the Samsung Google Nexus S. Amongst being a convenient and fast form of mobile payment, NFC capable phones can also aid businesses in promoting their services or products. For instance, a small restaurant business can transfer discount vouchers to customers so as to command greater patronage. You do not have to walk in with a coupon next time, it’s already stored securely on your phone. An application is out now called Enable Table that only run on NFC capable phones that will allow businesses to enjoy this benefit. Imagine the dollar savings from having not to print coupons and distribute flyers. In today’s digital world, I see a lot of prospects for even big businesses.Even still with Google, Samsung, MasterCard, Apple and major giant corporations spearheading NFC campaigns, people still doubt, questioning the security of this technology. Experiments are underway in Japan to begin testing the NFC technology. I bet the same people had reservations when the idea of carrying money on a plastic card got introduced. Today, debit/credit cards are accepted almost everywhere and around the world. If you still think this is rocket science, trust me you will be left out. The Starbucks’ mobile payment application is going to be viral and other businesses will be inclined to follow suit, paving the way for an industry standard NFC mobile payment solution. If you are very concerned about using forms of mobile payments, the Better Business Bureau has put together tips that can help in adopting this type of technology advancement. Time’s changing and so is technology and e-commerce!
Videos showing capabilities of NFC
NFC transaction
A video of Enable Table
A video of Taglet
The future is near and NFC is on fire, being tested in Starbucks all over the country and in particular cities. Thus it began- the era of taking care of consumer's life with convenience of a touch or a sway of your smart phone. For such a glorious mission of simplifying our lives there are counter forces in play.The problem is that some banks and companies, credit card issuers are not particularly happy with the need to download their software in the SIM-card.And that's exactly the way for Mark Dyuzner -representative of innovative business projects department in Vodafone, Germany (they, incidentally, sell phones with NFC for a limited trial launch on the market) said at a conference on NFC in Frankfurt, that, according to some estimates, carrying NFC as capabilities on your phone will add to the cost of the phone $ 5.
ReplyDeleteIn many countries, to maintain control over their subscribers, operators such as Vodafone, are going to store programs for NFC contactless payment and other applications on SIM-cards that they issue. Information contained in the built-in mobile phone chip. Presumably, banks can upload their programs to the chip with little or no involvement of operators. The chip is connected to another separate device inside the NFC phone.
At the conference Dyuzner said "SIM-card can cope with it all by herself. It can contain a variety of applications. It is already controlled remotely. Main force in play is fear of banks losing control over their clients.
"They are noticeably cautious, being in an environment where they are not owners and do not control mechanisms work," said Oliver Styles, vice president of MasterCard Mobile / Wireless Center of Excellence.
Though the air is still hot some vendors are beginning to offer their versions, which, according to them, reassure both parties:banks and operators. For example, the French Inside Contactless offered such an option under which customers of cellular operators could download an application, enabling contactless payment, the chip inside the phone, but could not activate this program without permission from the SIM-card. "SIM-card acts as a remote activator," said Philippe Martineau (Philippe Martineau), head of department on work with NFC in the Inside. So we will see how the story unfolds as we watch the progress of Starbucks.
Naturally the security of the technology is going to come into question. But I don't think it should be as big an issue as it seems to be regarding smart phones. Really it's not much different than using a computer to purchase something through Paypal or any other site like that. The only issue to me regarding the safety of this technology would arise if someone lost their cell phone. Even then the application used to purchase something with a mobile device will most likely be password protected. On top of that, most smart phones now have a password feature to be able to even access the phone.
ReplyDeleteThere is probably very little that will slow the NCF movement down; however, like Justin I do thin that some problems may arise in the area of security. Even though most cell phones are protected with password and other security measure, I think that they are far more susceptible to theft than the wallet that sits in our pocket for most of the day.
ReplyDeleteThink about how many times you have gone somewhere and left your cellphone sitting on the table, and at times have even left the table for a brief second or forgot about your cell phone all together. Also, think about how many times we carelessly lay down our phones and allow them to automatically lock. These are all windows of opportunity for a security breach that could end up costing money.
I know that most people would probably consider the times that they have lost their wallet, but I think that most people would agree that it happens less than leaving a cell phone.
Fascinating post Muyi! I agree that in order for mobile phone payments in the US to succeed in the long run, there needs to be a unified platform. I can't wait for the day where my smartphone can safely, and securely, be used to make daily purchases!
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