News of high-profile ventures involving mobile payments at the POS has been breaking with regularity, and recent near field communication (NFC) projects launched by two prominent payment corporations have added to the buzz.
On Sept. 21, 2010, VeriFone Inc. stated it was partnering with NFC technology provider Bling Nation Inc. to introduce a "tap and pay" initiative that combines Bling's NFC-enabling chips with VeriFone terminals. The program involves placing BlingTags - computer chips embedded in stickers that can be attached to phones and terminals to enable NFC - on VeriFone terminals, as well as on the phones of consumers who shop at locations using the service
On Sept. 15, 2010, First Data Corp., revealed it is partnering with SK C&C, a technology provider in South Korea, to provide what it calls a trusted services manager (TSM) that encompasses an electronic wallet and over-the-air (OTA) provisioning. Those two components, combined with NFC acceptance functionality at the POS, are the necessary pieces to get NFC payments up and running, according to First Data.
"For First Data, it's a very natural extension of our existing card issuing business," said Christopher Cox, Vice President of Mobile Commerce Solutions for First Data. "We offer to financial institutions and merchants card issuing today ... we encode mag stripes and emboss plastic cards and mail them out. TSM is changing the end of that process. Rather than mailing out the cards, we're sending them over the air to a handset."
Cox said the OTA technology that allows handsets to communicate with POS terminals is being provided by SK C&C, and the mobile wallets will be managed and branded by First Data. He added that SK C&C has provided NFC technology to South Korean businesses for years.
Cox noted that the service, which is scheduled for rollout in the first quarter of 2011, would depend on the implementation of NFC acceptance functionality at merchant locations by different providers. But he added that such implementation would happen in time and that, when it does happen, First Data may function as a bridge between the issuing and acquiring sectors that helps marry NFC payments with NFC acceptance.
"I think First Data is uniquely positioned to help drive some of that rollout at scale, just because we have such a large merchant acquiring business and relationships with large financial institutions," Cox said. "So we really view part of our role as taking some of the friction out of that whole ecosystem."
Meanwhile, the partnership between VeriFone and Bling Nation will produce a standalone NFC product. According to Paul Rasori, Senior Vice President of Marketing for VeriFone, the service is being tested at stores across Palo Alto, Calif., using two different VeriFone terminals: the VX 810 Duet for countertops and the wireless VX 680 device. But Rasori said Bling's technology could eventually be integrated with all VeriFone terminals.
"During this initial phase of testing, we're utilizing two of our newer terminals," he said. "But over time, once this becomes more mainstream ... there's no reason why we wouldn't make it available across all of our products, mobile as well as desktop."
The pilot allows participating merchants' customers to link their NFC-enabled phones with their bank accounts or PayPal Inc. accounts through an online registration process, Rasori said.
He said the PayPal option includes a stored-value feature, whereby consumers draw money from a limited fund set up in advance.
Rasori added that the service contains a loyalty component, allowing consumers to accrue points whenever they tap their phones at participating merchant locations - even if they pay with something other than the phone. Consumers are provided with loyalty updates through short message service (SMS) messages, he said.
"Any communication to the consumer post-transaction is done via SMS message," he said. "So you tap your Bling tag onto the VeriFone device, choose your method of payment, and then the consumer receives one or more text messages depending on what you've done. Either they give you insight into what loyalty benefit you've accumulated, or they can act as a receipt for that transaction and tell you that your payment was processed via this method and you have x dollars left on your tag."
These VeriFone and First Data projects come on the heels of other news related to NFC. In August 2010, reports surfaced about two major NFC-related consortiums popping up. One was a Bloomberg report of a partnership between AT&T, T-Mobile USA, Verizon Wireless and Discover Financial Services to pilot NFC in a handful of U.S. cities; the other was a report from Reuters of an NFC partnership involving Visa Inc. and Bank of America Corp. to pilot contactless payments in the New York area.
"NFC-based mobile payments are coming," Cox said. "It's not a matter of if; it's a matter of when. I won't and can't predict exactly when we see the growth start to hockey stick, but we're certainly seeing a lot of momentum from a lot of different angles. The partnership with [SK C&C] is for us really about making sure we're positioned to offer those types of services to our clients when they demand it."
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