Home » Mobile Technology » Your Smartphone is About to Become Your Wallet

Your Smartphone is About to Become Your Wallet

A flurry of news over the past couple of months points to 2011 as the year new smartphones learned to replace your credit card and identification at retail checkout:

  • Google Inc. is teaming up with MasterCard Inc. and Citigroup Inc. for Android phones. Google believes retail is a huge advertising opportunity;
  • Persistent rumors that Apple’s iPhone 5 will be a player for payments and for unlocking cloud-based data files;
  • Microsoft and RFID vendor Sirit have announced plans to collaborate on adding proximity technologies to Windows Mobile;
  • Deutsche Telekom, the parent company of T-Mobile, said it will launch an NFC service known as “mobile wallet” in Europe this year, with a planned roll-out in the U.S. and beyond next year. The provider will reportedly release NFC devices from Apple, Samsung, RIM, and LG this year;
  • Wireless carriers Verizon Wireless—a venture of Vodafone Group PLC and Verizon Communications Inc.—AT&T Inc. and T-Mobile USA said last fall that they would team up on a venture, dubbed Isis, to enable customers to pay for goods with their smartphones. Discover Financial Services Inc. will process those payments, potentially eliminating the need to carry cash, credit and debit cards, reward cards and transit passes;
  • Research in Motion co-CEO Jim Balsillie confirmed that the majority of new BlackBerry devices this year will include near-field communication (NFC);
  • Bank of America has started inviting select customers to trial its new Mobile Walletpayment service program based on NFC technology;
  • Coupon.com and other coupon sites are also jumping on the bandwagon, since a smartphone is an effective wallet for digital coupons;
  • On the Point-of-Sale side, VeriFone Systems Inc. will roll out more so-called contact-less devices, or readers that enable consumers to pay with an “air kiss” wave or tap of a credit or debit card — or smart phone. Verifone is to include near field communication technology in all its new point-of-sale hardware.

The above spells a genuine technology movement.

NFC is a short-range transmission standard that, unlike Bluetooth, requires no previous setup, and allows devices to find one another instantly, over a distance of about 12 inches. Promulgated by the NFC Forum, it extends the ISO 14443 standard for RFID-based proximity cards, combining the functionality of an RFID reader and a Smart Card into one device.

NFC requires a new smartphone radio that is able to communicate when placed very close — inches — away from the POS device. The transaction is completed in seconds when an application sponsored by your bank’s (e.g., Visa, Bank Americard, Discover) is enabled. Because NFC requires very close proximity to POS devices to trigger a transaction, banish the thought of walking through a store racking up unintended charges. However, you’ll have another important reason not to lose your phone.

NFC is not new. It is already widely used in Japan, where commuters commonly use it to quickly purchase train tickets or pay for parking by waving their phones in front of sensors. About 30 percent of all phones shipped globally will incorporate NFC by 2011, according to an NFC study reportpublished in January by ABI Research.

NFC-enabled POS will save time, which is money to retailers and convenience to shoppers, who will no longer have to sign the digital pad to complete the sale.

Both sides of the retail transaction require new equipment, which means nationwide roll-out will take years to complete. Consumers will have to buy a new smartphone with NFC capability. And notoriously stingy retailers will have to install a new generation of POS terminals.

The market for mobile payments is expected to grow significantly in the next several years, reaching $618 billion by 2016, according to a report by consulting firm Edgar, Dunn & Co. and sponsored by MasterCard.

The NFC Forum is a non-profit industry association advancing the use of near field communication (NFC) technology. HP recently joined MasterCard International, Matsushita Electric Industrial Co., Ltd., Microsoft Corp., Nokia, NEC, Renesas Technology, Royal Philips Electronics, Samsung, Sony Corporation, Texas Instruments and Visa International, receiving a seat on the NFC Forum’s Board of Directors.

As I add it up, the major smartphone, smartphone operating system, wireless network, and POS terminal manufacturers are all rolling out NFC-enabled technology in the near future. This is a done deal.

BenQ NFC-enabled Phone



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