Trials of mobile phones equipped with NFC (Near Field Communication) have been successful so far, and both operators and retailers are preparing for a technology that could arrive sooner than you’d think. Both Orange and Google have been using NFC for the last few weeks, and it is estimated that 40,000 retailers will have it installed by the end of this year.
Educating users on safe practice and the potential risks involved will be essential, and it looks like it will be down to a combination of service providers to kick things off. Orange has teamed up with Mastercard to launch a handset in Q2 this year, shortly before another joint venture between VISA and O2 hits the shelves. In addition, a range of banks, retailers and manufacturers are investing heavily in the infrastructure required to take advantage of the new phones.
Mobile phone analyst Kieren Hines takes a cautious approach to the progress however, stating “There are a lot of things that need to be resolved in the industry about how this is going to be rolled out. In terms of security you’re almost certainly going to have to enter a pin when you make a transaction.”
The two tiered approach to security, which would involve the entry of a personal PIN number to use the service, would indicate that a phone is as safe as a credit or debit card however, and with most users more likely to realise that a phone has been stolen in less time there don’t appear to be many reasons why NFC can’t succeed.
There may be alternative mobile phone payments systems on the horizon however, one of which – Obopay – has already proved successful in India and parts of Africa. Requiring no specialist technology barring a basic mobile phone, it allows payments to be made via SMS message and has proved extremely useful in areas where ATM machines are few and far between. The system is also available in the US and is commonly used to transfer funds between individuals, though with NFC gathering pace it’s unclear whether it’ll make it to the UK.
Additionally, a portable credit card payment device developed by Square can plug directly into a mobile phone to handle payments without the need for expensive dedicated equipment. Though it’s only really aimed at small businesses and individuals who have the need to handle such payments, it’s yet more evidence of the increasing use of phones to handle financial data.
The trend shows no sign of abating either, and IE Market Research expects the number of people who use mobiles for payments to rise to over 1 billion by 2014, with approximately $1.13 trillion spent through transactions, a massive increase over the $37.4 billion spent in 2009.