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Wireless transactions spreading fast 3/4 FinancialTimes Keys, wallet, mobile phone: it’s a mantra that many feverishly repeat each morning amid the rush to leave home. Yet for years, technology has held out the promise that one day, this will be reduced to just a phone. The idea of one device carrying all the information needed to board a train, gain access to the office & buy a sandwich at lunchtime is enticing – but has so far failed to materialise in any widely available commercial form. Behind the scenes the technology that will enable such transactions has fast been gaining ground, albeit in smartcards rather than phones. This is NFC, a standards-based, short-range wireless connectivity technology that enables 2-way transactions between tags & readers held within a few centimetres of each other. So far, it has been seen in travel cards such as Hong Kong’s Octopus & London’s Oyster cards & credit cards for low-value payments in the US & Japan. The NFC tags embedded in such cards mean they can exchange information with readers for downloading credit & uploading payments. The fact that tag & reader do not need to touch means such transactions are often called ‘contactless’. Now, mobile phones promise to take NFC mainstream – eventually. In 2004, ABI Research predicted that ½ the mobile phones in the world would be NFC-enabled by 2009. In 9/06, it slashed that prediction to 30% by 2011. So what is holding up NFC? First, there is a lack of hardware infrastructure to support it. Outside the US & Japan, NFC readers have not been deployed sufficiently widely by shopkeepers, restaurateurs & other merchants. Neither has there been widespread availability of NFC - enabled handsets, although that is widely predicted for IIH 2008. A second delaying factor has been the endless struggles between banks & mobile network operators over the business models that will underpin NFC-enabled mobile payments. At the root of that debate is the question of what kind of cut each party will take on such payments. With so many parties involved in supporting such applications - manufacturers of handsets, SIM cards & NFC tags, & the mobile operators & banks – it is no surprise that the thorny issue of agreeing on technology standards has been a big challenge. But the number of pilot projects involving NFC-enabled phones now under way gives grounds for hope, according to Mike Short, O2 Group. His company is undertaking a 6-month project with several partners - Transport for London, Transys (which owns & operates the Oyster travel card system), Barclaycard, Visa Europe, Nokia & AEG - offering cashless payments & travel services to a pool of 500 trialists selected from O2’s London customer base. In this trial, participants are using their phones as an Oyster card & to download journey information from ‘smart posters’ situated around the Tube network by Transport for London. A smaller subset of 200 is able to pay for goods up to £10 in a range of outlets, including those of Yo Sushi & Coffee Republic. The trial is due to end in May and, for now, Short is keeping quiet about his company’s findings. ‘At the end of 6 months, we’ll have full feedback from users & have been able to analyse it. At this point, I’m happy to say that the data we’re getting is helping us to understand the user experience. That’s vital in getting to grips with simplicity & security that a roll-out of this technology would need to offer.’ It is a case of ‘moving up the staircase of understanding’. But for now, each aspect of the O2 trial remains separate, meaning that purchases are not billed to the user’s mobile phone account & users are not able to top up their Oyster card from the embedded Barclaycard account. In Taiwan, those participating in a trial set up by Gemalto & Far EasTone Telecom are able to download money-off coupons from posters hung in East Asian Geant hypermarkets. These coupons are automatically redeemed when users swipe their mobile phone at the check-out to pay for products – ‘from shampoo to bananas’, according to Roger Chen, Far EasTone. There is one question that trialists & would-be users are asking of Far EasTone: What if I lose my mobile phone? In this trial, they will have to contact each of the individual banks involved, just as if they had lost a wallet full of credit cards, & cancel their SIM card with their mobile operator. But in future, they will only need to make one call – to a mobile operator, who, as a ‘trusted provider’, will cancel all accounts on their behalf, says Jerome Sion, Gemalto. At the heart of that kind of service will be complex software used by mobile operators to manage NFC-enabled phones ‘in the field’ – a market which Mformation, which provides ‘device management solutions’ to mobile operators, has in its sights. Mformation’s software enables a host of major operators, including T-Mobile, Vodafone, Telefonica, Sprint & Airtel, to configure, manage & shut down NFC-enabled phones at the request of users, directly from their customer service centre. ‘Mobile users expect these kinds of services to work first time - otherwise they’ll just walk away,’ says Rakesh Kushwaha, Mformation. He insists that the wait for mobile payments is almost over: ‘For most users, NFC-enabled mobile phones will appear suddenly, overnight – just as camera phones did. All the handset manufacturers we partner with are working on 1 or 2 NFC models for release this year.’ With the emergence of these phones will come a new generation of applications. In theory at least, the mobile phone will replace swipe-cards for accessing office buildings & hotel rooms, tickets for gaining entrance to concerts & theatres, maybe even a passport. No one will leave home without it.