The future of cashless consumerism?


After much hype and many hold-ups, mobile phone e-wallets are becoming a commercial reality. Technologists were already talking about chip-enabling mobile phones to hold electronic cash and credit cards a decade ago.
But, despite the early talk of waving phones over wireless readers in shops to pay for goods, the networks were too slow and wary to support handsets capable of such tricks.
Today, with new contactless technologies developed, things are finally moving on apace. Progress in Near Field Communication (NFC) has been key. NFC technology, developed by Sony and Philips, utilises the principles of RFID (radio frequency identification) to emit powerful and secure wireless signals with a range of just eight inches.
It is increasingly being used in contactless debit card readers at the point of sale, so that shoppers making low-value ܘcash ‘ purchases  say under £10  can wave a contactless card in front of a reader, and make a purchase without needing to enter a PIN.
Now NFC is coming to the mobile phone market. Nokia launched its first NFC-enabled phone, the Nokia 3220, in the UK in late 2005. With an NFC product on the market, and more to appear in the very near future, Nokia is now exploring ways in which consumers can be enticed to make use of contactless applications.

Handy football companion
In an extended trial it has teamed with Orange and Manchester City Football Club to offer fans with these phones many unique services when they ‘re within the club ‘s grounds. These include instant entry to games when phones pass over NFC-reading entry terminals, easy payment for drinks and snacks with mobiles, and instant access to player and match information once inside the stadium.
The system is activated through the phone ‘s settings, and cash can be uploaded in just the same way that wireless mobile phone top-ups are carried out, says Nokia.
Nokia head of NFC market development Gerhard Romen says: For consumers the beauty of NFC services is that they make people ‘s lives so much easier. After years of research into what people want from their mobile phones, Nokia is convinced that the ܘtouch paradigm ‘ is at the heart of the matter; being able to do everyday tasks with the most simple action of touch. Rather than looking at and clicking through several menus to reach service controls, we need to make possible easy, instantaneous, almost intuitive actions.
France-based point-of-sale technology firm Ingenico has teamed up with French card issuer Cofinga SA and France Telecom in a year-long trial of contactless technology in mobiles. In the northern French city of Caen, 200 mobile phone users can use their handsets, equipped with an NFC chip, to make low-value purchases at around 30 different shops. They can also pick up bus timetables by waving their phone in front of an NFC-enabled bus stop unit.
Ingenico ‘s product line manager Dominique Gauthier says: Most banks today are really getting their foot into contactless, and they are looking at ways to differentiate themselves. They see mobile phone payment as a really good way to put attention on themselves and demonstrate their innovation capabilities.
A spokesman for Ingenico says a UK pilot of similar proportions is expected next year. However, he says it is too early to reveal where it will focus and which banks, handset manufacturers and network partners Ingenico is working with.
While Europe has been characteristically cautious about deployment of NFC in
the market, Asia has forged ahead and embraced contactless payment through both cards and phones.
Motorola director of business development Sarab Sohkey says: In countries like Japan, Singapore, Hong Kong and even China cashless payments are already a way of life. Asian operators are bullish about the technology and are willing to take risks. Telecommunications companies like NTT DoCoMo in Japan are not only impressing their customers with wonderful, simple services for easy payment and access to information, they are also seeing higher profit margins because of this use of contactless technology.

Tickets and transport
Meanwhile, in Europe the initial focus has been on ticketing, for transport, concerts, sports events and so forth. Although of course this is still payment, and that will be where NFC will power a revolution, says Sohkey.
He explains how European and US businesses involved in the early use of NFC have sensibly collaborated in order to standardise the industry from its inception. The NFC Forum now has over a hundred members including technology specialists like Texas Instruments, handset manufacturers like Nokia, Samsung and Motorola, most of the Western mobile phone networks and the credit facilitators such as Visa, MasterCard and American Express. With standards now agreed, the market will begin to move, says Sohkey.
He believes NFC-enabled payment will be just one element of the e-wallet of the future, and that having small amounts of cash on your mobile phone to pay for things instantly will be complemented with the ability to bank through your phone, transfer money, receive coupons and loyalty points, and make online purchases by phone  all the trappings of m-commerce. Motorola ‘s M-Wallet Solution was launched in the US this February and has the capability to do all this.
This is just the beginning and the dynamics of how NFC is used is bound to evolve over the next few years as we watch how consumers use the services, says Sohkey.
But he is confident that the commercialisation of NFC-enabled phones will really kick off in 2008 in Western countries, in the wake of faster commercialisation in Asia. In 10 years ‘ time credit cards and cash will have disappeared, he predicts.
Romen at Nokia shares these sentiments. The consumer market will begin taking note of NFC services in 2008 and sales of NFC-enabled devices will pick up speed during 2009, he says. By then, consumers won ‘t want to miss out on the helpful services on offer to them. They ‘ll know they can pick up interactive information from smart terminals or smart posters, be able to use an instant tourist guide on their phone, get into concerts easily, buy newspapers and their sandwich in a flash. They won ‘t be thinking about the technology when they choose an NFC phone, they will be buying into the services which will have become mainstream.
Romen cites ABI Research statistics when asked how important he thinks this market will become. The technology market research company has estimated that global NFC-enabled mobile devices will have reached 450 million by 2011.

Oyster Card shows the way
Here in the UK the hugely successful Oyster Card, a ܘsmart travel card ‘ scheme run by Transport for London, is being taken as early evidence that time-pressed Brits are hungry for such technological advances.
Today, speed really is of the essence, says Connie Penn, managing director of Kilrush Consultancy, which specialises in secure payment systems. Whether it ‘s retailers asking customers to chuck their coins into a bucket rather than queue to pay for a paper, or the much-loved Oyster Cards, there is a real drive to speed up payment processes. For this reason everybody wants to see NFC take grip in the UK market so that shoppers can ܘtap and go ‘. It will undoubtedly become a way of life.
Penn says the banks, technology providers and merchants all want to move ahead, and as EMV accreditation has now been approved for contactless systems we can expect to see progress.
This has got to be great news for handset sales, says a spokesman for O2 Retail. There ‘s no sign of consumers asking for NFC phones yet, but anything that encourages people to use their mobile phones more regularly in everyday life will reflect well on the market.
One question that technology analysts, handset manufacturers, networks and banks are all addressing is the security of this new generation of mobile phones. While m-commerce and m-banking through phones will be highly secure, these mobiles will be carrying e-cash that does not require a PIN to release, so could become an attractive target for thieves.

Safety and security
Gerhard Romen at Nokia makes the valid point that transactions with e-cash will be recorded in detail, so that once a phone is reported missing and cancelled, the exact amount being lost will be clear.
Penn at Kilrush Consultancy says the amount of e-cash loaded onto phones will be capped at probably well under £50, with PIN-entry required above a certain amount. We ‘re not going to be having thousands of pounds held on a mobile as instant cash, she says.
Motorola ‘s Sohkey thinks consumers will feel safer carrying all their cards and cash within their mobile, as the bulk of financial services are effectively locked in by a PIN. If your wallet is stolen, it can be opened and rooted through, he says. With a mobile phone there is a PIN to keep everything secure. If there is a readily available cash amount on it, this will be minimal  the equivalent to loose change.
He makes the point that having your mobile regularly and automatically ‘topped-up ‘ with e-cash is a sensible, safe and highly convenient way to manage cash.
He adds that biometrics might also play a part in secure e-wallets of the future, so that fingerprint recognition, potentially replacing PIN verification, could bring a new dimension to paying with mobile phones, for instance as a back-up to contactless transactions.

Stolen phones
Security is something we are spending a lot of time exploring, says Sohkey. An area that will need to be tackled going ahead is how easy it will be to replace a lost or stolen phone and where responsibilities lie in doing so.
Penn would like to see commercial strides being made in NFC in the UK well in advance of the 2012 London Olympics. It ‘s only six years away. Think of the value of visitors being able to use NFC-enabled mobile devices to access Olympic events, use the transport system to get there, buy meals and drinks. Huge events like these are where the technology could help ease the burden of large numbers converging, and ensure the best possible service.
Certainly by the time the Olympic torch is lit in London, NFC will be part of many walks of life, helping consumers access information at high speed, and pay for goods at lightning speed.

NFC  the bluffer ‘s guide
What is NFC?
Near Field Communication (NFC) is a short-range wireless connectivity technology standard designed for intuitive, simple and safe communication between electronic devices.
NFC communication is enabled by bringing two NFC compatible devices within a few centimetres of one another or for the two devices to literally touch one another. Applications of NFC technology include contactless transactions such as payment and transit ticketing, simple and fast data transfers  including calendar synchronization or electronic business cards  and access to online digital content.

What everyday machines and devices are likely to be NFC-enabled?
A wide range of devices and machines are likely to become NFC-enabled, including mobile phones, turnstiles, parking meters, check-out cash registers and point-of-sale equipment, ATMs, garage doors, personal computers, product packaging and posters, street signs and bus stops, among others.

How will NFC technology
make mobile payment and ticketing easier?
NFC enables contactless tickets and cards to be held in everyday devices like mobile phones. Instead of carrying several physical cards, you can choose to carry some or all of your cards within a personal device like an NFC-enabled mobile phone. Presenting an NFC device can make your life easier.
NFC technology can enhance contactless payment at shop check-outs or unattended payment machines like parking meters. You can pay using virtual payment cards or e-money.
Contactless tickets have revolutionized transport and event ticketing with their speed and flexibility. With NFC-enabled devices like mobile phones, you can buy tickets, receive them on your device and then go through fast track turnstiles while others wait. You can check your balance or update your tickets remotely.
You can also quickly download information (such as a bus timetable) by bringing your NFC-enabled phone or PDA close to a sign with NFC-readable information.
NFC technology is helping to increase the acceptance and usability of contactless services because it is based on an international standard  designed to work for any service in any place around the world.
Source: NFC Forum