As near-field communications payments hit the headlines thanks to Apple, Orange and Barclaycard announce that they will be first to the UK market 2011 is the year that the mobile phone is set to finally start replacing the credit and debit card: Apple’s forthcoming iPhone is widely expected to contain ‘near-field communications’ (NFC) technology to make payments possible by simply swiping the handset over a reader on a shop counter. Google’s new Nexus S already has NFC built-in. And today Orange is announcing that by the summer they will have, in association with Barclaycard, a payment-equipped mobile phone already on sale to consumers.
The trend brings a whole new meaning to payphone, and it’s one that Gerry McQuade, announcing the Orange deal, says is “the beginning of a revolution in how we pay for for things on the high street. It’s a cultural shift that is as important as the launch of the personal credit card or ATMs.”
In Japan and across other Asian countries, however, scores of handset models are used tens of thousands of times each day to pay for millions of pounds worth of transactions.
Yet in the UK and America the market is rather different. As far back as 2007, this newspaper reported on Nokia’s trial with O2 of a mobile wallet that would work with London’s Oyster card system as well as for payments of up to £15. Now Orange are going to offer a similar service, although details on hardware so far are limited. The company says that there are over 40,000 stores ready to accept contactless payments, and that its approach is based on customers’ SIM cards rather than their handsets.
Ben Wood, head of research at Analysts CCS Insight, says that “Near field communication will become as pervasive as Wi-Fi in mobile devices by 2013 and by the end of 2011 most leading device manufacturers will have implemented NFC capability across much of their device portfolios.” The 2012 Olympics, he adds, will be a crucial first UK test-bed for widespread usage of the technology.
Orange and Barclaycard, meanwhile, claim that their customers will be “the first to be able to use their mobiles to make payments on the high street wherever contactless payments are accepted”. Orange says that it’s part of their “wider strategy to re-define what people use their mobiles for, with mobile payments being the start.”
Indeed, according to Ben Wood, “The key here is that it won’t only be about payment. Deploying NFC tags is as easy as putting a “We take Mastercard” sticker in your shop window. This gives the “owner” and Apple some amazing opportunities. They can push promotions to those people, they can track their movements and see if they are regular customers or they can see which are the most popular venues”.
The privacy problems of such an approach will unsettle many potential users, but done well there are clearly potential benefits for both users and advertisers. It could, for instance, mean the end of the blanket advert that hopes all consumers in a particular clothes shop would like the same fashions, for instance.
David Chan, chief executive of Barclaycard Consumer Europe, is however surely right to suggest that “future generations will find it surprising that early this century we were still carrying separate items to buy goods and to communicate with each other”.
What remains to be seen, however, is whether Apple will corner this market, just as they currently sell 90 per cent of all tablet computers. If the company really can get a small piece of countless transactions, it will make it much more than a technology firm. One thing’s for certain however – it could do with coming up with a better name than ‘near field communications’. iPay, anyone?
