Intel and MasterCard aim to enable Ultrabook Intel-based PC users to make online payments safer using NFC technology

Intel has teamed up with payment provider MasterCard in a drive to provide more options for a safer and simpler check-out process for online merchants and consumers using Ultrabook or netbook type devices and future generations of Intel-based PCs.

They are working together to optimise a variety of emerging payments technologies, including MasterCard’s NFC-based PayPass and Intel Identity Protection Technology (IPT).

Intel’s IPT enables consumers to use two-factor authentication and hardware-based display protection, which provides increased online security against malware. Additionally, when used with an Intel IPT-enabled reader, consumers will be able to pay for online purchases with a simple tap of their PayPass-enabled card, tag, or smart phone on an Ultrabook device.

“The collaboration with Intel will deliver enhanced security and faster checkout – with the convenience of a simple click or tap,” said Ed McLaughlin, chief emerging payments officer at MasterCard.

The firms explained that the technology will become increasingly relevant over the coming years, as online sales reached $176.2bn last year in the US alone, and is expected to grow at double-digit percentage rates annually for the next 5 years, according to Forrester Research.

Etisalat's NFC service will initially be available on BlackBerry 9900 devices

UAE operator Etisalat has teamed up with MasterCard Worldwide to launch cashless mobile payments programme in the country.

The system uses Near Field Communication (NFC) technology to authorise everyday transactions via a smartphone. Consumers will be prompted to enter a PIN on their mobile phone before completing a transaction.

The NFC service was developed in conjunction with Network International, Oberthur Technologies and Research in Motion (RIM).

It will initially be available on BlackBerry Bold 9900 devices but will later include all phones with near field communication (NFC) technology. It will allow users to pay for purchases of up to $50 by swiping their mobile phone at MasterCard purchase points.

“This is just the beginning of a new era in how we make payments in the UAE,” said Rashid Al Abbar, VP for home products at Etisalat. “Soon your mobile will buy you lunch, a cinema ticket, transport and much more. It could become the single solution for many of your purchase needs in the very near future.”

Sandeep Saihgal, managing director at RIM Middle East, added: “NFC technology is set to be a major market mover for the mobile sector over the next five years and RIM is working in close collaboration with Etisalat and MasterCard to help make the concept of mobile commerce become a reality in the UAE.”

“The new line-up of BlackBerry 7 smartphones includes various models that are NFC-enabled and demonstrates RIM’s commitment to enabling NFC-based experiences on BlackBerry.”

Businesses need to collaborate to establish business models to make NFC services successful

The convergence of many different markets to deliver near-field communication (NFC) payments, and the complexity of these new commercial relationships, has created a barrier to widespread deployment of the technology, according to the Mobey Forum.

The global, not-for-profit, financial industry forum claims that as NFC technology continues to gain momentum, businesses need to explore different implementation models, define the business case and roles that will meet their requirements and establish a clear go-to-market strategy with partners.

Jordi Guaus, chair of the Mobey Forum Business Workgroup and head of mobile payments at Spanish bank “la Caixa”, explained that the group has compiled its research on how to NFC into a whitepaper entitled: Business Models for NFC Payments.

“The study acknowledges that customer demand for NFC services will grow substantially in the near term, presenting businesses with profitable opportunities,” he said. “The marketplace, however, still has a lot to do to ensure NFC payment reaches its potential. There are many implementation models to choose from requiring payment service providers and other stakeholders to make significant business decisions today about an emerging ecosystem that is evolving rapidly.”

The whitepaper analyses potential business models for facilitating mobile contactless payments when an NFC device is used, taking into account all the stakeholders involved. The analysis focuses on point of sale (POS) transactions using cards as a payment instrument.

Potential business models are analysed according to ecosystem dependencies, stakeholders and scope. One of the most critical decisions for a payment service provider is how to cooperate with other stakeholders to go to market, explained the group. It added that, in essence, there are three cooperation models:

• Collaborative model: in a specific region, the main stakeholders, secure element (SE) issuers, mobile contactless payment application (MCPA) service providers and other relevant parties jointly define a common landscape which allows each entity to participate.

• Bilateral model: in a specific region, one SE issuer and one MCPA service provider reach an agreement to develop NFC payments.

• Standalone model: there is no cooperation. The MCPA providers and the SE issuer are the same entity.

“The technology exists and is ready to go live. The focus now needs to be on making MCP a reality, by increasing the number of implementations and building an understanding of best practice and standards within the industry,” the group explained in the whitepaper. “It is too early to predict which MCP model will be favoured by consumers and businesses. This is likely to vary within different regions depending on a range of factors including existing infrastructure and the number of stakeholders.”

We expect a modest growth of the mobile NFC market for the next two years but this will change as many of the leading players introduce NFC-enabled handsets, spurred to enter the market by fear of Apple’s and Google’s ambitions in the sector. Google has already played its hand, overshadowing moves by carriers in its home territory, the US. Apple is still waiting in the wings, leaving everyone guessing, according to Guillermo Escofet, senior analyst at Informa Telecoms & Media.

We anticipate that Android will account for the largest number of NFC handset shipments from 2012 onwards and over 75 per cent of NFC handsets are anticipated to be smartphones by 2015.

In addition, growth will be driven by the various user cases for mobile NFC (e.g., tagging/sharing, access controls, coupons, loyalty cards, information, ticketing and local payments). The availability of NFC handsets will depend on the speed of deployment of NFC-enabled POS infrastructure, the handset vendors’ perception of the scale of the commitment to the market from the mobile operators, and the financial services and retail sectors.

The total value of the transactions from mobile NFC payments is expected to grow from around US$2.4 billion in 2011 to over US$71 billion by 2015. Currently over 90 per cent is generated in Asia Pacific (mostly Japan and South Korea) but this share will drop to around 40 per cent by 2015 as Western Europe and North America start to see strong adoption of mobile NFC services.

Not all NFC handsets shipped will be actively used for NFC services, as this will depend on the number and range of merchants with NFC-enabled POS terminals. Consequently, usage will be highest in markets where POS infrastructure is already widespread like Japan and South Korea or is expected to be rolled out quickly like major urban areas in Western Europe and North America.

PayPal will introduce new mobile payment services in retail outlets

eBay is launching a host of in-store payment processing services for retailers, via PayPal, over the coming months. The services do not rely on the use of near-field communications (NFC) or credit or debit cards.

The new services include the functionality to allow users to pay for products in-store by scanning barcode with their smartphones in-store and paying for them via an app. This means that there is no need to queue at a till or use a credit or debit card.

Another service will allow users to pay at a till in-store with their mobile number. The user simply keys in their phone number and PIN at the cash register in order to authorise a payment from a specified bank account.

It is also launching features such as geo-targeted mobile advertising, to push special offers to customers on behalf of retailers, depending on their location; real-time inventory availability, to allow customers to identify whether the product they want is in stock and which sizes are available, and the firm is also looking to introduce its own virtual mobile wallets.

“PayPal is re-imagining money and making it work better for merchants and consumers – whatever device you’re on, wherever you are in the world, and however you prefer to pay, whether that’s cash, credit, or instalments,” said Scott Thompson, president at PayPal.

“We’re rolling out a one-stop shop for merchants to engage their customers directly during every part of the shopping lifecycle –  generating demand from consumers through location-based offers, making payments accessible from any device, not just from the mobile phone, and offering more flexibility to customers even after they’ve checked out.”

eBay has been working on a number of initiatives in the mobile payment space with PayPal, recently making two announcements; one in collaboration with Google to allow Android users with NFC-enabled phones able to send money to each other just by bumping the handsets together and its $240m acquisition of Zong, a transaction firm with strong ties to Facebook.

Google intends to play a leading role in the m-commerce value chain. In just over six months, it has added NFC to the Android OS, announced the Google Wallet and Offers service, and has now acquired Motorola Mobility. It has also launched the Nexus S NFC phone and signed agreements with MasterCard and a number of retailers including Subway, Macy’s, American Eagle and RadioShack.

It will take a couple of years before NFC enabled handsets will be shipped in significant volumes. Consensus in the industry is that market penetration of handsets of at least 20 per cent is necessary before the mobile NFC market really starts to reach its potential. Google has implemented the necessary NFC software in its Android OS Gingerbread and wants to get the NFC hardware embedded in large number of Android devices. The acquisition of Motorola’s handset business means Google will be in a position to drive NFC device shipments.

Google’s main interest in m-commerce is not payments but the activity leading up to payments, such as search, advertising and special offers. It sees NFC as an extension of its advertising business model.  NFC provides it with an opportunity to link the ads and offers it serves in the virtual world with purchases in the physical world. With the growing preference for CPA (cost-per-action) based pricing for Internet advertising, NFC can enable Google to prove to advertisers that the page impressions or click-throughs they’ve paid for have translated into the desired customer action and/or sales at shop tills.

Also, the acquisition of Motorola takes Google closer to having an Apple like end-to-end ecosystem for mobile devices and services. This has so far been the key differentiating strength of Apple. The vendor has complete control of the software and hardware that goes into the iPhone and with the acquisition, Google will also have similar control over devices manufactured by Motorola Mobility.

Google Wallet will launch this summer

Web giant Google has unveiled its plans for NFC mobile payments via the handset and promptly got itself into hot water. PayPal has taken issue with Google Wallet, and small wonder, given that the two people heading up the initiative used to work for the payments firm.

At the moment, Google Wallet is in the field trial phase and won’t become a commercial reality until later in the summer. At that point it will be supported by the Nexus S 4G (WiMAX) handset on the Sprint network in the US, with the 3G version of the Nexus S, also sporting an NFC chip, expected to follow soon after.

Citi, MasterCard and First Data are the launch partners, supporting two payment solutions: a PayPass eligible Citi MasterCard and a virtual Google Prepaid card. Most people who already have a PayPass eligible Citi MasterCard can simply add it to Google Wallet over the air, using First Data’s service. Or, the Google Prepaid card can be funded with any payment card.

The retail side will be based on the MasterCard PayPass network—a merchant point of sale service covering more than 124,000 PayPass-enabled merchants nationally and more than 311,000 globally. The first Google Wallet field tests are focused in New York and San Francisco, where many retailers, Coca-Cola vending machines and even taxis are PayPass-enabled, including major outlets such as CVS, Jack in the Box, Sports Authority and Sunoco.

Google, naturally, will also be involved in the delivery of relevant deals, promotions and loyalty rewards as it steps up its presence in the buoyant coupons and vouchers space.

Stephanie Tilenius, vice president, commerce and payments, Google, said: “With Citi, MasterCard, First Data and Sprint we’re building an open commerce ecosystem that for the first time will make it possible for you to pay with an NFC wallet and redeem consumer promotions all in one tap, while shopping offline.”

Yet just minutes after the announcement, Google was hit with a lawsuit from PayPal and parent eBay, over the misappropriation of trade secrets. Tilenius was named in the suit, having worked for PayPal/eBay between 2001 and 2009, largely in the field of payment services. Another Google employee named as a defendant was Osama Bedier, who worked for PayPal from 2002 to January of this year as VP of mobileand was allegedly poached by Tilenius in violation of a contract she signed, pledging not to solicit PayPal employees.

That Tilenius did the alleged poaching via Facebook probably doesn’t help her defence either. In the lawsuit, PayPal claims that in July 2010, Tilenius initiated contact with Bedier through a message on Facebook, writing: “I heard from a little birdie that you might be open to bigger and better challenges, I have a HUGE opportunity for you, would love to chat if you are interested.”

The legal waters are further muddied by PayPal’s claim that between 2008 and 2011, Google and PayPal were “negotiating a commercial deal where PayPal would serve as a payment option for mobile app purchases on Google’s Android Market.” Apparently, during that time, PayPal provided Google with an extensive education in mobile payments and the crux of PayPal’s complaint is that prior to his departure, Bedier allegedly met with Android founder and SVP of mobile at Google, Andy Rubin, not to talk about what PayPal could do with Google going forward, but rather how Bedier could help Google compete against PayPal.

As Fred Huet, managing director of Greenwich Consulting points out: “This is potentially about much more than mobile payments. The frontiers between m-commerce and e-commerce are blurring, becoming encompassed in what we call ‘digital money’ where a digital wallet is accessed through many different channels… and this could indeed be the start of ‘digital money.’”

Currently, Samsung, Nokia and RIM have or are planning to implement NFC in future devices. The fact that large retailers such as Subway and Toys ‘R Us have signed up to the scheme in the US may signal that something similar could be on the way to the UK, Huet said.

In terms of deployment, Google Wallet is engineered to enable secure payments and goes beyond what’s possible with traditional wallets and cards. It will require an app-specific PIN and in the first release, all payment card credentials will be encrypted and stored on a chip, called the secure element, that is separate from the Android device memory and is only accessible by authorised programs.

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Orange customers with an Samsung Tocco and a Barclays account or Barclaycard credit card will be able to use QuickTap tech at places such as McDonalds

The UK arm of France Telecom’s Orange has launched what it says is the first contactless mobile phone-based payment services, allowing customers to make purchases up to the value of £15. The service has been developed in conjunction with Barclaycard, and will use the credit card firm’s network of contactless readers, deployed in more than 50,000 UK stores.

The service, named Quick Tap, uses a secure, SIM-based solution based on technology from Gemalto but is only available, in the first instance, to customers who buy a special version of the Samsung Tocco handset. Orange said in a release that a wider range of compatible devices are “expected to follow” at some point in the future, a choice of words that suggests the firm isn’t certain when, or even if, they will come.

An Orange spokeswoman said that the firm is “currently in discussions with top handset vendors” about expanding the range of QuickTap handsets, so Samsung’s Tocco may have the space to itself for a little while.

The Tocco is a low end touchscreen model – it lacks 3G – which might be a pointer as to the target market for Orange’s initial foray into mobile wallet services. Traditional early adopters are not likely to want a low end handset, so it seems likely that Orange wants to sell the service more to its mass market customers. Orange name-checked a number of fast food outlets as participating retailers, including McDonalds, Little Chef and Subway.

The handset is not the only restriction, as only Barclays Bank debit card holders, or users of Barclaycard or Orange Credit Card can load money onto the financial application. The limit is set to £100.

Orange VP Pippa Dunn said that the service “is going to start a revolution in the way that we spend money on the high street”.

On Thursday, no doubt seeking to steal some of Orange’s thunder, rival O2 announced the organisations it will be partnering with for its own mobile wallet service, scheduled to launch later this year.

Twitter and DoCoMo are to launch location-based services in Japan

NTT DoCoMo has announced a deal with Twitter that will see the pair working on the development of location-based and other mobile services. According to DoCoMo, one of the envisioned services will “bring richer search results” to users through the use of Real-Time Tweets; other content from the microblogging site will be incorporated into search results on the telco’s “i-mode” portal for feature phones. Smartphone users will access similar services on the “docomo market” portal.

DoCoMo also announced plans to update its existing “touch and follow” application that allows NFC-capable phone users to exchange Twitter following permissions by placing their handsets together. DoCoMo says it expects to launch the service for feature phone users this summer. Smartphone users will be able to use it later this year.

In addition to the announcement from DoCoMo, Japan’s Nikkei newspaper is reporting that the two firms will combine anonymised keywords in Tweets to offer a new kind of real-time, location-based information service to users. Data will also be offered for sale to marketing companies.

NTT DoCoMo has a customer base of 58 million, making it Japan’s biggest mobile service provider. The move from Twitter to officially licence its content in such a big market could work well as part of its strategy to try to monetise the service in a country with more than 17 million Twitter users. According to research company Semiocast, Japanese is the second-most popular language used in the service, after English.

European banks have released guidelines for NFC payments

The European Payments Council (EPC) has released draft guidelines governing the use of Near Field Communications (NFC) technology for mobile payments. The Council, which represents the European banking industry, has also called for stakeholder submissions on the subject, with the deadline for feedback on June 17^th this year.

The Mobile Contactless (SEPA – Single Euro Payments Area) Payments Interoperability Implementation document deals entirely with NFC, giving details of service models, processes, security, architecture  and lifecycle management for mobile payment applications. According to the EPC, it is seeking to promote the use of open standards while clarifying the roles of key stakeholders in order to “establish confidence in this environment.”

Dag-Inge Flatraaker, chairman of the EPC’s M-Channel working group, has said that while the Council is keen to advance activity in all areas of mobile payments, the group’s initial focus will be on NFC alone. He said that the EPC was also developing implementation guidelines for mobile remote payments to be released at a later stage.

In order to avoid fragmentation, the EPC is working with other relevant organisations in the m-payments space, including GlobalPlatform (which standardises applications on secure chip technology), the GSMA and Mobey Forum (a global cross-industry forum that operates from a banking perspective).  In October 2010, the EPC and GSMA jointly published a paper on the requirements and specifications for mobile contactless payments services.

The current document explores NFC implementations on phones with integrated support (such as Samsung’s Google-branded Nexus S) as well as the use of NFC on SIM or microSD cards. Guidelines outlining the security requirements for each component are included, alongside an overview of standards and specifications currently in place. The EPC document points to what it sees as a need for greater standards development if NFC m-payments are to achieve widespread adoption. A final version of the document is expected to be issued in October this year.