Cell phone payment for parking first step to more use of handheld device as wallet

Near field communication (NFC), an RFID-based development appears poised to revolutize the use of cell phones to pay for goods and services – an activity that has long been talked about, but has only just begun in North America. With NFC, handsets with an embedded RFID chip allow the transaction to be completed with the tap of the device on an RFID reader. The cell phone can be linked back to a bank account, a credit card or can be used as a pre-paid option where the user "loads" the account with a set amount of money. Toronto-based Mint Inc. is one of the pioneers leading the charge to implement RFID payment solutions, referred to as contactless payment. The company is a big supporter of payments withe cell phone. "The concept behind the company was that we ultimately believe that the phone will be the primary device or mechanism that you’ll use to make payments," Mint president Frank Manduri tells Report on Wireless. "The question is all timing. Is that something that’s going to happen in the next six months, six years, or 16 years?" Mint already has set up the cell phone as a payment vehicle with a variety of parking lot operators in Toronto, Vancouver, and Coral Gables in Florida. It is ready to deploy similar services in Ottawa and a number of other major urban centres. With the parking application, text messaging "starts the clock" on the parking, and the charges are billed directly to the user’s cell phone account. Mint is getting into the game early, not only getting into the parking lot business, but also embarking on an aggressive trial of RFID technology with a 4,000-employee company in the Toronto area (RoW, June 29/05). The first stage provided 1,000 employees with RFID-enabled cards that they loaded with a certain amount of money. The second stage, which, Maduri says will begin shortly, will give the same employees cell phones embedded with RFID chips. The devices are being used to purchase goods at a number of the company’s food service and convenience stores. Unlike in North America, Hong Kong and London in England are experiencing tremendous use of contactless payment options, such as cards embedded with RFID chips. What is happening in Hong Kong and London is telling, Maduri states. The two cities have issued smart cards for the subway system where commuters load the pre-paid cards with money. "We looked at (the Hong Kong experience) and that was so wildly successful that merchants along the subway line began accepting it as payment, too. The contactless payment method began to get adopted outside (of the subway)," he explains. Using RFID technology would also not require a "reinventing of the wheel," says Maduri. Existing payment networks such as those offered by Paymentech and Moneris could be used without too much difficulty. An RFID reader placed at a point of sale would simply replace the swiping of a credit or debit card. Pieces of the puzzle falling into place Cell phone manufacturers are on board as well. The big three – Nokia, Motorola and Samsung – are all in various stages of developing RFID-equipped cell phones. They are each expected to commercially introduce a handset with contactless payment capabilities this year. Nokia introduced an NFC shell for its 3220 handset in February. "With the Nokia NFC shell for payment and ticketing, the consumer can conduct local transactions with a mobile phone, simply by touching a point of sales device or ticket gate. Consumer’s payment credentials, such as debit and credit cards, and transport tickets are securely stored in the integrated smart card chip of the Nokia NFC shell. The Nokia NFC shell for payment and ticketing is compliant and interoperable with contactless smart card infrastructure. Hence additional investments are not required," reads a February 9 news release from the company. Major credit cards on board with contactless payments MasterCard, Visa and American Express (Amex) have recognized the potential in contactless payments and are moving to standardize their efforts on this front. They have adopted the ISO 14443 standard, which is compatible with a number of other standards developed to support contactless payments. Maduri is bullish on the future potential of RFID and contactless payments whether it is a card-based solution or embedded in a cell phone, but reiterates that it is still a question of timing. "There are a lot of wounds, war wounds, we’ve gone through, so we’re not naïve to this. But if you look at our debit card penetration in Canada, what is that telling you? It is telling you people do want a cashless alternative," he says. Contactless payment also opens doors to a whole segment of the retail industry that doesn’t want to accept credit or debit card transactions because they take too long to complete. Quick service restaurants (QSRs) such as coffee shops and fast food restaurants are exploring the possibility of implementing contactless payments, says Maduri. The reason is that it doesn’t slow down the customer turnover. With cell phone penetration in the United States reaching the 60% level and that in Canada soon to pass the 50% mark, it seems logical that practical applications such as cashless payments will come to the cell phone. NFC association gaining momentum globally The Near Field Communication Forum recently announced that 20 new members have joined the non-profit industry association since February. The total member count is now at 47 with the big three cell phone companies, Visa and MasterCard, several consumer electronics manufacturers and Microsoft Corp. as sponsor members. The NFC Forum also announced in June that it had formed four working groups tasked with studying the various factors related to the promotion and adoption of NFC technology. The technical working groups are: NFC devices, reference applications framework, security and testing.

Cell phone payment for parking first step to more use of handheld device as wallet

News | 07/15/2005 4:00 am EDT

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us