Forget your wallet? Pay with your mobile phone
March 12, 2009 With around four billion mobile phones in use world wide at the end of 2008 they now outnumber credit cards in circulation by a factor of 2:1, so the proliferation of payment systems based on the ubiquitous mobile phone seems almost a certainly. We've previously reported on Near Field Communication (NFC), a new generation of mobile phones able to make contactless payments and now UK mobile phone operator Orange is partnering with businesses to offer a complete range of contactless services.
One of the first to sign on is Barclaycard, which is offering a cellphone payment system designed to replace cash rather than credit cards and will be used for making payments. Around 8,000 retailers in the UK already accept contactless payments and as of this month, Barclays customers getting new or replacement cards will receive ones containing RFID technology. This contactless technology will allow them to use the debit card for transactions of up to UKP 10 (USD$14), without entering a PIN. Owners will still be able to use the debit cards for chip and PIN transactions and for bank machine withdrawals.
The use of Near Field Communication, a short-range wireless technology, has been on trial by Barclays since 2007 and the Orange and Barclaycard's partnership will bring mobile payments to a customer base of 28 Million people — around half the UK's population.
Mobile phones make it possible to store an electronic version of payment or access cards, which users can manage or personalize with their screen and keypad. The storage and management of a range of “virtual cards” in a mobile (activation, code, balance tracking) is therefore simplified compared to carrying a wallet full of plastic cards.
How does it work? The phone is fitted with a “second antenna” that manages NFC exchanges, and all you need do is move it near a scanner to pay for a purchase - there's no need to re-enter PIN codes or signatures as the pin is stored in the phone. The phone will also use NFC to access information points, validate transport tickets, track loyalty cards, store and redeem money-off vouchers and pay for vending machines.