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Cellphones as payment devices

2011-12-06

Absa Bank embarks on South Africa’s first live NFC trial that enables cellphones as payment devices

Absa today announced the launch of South Africa’s first live user trial of Near Field Communication (NFC) technology on mobile phones. The trial will kick off in mid-December and involve 500 of the bank’s own staff members, operating in a live commercial environment.

“Absa is the first institution in South Africa to bring Near Field Communication (NFC) capabilities with an EMV (Europay, Mastercard and Visa) card payment application to a handset,” says Arrie Rautenbach, Head of Retail Markets at Absa.

He adds: “The trial paves the way for consumer market utilisation of the mobile phone as a payment device by using the revolutionary NFC technology. While this trial will facilitate low value payments in retail and transit in early stages, we envision many more exciting new forms of mobile payment in the future.”

Absa, in partnership with Mastercard, have embedded their Paypass Tap and Go™ payment card on the handsets for the trial. This will allow trial participants to load funds into a prepaid store of value on a secure element on the phone, at point of sale, through Absa Online or at Absa ATMs.

The mobile payment system also contains the National Department of Transport data structure which will, in future, facilitate more advanced payments in transit. The application on the phone will store details of the commuter, the day and time, where they entered and exited the transit system - and use this information to calculate the fares.

Adrian Vermooten, Deputy Managing Executive of Absa Digital Banking, explains that all the payment and NFC services that are available on the handset will be accessed from the mobile phone’s main menu, in addition to information about each service and customer support.

“By simply tapping one’s phone in front of a contactless NFC-enabled pay point, the value of the transaction will instantly be debited from one’s bank account,” states Vermooten.

From the customer’s perspective, the benefits of NFC will include faster transactions, shorter queues, increased levels of security and the ability to electronically track their spending habits.

Vermooten adds that the trial will enable participants to pay for goods at coffee shops, canteens, and later, at other service providers that are located at Absa’s head office in central Johannesburg.

Research In Motion’s Blackberry models will be the initial handset for mobile payment trials. The Blackberry device will be equipped with an NFC wireless chip, making it well-suited for mobile payments.

Today’s announcement follows Absa’s pioneering of the "tap-and-go" technology which is equipped to make payments by means of tapping cards on a reader. The NFC trial uses the same readers to accept payments from smart-phone devices that are enabled with the NFC technology.

“Both technologies are exploring new ways to add convenience and value to payments, typically leveraging off the NFC technology for mobile phones to breathe new life into ‘tap, pay and be on your way’ payment capabilities,” Vermooten says.

“This trial is going to provide key insights which will prove crucial to refining the customer experience as we bring NFC on mobile to market,” adds Vermooten, adding that “we are currently at the start of this journey”.

In time to come, consumers will store any type of payment cards in their mobile wallet on their handsets, and either pay online by tapping the phone on a merchant’s reader or on a person-to-person basis,” he explains. “This new technology is paving the way and building acceptance networks for mobile payments in future.”

Absa has worked extensively over the past few years with its global parent company Barclays, through its card division Barclaycard, who are global leaders in contactless and this form of mobile payment. Earlier in the year, Barclaycard released an NFC mobile payment product with Orange, the UK mobile network operator. “Our relationship with Barclaycard has provided our Absa team with both the inspiration and the expertise that is necessary to make this new payment form a reality.” says Rautenbach.

He notes that international experience and various research papers have shown that for NFC to become a reality, the close cooperation of major players in the “NFC ecosystem” such as banks, network operators, retailers, cellular handset manufacturers, information technology partners and other players with an interest in creating a customer-focused NFC solution, is required.

“As we learn from the practical, hands-on experiences of the trial, we will continue our discussions and deepen our relationships with the major players in the ‘NFC ecosystem’ to develop the commercial models, and extend the variety of payments instruments made available by the wallet,” says Rautenbach.

In July this year, Absa and Vodacom announced the formation of a strategic alliance to accelerate the pace of innovation in mobile financial services. One of the focus areas of this alliance is NFC.

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