Telefonica starts testing phone-to-phone and cardless NFC payments14 Feb, 2013
It’s funny to see how payment innovations seem to go full circle (from the perspective of the customer, at least). We started out with small boxes that read the chip on your debit or credit card. The merchant inserts the card, inserts the amount, you pin, ready.
Next came solutions that allow you to pay with your smartphone: Square, iZettle, Payleven. Here, the idea was that you can do away with the card entirely. Of course, for people without the app, merchants still needed to accept cards. Enter the “dongle” – a tiny card reader that allows the merchant to insert the card, input the amount, you pin, ready.
Next – revolution! – Telecom Portugal (with mPowa) and Payleven announce at about the same time that they developed a Bluetooth solution: a little box that reads the chip on your debit and credit card. Sound familiar?
Of course, for the merchant this has all been a move towards more simplicity and cheaper payment solutions: new apps have dashboards, offer business intelligence, and replace an expensive legacy chain of solutions (cash register, card terminal, uplink to the bank) with one internet based solution.
But the consumer still needs to carry a stack of plastic cards. And it’s still impossible to quickly send someone € 2 by phone when you need money for the parking meter.
It looks like things are now moving in that dirction – at last. In mid-February, Telefonica Germany will start a test with a “near field communication” enabled digital wallet. You’ll be able to pay in a store by just keeping with your phone near to a cash register or a small box (see photo).
The app will also (for the first time, says Telefonica) allow consumers to make phone-to-phone payments. Consumers will be able to make money transfers from one phone to another “virtually in real time”:
Compared to traditional bank transfers, the process is simple and convenient,” said the telco in a statement. “There is no need to disclose the recipient’s bank details. All you need is their mobile phone number.” The transactions will be protected by PIN codes. (source)
I didn’t see anything about the cost of transactions in the article.
I’m curious to hear what all you payments specialists out there think of this. There are people who say that NFC will never become a thing. One of them is PayPal president David Marcus:
The NFC payments debate will slowly die in 2013. Is tapping a phone on a terminal any easier than swiping a credit card? I don’t think so – it’s not solving a real consumer problem and its not providing additional value to encourage me (or anyone else for that matter) to change my behavior.
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