On January 10, 2012 Visa Inc. and Visa Europe made public their certification of a new range of NFC-capable smartphones that can be used with payWave, the company’s aptly named mobile system for point-of-sale payments. The new phones by Samsung, LG, and RIM have been added to the list of Visa-compliant payment products and can now be commercially deployed by financial institutions.
The specific models include the LG Optimus NET NFC, Samsung Galaxy S II, the Blackberry Bold (9900 and 9790), and the Blackberry Curve (9360 and 9380). On each phone the payWave app is hosted on a secure SIM and makes use of short-range Near Field Communication (NFC) technology to send payment information to contactless terminals. Users literally “wave” their phones at the device.
The potential for smartphones to be used as mobile payment devices is another step forward in moving away from the less-secure magnetic stripe cards that have long dominated the payment sector, and toward chip-enabled cards and other NFC-based payment methods. Not only is the technology more secure, but it allows merchants a broader ability to offer added-value services at the point of sale.
The industry is clearly trending toward NFC-based transactions as the standard, with analysts like Yankee Group predicting the value of these transactions, which stood at $27 million in 2010 will grow to $40 billion by 2014. NFC usage has already gained much broader acceptance in Europe, where Visa has approximately 30 million contactless cards in distribution through 54 banks. By the end of 2012, Visa expects their number of contactless cards to reach 50 billion.
While the chip cards and NFC enabled technologies have been slower to catch on in the United States, Visa has been a leader in offering incentives to merchants to switch out their terminals. All of the smartphones now approved for use with payWave are highly popular with U.S. customers who are rapidly becoming accustomed to using their devices for action-specific purposes well beyond texting and voice calls.
The ease with which such transactions can be handled, mitigating the need to carry multiple cards, is proving highly attractive with the public. Business travelers who routinely use their cards in Europe have been clamoring for American acceptance of the new technologies.
By the end of the 2011 gift-giving season, 50 percent of Americans were carrying some variety of smartphone, with the number expected to grow steadily throughout 2012. As these new users become more comfortable with their devices, and more sophisticated in their use of the available apps like payWave, the transition to NFC technology will gain even more momentum.
For further information, see: http://www.marketwatch.com/story/visa-certifies-smartphones-for-use-as-visa-mobile-payment-devices-2012-01-10
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