MasterCard and Visa Both Move Into The Near Field Communications Mobile Pay US Market

For well over a year now, I have been very excited and closely following the emergence of NFC-enabled mobile phone services opening in the United States. This type of cell phone payment service allows you to leave your wallet at home and just use your cell to pay for everything from gas to groceries, wherever the service is accepted. M-commerce is already used with great success in many countries around the globe. However, it has been a bit slow coming to the United States.

Just recently announced, MasterCard Worldwide has teamed up with Citigroup, Cingular Wireless & Nokia and is beginning trials which will allow clients to pay with their cell phone. Account holders in New York City are now able to test the newest consumer technology of Near Field Communication (NFC)-enabled mobile phones with MasterCard PayPass contactless payment capability. The trial run should last between three to six months and their goal is to evaluate the “tap and go” payments for speed and convenience. Ah, more shopping and faster payments, just what Americans need! The trial is for Citi credit card holders and Cingular customers in NYC only.

A pre-selected group of Citi MasterCard cardholders with Cingular Wireless accounts are already receiving their new Nokia NFC-enabled mobile phones with the built in MasterCard PayPass payment functions. If you think you may qualify and would like to request participation in the New York City area mobile phone trial, please visit www.nyctrial.com by December 20, 2006. Trial participation is limited and certain criteria must be met in order to participate.

With this program, participants may pay for their sales at ANY merchant which already accepts MasterCard PayPass. The whole process is very simple, on checkout, just hold the phone within about 1-2 centimeters of the PayPass payment terminal or tap it against it and you are checked out. Even though the entire checkout process takes just a second or two and you are ‘out the door’, don’t forget to wish the clerk a “Happy Holidays” on your way out. The final payment is automatically charged to the user’s account through the exact same channels as the secure MasterCard network, just like a PayPass transaction or credit card charge.

Participants have the option to ‘turn on’ or enable the PayPass functionality only at the point of sale and disable it at all other times. I blogged possible security issues with RFID a similar technology a few weeks. The post is here.

Trial participants can also take part in the New York City Subway contactless transit fare payment trial sponsored by Citigroup, MasterCard Worldwide, the Metropolitan Transportation Authority, and MTA New York City Transit. All the customer has to do is activate the phone in order to tap for entry at participating 4, 5 and 6 subway locations along the Lexington Avenue Line.

What do the participating company execs have to say?

The Chief Innovation Officer, Global Consumer Group, Citigroup states “We are confident that mobile phone technology with contactless payment will appeal to our customers’ increasing demands for speed, convenience and security.”

“This trial offers Citi customers a new payment experience and, in fact, the first step in the convergence of the wallet with the mobile phone,” said Ed Garofalo, Executive Vice President, Citi Cards.

“Carrying a mobile phone has become almost as common as carrying a wallet,” said Scott McElroy, vice president technology realization for Cingular Wireless. “This trial will continue to help us learn more about how NFC technologies work and how customers will want to use their phones as part of their real-world transaction process.”

“Most people have their mobile phone with them wherever they go to stay in touch. The simplicity of conducting everyday transactions, such as low cost purchases with their phone, adds high value and convenience for consumers,” said Dieter May, Vice President and Head of Nokia Emerging Business Unit. “Nokia NFC-enabled phones used in this trial support over-the-air downloading of cardholder information, which is necessary for commercial rollout of NFC based mobile services. We believe NFC creates new and exciting opportunities for mobile operators, credit card associations, banks and other stakeholders, and we will be closely involved in the creation of the emerging NFC ecosystem bringing benefits to all parties.”

“MasterCard has long believed that the mobile phone represents a ubiquitous payment device, in large part because consumers continue to grow more comfortable using them for a range of activites beyond making and receiving calls,” said Art Kranzley, Executive Vice President and Group Executive, Advanced Payments, MasterCard Worldwide. “We also believe New York City makes an ideal backdrop for a technology built on speed and convenience. We are excited to team up with industry leaders such as Citi, Cingular and Nokia to test the promise of NFC in one of the world’s fastest-paced environments.”

Content Discovery

Additionally, the trial mobile phone with NFC technology allows you to view and download content, such as movie trailers, wallpapers, and voice tones from smart posters featuring the trial symbol. These locations are available after signing up from their web. Again, just wave the phone close to the symbol or tap it and download.

Visa International is following MasterCard’s Lead

Visa International is not far behind….they have just announced a ’strategic partnership’ and investment with mFormation Technologies. mFormation Technologies is a global provider of the same type of mobile device management solutions already in trail runs as just announced with MasterCard.

mFormation provides solutions that enable mobile operators to manage wireless handsets and mobile services remotely. Applications and software updates are efficiently delivered over-the-air, eliminating the requirement for in-person support. This ability could benefit the payments industry by offering banks and operators the potential to securely and remotely provision mobile devices with payment applications, and ultimately bring mobile payments programs to commercial scale.

The collaboration between Visa and mFormation is expecting to develop over-the-air delivery and management solutions for mobile payment applications. The pilot trial is scheduled for 2007.

Q & A – On The MasterCard Program

Q: Where can I use my trial mobile phone? A: Your trial mobile phone can be used to make contactless payments at any merchant accepting PayPass. You can also use your phone to view and download content at smart posters featuring the trial symbol. Of course you can use your trial mobile phone to make calls anywhere in the Cingular Wireless network.

Q: How do I download content? A: To download content simply tap your Trial mobile phone on one of the trial smart posters to gain access to movie trailers, wallpapers, and voice tones.

Q: Will I be charged carrier fees when I make purchases with my NFC enabled mobile phone? A: No. Because transfer of information using the NFC technology does not use the carrier network, there will be no additional carrier transport fees charged.

Q: What is Over the Air (OTA) Personalization? A: Over the Air Personalization is the process of initializing your mobile phone with the information it needs to conduct secure transactions such as making purchases at retail locations that accept PayPass.

Q: Are there charges for Over the Air (OTA) Personalization? A: While personalization is free, you will be charged for the number of kilobytes used to complete the personalization process. See your data plan for additional details.

Q: How safe are contactless payments? A: Thanks to special security technology, contactless payments are as safe as traditional card payment transactions. Your contactless payment-equipped mobile phone must be extremely close to the terminal to be read (typically one to two inches). Contactless payments also provide more consumer control, since the mobile phone doesn’t have to leave your hands to be swiped by a merchant/retailer. U.S.-issued Citi credit MasterCard cards/devices with PayPass are protected with Zero Liability coverage for any fraudulent transactions.

Sources: http://www.cbronline.com… and http://www.cbronline.com…