ANZ and Visa have launched a month-long trial for a contactless payment system using mobile phones, with participants able to pay for goods under $100 at participating retailers by simply waving an iPhone over a payment terminal.
The trial, which is one of many across the world currently being conducted by Visa, comes as mobile manufacturers, banks and telecommunications companies continue to explore the viability of using NFC technology for users to connect their bank account with a mobile phone.
“That is the ultimate goal,” says Visa country manager of Australia, Vipin Kalra. “We want to see these phones with NFC capability.”
“Google itself is launching its own phone with NFC, and we’re hearing rumours that Apple may even be launching a new version of the iPhone which uses NFC. There are definitely smartphones being built with this technology.”
The mobile market is certainly heating up with regard to NFC – the new Google Nexus phone comes with in-built with the technology. And although a new rumour suggests the iPhone 5 may not come with NFC as originally planned, reports suggest Apple still has NFC on their radar.
“The idea is that when we have mobile phones which have NFC, then we don’t need to work with these types of cases. It’ll just work automatically.”
Participants in the Visa trial will equip their iPhone with a special case that contains an SD card with their bank details and a contactless reader. That SD card is connected to the user’s credit, debit or pre-paid card, and funds are taken from the account whenever a purchase is made.
For purchases under $100, no PIN or signature will be required, and transactions can be made at a number of participating retailers including 7-Eleven, JB Hi-Fi, IGA Supermarkets and McDonald’s.
Kalra says the growth of mobile payments over the past 18 months has given the company scope to introduce trials for commercial use.
“We’ve done lots of trials in the past with mobile phone payments, but this one is particular exciting as we’re bringing a Micro-SD card into the case.”
“The idea is that the payment details come from any product, so it could be a prepaid, credit or debit card,” he said.
Part of the trial will be devoted to figuring out how the logistics of NFC partnerships would work, answering questions such as whether users will be given SD-cards from banks, or Visa itself, or how the payment system itself would work on the phone.
“That is part of the pilot, to knock out those logistical details, understand what works better for the telcos, banks and so on.”
Visa intends to commercialise the technology this year – but ANZ is taking a more cautious approach.
ANZ head of product management consumer cards and unsecured lending Sam Qubrosi says the bank is very much interested in how customers react to the trial, as it wants to make the actual experience of mobile payments the best it can be.
“At the moment, it’s very much in its infancy. The first step is to look at the logistics. So we need to find out what the customer value proposition is like, and then look at how the end customer experience would work.”
Qubrosi points out the current mobile payments space is still young, and moving to such a system would be a big step if users don’t understand or like the technology.
“The end point for this technology is not clear, because you’ve got so many players within the eco system – every week there is a different rumour. We need to consider what those are, and then determine if and when we can commercialise.”
“The first part is to understand the customer experience. This utilises the current contactless infrastructure, which is great… but we need to digest the trial and its results.”
Whether or not ANZ and Visa end up launching contactless payments through phones, the mobile space is still heating up. In America, Twitter co-founder Jack Dorsey started Square, an app which allows merchants to take payments through smartphones.
The company is currently monitoring mobile payments of over $US1 million per day. Kalra says this type of activity is what gives Visa hope the technology will become more widespread.
“Those have definitely been the discussions we’re hearing, but given the advancement in technology it seems as if all the minds are coming together, so to speak.”
“We see telcos, banks and retailers coming together. I’m fairly confident we are over the hump and aligned in our vision to the future. We know that eCommerce and mobile commerce will evolve as technology evolves.”
The Visa trial will continue for the next four weeks.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
