Mobile Payment Systems - the wallet in your cell phone

Mobile Payment Systems
It’s one thing to say mobile payments will gain traction in the US, and in their NFC variety, what we did in an editorial last year, extrapolating from the experiences of other countries, and another to amusingly watch how things actually played out a year later. By now it’s already widely accepted by analysts that mobile payments are set to explode in the US come 2012, but which of our last year contestants made the cut, and who is most likely to come out on top next year, if the world is still intact?

Most surprising were the announcement of Google Wallet, and the downsizing of the carrier-backed model ISIS. On the other hand, it certainly seems that the traditional payment processors like Visa and MasterCard are winning the battle once again. Bi-winning, we’d say, since they are both planning their own mobile payment networks, layered on top of their existing ubiquitous infrastructure, and will be providing the backend for other initiatives, like Google Wallet.

That explains to a huge extent why the carriers toned down their plans for mobile payment domination with ISIS. Actually carrier-billing is something they can roll out successfully – after all, they are huge as revolving payments processors – but because Visa and MasterCard are so superior in brand recognition and an already established global payment network, people are naturally inclined to trust them before anyone else with the issue of cash stored in your cell phone.


But let’s recap a bit of what we wrote before about the fascinating history behind the NFC-driven mobile payment revolution, which started in Japan. If you have ever been there, you’ve certainly noticed people waving their high-tech looking cell phones in front of soda machines, metro sensors and at cash registers in grocery stores. No fumbling with cash, no card swiping, effortless and classy.

Notorious for their high-tech way of life, the Japanese love and trust their gadgets like hardly any other nation. Nowhere is that relationship more explicitly displayed than in the most private of all gizmos – your cell phone. What is even more stunning, though, is not just the hardware of the Japanese handsets, it is the services offered for them from the mobile carriers in the land of the rising sun. Of greatest interest for this article is “Osaifu-Keitai”, translated as “mobile wallet”.

On July 10th of the distant 2004 the joint venture of Sony, NTT DoCoMo and a couple of local banks, introduced a mobile payment system for the carrier’s customers, that was subsequently licensed by the other Japanese cell phone operators, and today more than 60 million subscribers have cell phones with Sony’s near field communication FeliCa chips. The technology, in a nutshell, can serve as your mobile wallet, credit card, access card, loyalty card, or fare collection on public transits like metro, trains, buses, even planes – all combined in your phone.


Europe is steadily advancing towards a unified payment system but it faces many hurdles before a common system is introduced, especially now with its financial system woes. The EU market is more ragtag than the ones of US or Japan, for example, as it has to reach consensus among 27 member nations before anything is introduced, and that is a lot of red tape to overcome.

Maybe that is why Visa Europe and MasterCard chose Turkey for their pilot NFC projects. Stopgap contactless payment methods have been developed to cover the time until smartphones begin shipping with NFC chips inside - like Visa’s microSD card solution for the Samsung Vibrant, provided by the Texas-based DeviceFidelity, and the MasterCard project executed through a SIM card plus antenna contraption, courtesy of Gemalto, both of which are being tried in Turkey. The Dutch from Gemalto were also contacted by Apple for a programmable SIM card and possibly NFC chips inside the iPhone.

France is trying to be at the forefront of contactless mobile payments by creating the AEPM (Association Européenne Payez Mobile) alliance. It has all the ingredients for a mobile payments pilot to succeed – the largest French banks and mobile carriers, as well as a couple of hundred of retailers are participating. It is probably the first effort that allows for both payWave and PayPass to be used simultaneously, and is using the above mentioned SIM-based NFC solution by Gemalto, until the first phones with NFC chips inside become available. The AEPM members announced last month the publication of the target version of Payez Mobile specifications. This achievement will permit the roll-out of mobile payments in France in the spring of 2012.

Not to be left in the dust, the biggest UK carriers hammered out an NFC alliance under the Everything Everywhere carrier cooperation initiative, for the "rapid development and delivery of new mobile marketing and payment services". Ericsson launched a mobile payment network of its own in seven key European countries, called Ericsson Money, which allows anyone with such an account to send and receive money from their cell phone.

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