Snapper, 2degrees launch NZ's first commercial mobile payment system

May 3: Vodafone and (soon) Telecom have limited tap-and-go payment trials in Auckland. Both let you use a smartphone to make payments that would usually be made by cash or credit card.

But yesterday 2degrees got the leap on its rivals by backing a new Snapper smartphone app which, when used with a compatible smartphone, can be used for tap-and-go payments.

Snapper is a wholly owned subsidiary of NZX-listed Infratil [NZX:IFT].

The Snapper system can be used with around 400 buses in Wellington - and, although it hasn't been pushed in publicity around the launch, around 600 NZ Bus buses in Auckland.

A couple of taxi companies and a number of retailers - most clustered around the capital - also support Snapper's tap-and-pay system.

A key problem with mobile wallet technology is that it requires a smartphone with compatible near field communication (NFC) technology.

At the moment, there are almost no NFC-compatible phones in New Zealand - Vodafone had to ship in a couple of dozen Samsung Galaxy S2s from overseas for its trial, as the model sold locally didn't support the right spec.

To address this key drawback, 2degrees is releasing a smartphone with the requisite NFC technology - the LG's P692, an Android model.

2degrees CEO Eric Hertz says the LG phone is cheap enough (at $299 off-contract, or $0 up-front on a $30/month contract) to push the technology into the mainstream, and make Snapper's mobile app attractive to Snapper's 200,000 or so customers, who at the moment all use cards.

Mr Hertz said 2degrees will sell four NFC smartphones within a few months, with two more models on the way from LG, plus one from Huawei (the telco industry is keeping a keen eye on Apple, and whether it includes NFC in its next iPhone).

2degrees is co-branding the service launched today as Touch-2-Pay - as well it might, given its the only phone company pushing a mainstream NFC phone.

Snapper's new mobile app can be loaded onto any Android smartphone via Google Play - formerly known as Android Market - but only for managing Snapper cards. It will only work for mobile payments if your phone has NFC, and the applet loaded onto its SIM card (which is exclusive to 2degrees at present).

NBR ONLINE has not had 100% happy experiences with mobile payments so far, with a couple of hiccups, and poorly designed apps that require being started and PIN being entered before they can be used - saving little time over using an Eftpos or credit card.

But in brief bus ride yesterday, the Snapper system worked as advertised with 2degrees' LG phone. 

NBR ONLINE pressed the phone to a Snapper reader on the bus, and it duly deducted the fare.

A key element is the Snapper app doesn't need to be open (though it helps, if you want to see your balance). In fact, the phone doesn't even have to be on - because the LG Phone has support for the service at the SIM card level.

The cellphone only needs to be on, and held in near proximity to the electronic reader.

Snapper's smartphone app can also be used to top-up a Snapper card held in near proximity.

So far, it all looks good.

One note of caution for Aucklanders, however - although the system will work with any bus, taxi or retailer with a Snapper reader, the required phones and special SIM cards are only being sold at 2degrees' Wellington stores at present.

UPDATE MAY 31 Snapper and 2degrees have confirmed rumours that Samsung's new Galaxy S III, released today, will be compatible with the pair's mobile payment service.

On the question of whether Snapper will work with Telecom and Vodafone in future, CEO Miki Szikszai told NBR ONLINE: "For sure. We're looking forward to seeing how the carrier-Paymark joint venture will enable this."

Telecom, Vodafone and 2degrees recently partnered with electronic transaction company Paymark and others to work on a common trusted service manager (TSM) for secure mobile payments. A common platform should help push mobile payments into the mainstream.