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Telcos unite behind Semble mobile wallet, but 5 stumbling blocks remain

Thu, 09 Oct 2014

New Zealand’s first mobile wallet is on the way. It’ll let you pay for stuff with a wave of your phone over an eftpos terminal.

See NBR’s print edition Friday for the full story, but here are some quick points on the promise, and remaining stumbling blocks, for this new technology.

Last year, a company called TSM was formed by Spark, Vodafone and 2degrees (who own 16.67% each) and payment network operator Paymark, which holds a 50% stake. Paymark is in turn owned by ANZ, BNZ, ASB and Westpac).

Last night, TSM had its brand launch, christening itself Semble.

The jointly-owned company has created a mobile wallet app, also called Semble. You’ll be able to download it to your Android smartphone, load your credit card details, then make purchases with a swoosh of your phone over any terminal that’s Visa PayWave and MasterCard PayPass compatible.

It’ll be branded Semble whether you’re Spark, Vodafone or 2degrees customer, and you’ll be able to load any MasterCard or Visa credit card to the app. You can choose to have one card “always on” by default, so you can buy stuff with a wave of your phone without even opening the app for purchases up to $80. If you’re more security conscious, you can set one or more cards to require a PIN.

Initially, Semble is all about making payments against your credit card (and accruing Air NZ AirPoints if you’ve got a GlobalPlus card). But Ellis has plans to add loyalty, discount and public transport cards.

There are a lot of positives here.

New Zealand is the only market in the world where all the major banks and, more, all the major phone companies, have come together to collaboratively work on a mobile wallet.

Semble CEO Rob Ellis and his half dozen staff have worked a complex maze of interests, working with around 200 people in total across the various partner organisations, plus development partners Gemalto and C-SAM (acquired by MasterCard earlier this year).

A trial involving 250 Spark, Vodafone and 2degrees customers will begin in November. A commercial launch will be in the New Year.

Forget the bitsy trials involving individual carriers, this is the real thing: a mainstream service with everyone onboard.

As Stanners told NBR last night, it's a world first to have all mobile network operators supporting the same mobile wallet. Efforts in the US and UK fell over because not all telcos were onboard, the Vodafone NZ boss says.

It’s a genuine achievement and I wish Semble well. I’ll be lining up to download Semble as soon as it’s available to all-comers.

A few negatives
And yet … my Bad Cop instincts behove me to point out there are a few issues yet to be cracked.

I see five stumbling blocks

1) No iPhone app
The most obvious is that Semble is Android-only at this point. With its new iPhone 6 and 6 Plus, Apple has finally added an NFC (near-field communications chip), NFC being the key technology for making wireless instore payments.

But as Ellis notes, Apple isn’t allowing any app makes to app makers access to its new phones’ NFC at this point – the better to promote its own Apple Pay  (being launched in the US this month) for instore payments (Apple has so far given no timeframe for an NZ launch. Visa and MasterCard won’t have the necessary “trusted token” technology in NZ until some time next year, in any case.).

When will it? No one knows. Vodafone CEO Russell Stanners struck a relaxed pose on this issue at the Semble launch last night, telling NBR it was typically for Apple to hold a new technology tight for a few months before opening it up.

Phones running Google’s Android software (made by Samsung, Sony, LG, HTC, Huawei and others) have more market share than iPhone.

Still, all the phone company CEOs pack iPhones – meaning they can’t use their own mobile wallet—at this point.

And it’s the iPhone 6 and 6 Plus that are in big demand right now. “I just wish we could get more of them,” Stanners said last night (all-comers are facing a wait of up to four weeks on some models).

Windows Phones are also part of the picture these days. Microsoft NZ Paul Muckleston says they account for up to 10% of shipments. But Ellis says there are no immediate Windows Mobile plans.

2) ANZ and Westpac aren’t on board
Two of the four bank that cooperatively own Paymark aren’t onboard.

ANZ is still in talks, and could get with the Semble programme.

Westpac is going its own way. The bank has been trialling a mobile wallet based on the Host Card Emulation (HCE) system, developed by Canadian digital payments outfit Carta Worldwide.

"Westpac has chosen to develop its own mobile wallet which is separate to the solution Semble is developing for all of New Zealand and we respect their decision," Ellis says.

"We continue to engage with ANZ."

What about Kiwibank? 

"Kiwibank have been kept fully informed of progress with Semble for quite some time now and we are in dialogue with them about potentially offering their cards in Semble," Ellis says.

3) Semble can’t replace your eftpos card
It’s one of Rod Drury’s hobby horses that a mobile wallet app should be able to act as your eftpos card.

I agree with him that it would help drive the technology into the mainstream. It would be so practical, and my eftpos card has a pleasing lack of fees.

And Ellis says he’d love for people to be able to load their eftpos card/cheque account details into the Semble app.

But there are no immediate plans. I suspect that lack of fees bit has something to do with it. A lot of elbow wrestling lies ahead.

4) You’ll need a new SIM card
Every mobile payment solution needs what’s called a secure element. In Semble’s case its encrypted onto a special SIM card.

That means even if you’ve bought a new Samsung Galaxy S5 recently, or any other Android with the latest and greatest NFC technology, you’ll still have to swap your SIM for a Semble-enabled one from Spark, Vodafone or 2degrees.

That’s quite doable, of course, but it’s a logistical hassle that will slow up take.

5. Few wireless payment terminals
Semble says there are around 16,000 eftpos terminals that accept wireless payments.

That sounds like a lot, but it’s only around 20% of the total.

That’ll grow over time, but things seem to have stalled, especially with the small army of small retailers – many of whom still have a fee-fighting bodgy bit of tape over the “Credit” button on their payment terminals, let alone being open to NFC.

It’s still hard to pick where things will go with payments.

In a couple of years, maybe I’ll walk into an Event Cinemas theatre or a JB Hi-Fi and pay for something with a PayPal tap on my phone (as I do today on each company’s website – so easy, no credit card details required, although that’s where things get billed.) Payment terminals could be taken out of the picture altogether. (PayPal and Apple are currently jostling over Apple Pay, but I digress).

Interesting times.

For Semble's part, the startup will be looking to gain the kind of critical momentum that will see everyone want to jump onboard.

"Semble is talking to an exciting mix of payment and non-payment service providers. The demand from other service providers has been significant and we look forward to the opportunities this will ultimately bring for New Zealand businesses and customers," Ellis says.

"Our goal is for Semble to one day replace the contents of the physical wallet and we’ll be working really hard to make that a reality."

ABOVE: Semble's official promo clip.

For the full story, read Friday’s National Business Review print edition.

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Telcos unite behind Semble mobile wallet, but 5 stumbling blocks remain