Hot Topic Reporting season
Hot Topic Reporting season
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Whoops: Telecom boss can't use his own company's mobile wallet

Ignoring iPhone, Auckland Transport, Thales, Telecom push ahead with an NFC-based mobile payment system. At a demo, there is good news, and bad.

Tue, 25 Sep 2012

Pity Telecom director and chief product officer Rod Snodgrass.

His iPhone is incomptible with a new mobile payment system demonstrated today by Telecom, Thales and Auckland Transport.

Rod is in good company.

Most phones today don't come with the NFC (near field communication) technology required for the new tap-and-go payment system demo'd this afternoon (whose broad framework is also supported by Vodafone and 2degrees).

And there's no guarantee that Apple will support NFC in future - or other companies with their mass-market models.

They might, they might not. I have no idea (beyond the fact that Apple seems to have given up on the technology ever gaining traction. Instead it has opted for its Passport service, which uses e-vouchers and onscreen barcodes, plus optional GPS proximity triggers). Why bet on which way the fickle, fast-changing mobile market is going to head? 

NFC has been just six months away for about five years now.

Advocates of the technology – including Vodafone, at one briefing – pinned their hopes on Apple adding NFC with iPhone 5, finally popularising the technology.

It didn’t. Apple left NFC off the iPhone 5. Punters haven’t worried, buying the new model by the bucketload.

Telecom mobile product portfolio GM Ed Hyde was okay. He has brought a Samsung Galaxy S3 to the demo (you not only need NFC, but the right spec. Some rival Androids, like the HTC One X, have the wrong standard – at least for this rollout).

But as noted above, his boss was out of luck.

Hyde said he saw most phone makers releasing an NFC model over the next 12 months (and time, if nothing else, is on his side – the mobile payment solution today, about to be piloted by around 30 people, won't go live until "late 2013" - developer-speak for "sometime in 2014". The 30 people on the trial, more or less by necessity, are using the Galaxy S3).

He hopes NFC fill not only spread trough high-end smartphones, but filter down to $150 to $250 models (and 2degrees has already managed to source LG and Huawei models near that price).

I’m not so sure.

Apple is pushing off in a different direction with its software and onscreen barcode-based Passport service, which uses GPS/cellular and wi-fi to to establish your proximity. (In the Android camp, Google Wallet does use NFC, but has yet move beyond a gimmicky niche.)

Some media see GPS-based solutions, lead by Square (a mobile payment sevice from the founder of Twitter) as a potent threat to NFC.

And it’s very a chicken and egg situation. Telecom (and Vodafone and 2degrees) are hoping more NFC-equipped models will appear on the market. Phone makers want to see mobile payment services to  – and major retailers onboard – before they hit the button.

NFC sleeve?
Hyde said an NFC sleeve could be an option in future for those who don’t have NFC phones.

But that’s another layer of complication (and, boy, Auckland e-ticketing does not need that) and expense. And good luck selling it to Aucklanders already cheesed off with the multi-year electronic payments fiasco, and solutions that come and go.

The good news
On a brighter note, Telecom, Vodafone and 2degrees are playing nice behind-the-scenes, cooperating, with Paymark, on the trusted services manager technology required to make a mobile payment solution work.

And, even better, the three are cooperating on an open wallet – open as in they will share the same basic software but will each be able to tweak it a little.

Westpac and mobile security specialist Gemalto provided other pieces of the jigsaw for today's demo.

All this cooperation makes it more likely that the mobile payment dream will come true. Not just your credit and eftpos cards, all your loyalty cards could be loaded, in virtual form, onto your mobile, for wireless payments at any retailer.

If only it wasn’t betting on NFC …

The demo itself
The demo worked perfectly. (It was held at the Auckland office of Thales, the French conglomerate that has emerged as the arch-enemy of NZ's Snapper).

No surprises there. NFC technology has been hanging around in the background for years, while manufactures, politicians, telcos, banks, payment network operators, retailers and others arm wrestle around it.

A Samsung Galaxy S3 was tapped against a payment terminal, the fare deducted, and our demonstator was duly allowed to walk through an actual ferry turnstyle.

As with 2degrees and Snapper's already up-and-running Touch2Go mobile payment scheme in Wellington, it doesn’t matter if you’re out of coverage, or the phone is off, as the NFC technology is in-SIM, as opposed to the rival in-Phone iteration used by HTC. It’s not as easy as just popping in an NFC-capable SIM card, as the an in-SIM handset also has to have an NFC antenna. Got it?).

Mobiles can be big time-savers for shoppers, and for travelers. 

New Telecom CEO Simon Moutter knows this. As Auckland Airport CEO he saw Air New Zealand introduce its acclaimed mPass app for iPhone.

If so, he could be naturally inclined to think Apple's alternative path to NFC, Passport (likely to be imitated by Android), could be a better path - or at least one that has to be taken into account as Telecom weighs its broader options for mobile payments and services.

There are so many potential avenues - including NZ retail software company Vend, which is working with PayPal on mobile in-store payments. And to keep its rivalry with Thales juicing along, last week Snapper staged an Auckland launch for its Touch2Go system, which it says can be used at 300 retailers if you buy a special NFC SIM card from 2degrees (for $20) or have one of five compatible Android handsets (the high-profile Samsung Galaxy SIII plus the Huawei Ascend Y201, and the L5, L7 and Net in LG's Optimus series).

Who knows where we'll end up with mobile payments ... or how much ratepayer money Auckland Transport (a division of Auckland Council) in its efforts to pick the right course. But where ever we get to, I'm pretty sure it will include iPhones like Rod's - and the phones of the great unwashed.


Telecommunications engineer Steve Biddle thows another complication into the mix: an API (application programming interface) in a phone's operating system software (such as iOS or Andorid) to communicate with a smartphone's NFC secure element. "There isn't such a thing as a 'standard' API, but several competing ones.The Open SIM Alliance API stands the best chance of becoming the 'standard' but whether Google will adopt it into the Android OS is another issue entirely."

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Whoops: Telecom boss can't use his own company's mobile wallet