Vodafone is testing its SmartPass mobile payments system in Auckland ahead of an international launch pencilled in for later this year.
SmartPass is Vodafone’s global brand for making contactless payments using a mobile phone equipped with NFC (near field communications). NFC technology is built-in to most new smartphones now on sale, although at the time of writing this does not include Apple’s iPhone.
Vodafone New Zealand is working with Visa which helped develop SmartPass internationally and with BNZ. Eventually other credit and debit card providers are expected to join the scheme.
Goodbye wallet, hello SmartPass
When the technology becomes widely accepted people will no longer need to carry credit cards, eft-pos cards or cash. Instead they will wave smartphones in front of terminals to pay for everything from a litre or milk to restaurant meals. The technology may also extend to public transport ticketing and include discount coupons and customer loyalty cards.
Vodafone’s “pre-commercial” trial will see around 200 people test the technology. Many of the guinea pigs either work for Vodafone or BNZ. Visa Paywave terminals able to handle contact payments have appeared in central Auckland in recent weeks including a number of cafes.
The trial will use either Samsung Galaxy S3 or HTC One Android smartphones along with the Vodafone SmartPass app. Vodafone says testing is likely to last for at least two to three months before the service becomes more widely available.
Vodafone’s pre-emptive strike
NFC has taken a while to reach the market. In 2011 BNZ ran a pilot program. This time last year Telecom NZ, Westpac and Auckland Transport demonstrated a system allowing customers to pay for ferry rides and bus trips using a smart phone. At the time Telecom said the system could go live in early 2013.
Vodafone is working with Telecom NZ and 2degrees as well as with New Zealand’s main banks to develop what they call the TSM or Trusted Service Manager. TSM is effectively a common mobile wallet standard. Without this approach there’s a risk of a fragmented market with rival networks not necessarily accepting devices for each other. TSM is scheduled to go live early in 2014, by then Vodafone’s SmartPass trial will be complete and the system should be in operation.
Mobile wallet barriers
Barriers remain to widespread acceptance of NFC-based mobile wallets. At the time of writing Apple’s iPhone still doesn’t have an NFC chip. While the iPhone represents a relatively small segment of the total smartphone market in New Zealand, it’s users are among those most likely to warm to mobile wallet technology. This could change this week when Apple announces one or more new phones.
Meanwhile with Apple possibly about to adopt NFC, there are reports Google could be heading in the opposite direction and may drop support for the technology.
The key problem for everyone is who gets to clip the mobile wallet ticket and who gets to own the customers and merchants. Carriers, phone makers, software developers, banks, card services companies and even large retailers are all hoping for a slice of the action. Negotiating through these relationships and power structures is proving far harder than creating the hardware and software needed to make mobile wallets a reality.