NFC nears reality in SA

As local banks and the Department of Transport begin endorsing contactless technology, SA is moving closer to the adoption of near-field communication (NFC) mobile payments, say key local players.

In a further development for take-up of NFC, local software company Qmuzik Technologies has entered into an agreement with international software and systems company ViVOtech, to rollout NFC technology in SA and Africa. ViVOtech is the software company behind the Google Wallet.

NFC is short-range wireless technology that enables mobile devices in close proximity to exchange data. This technology has been gaining publicity as more mobile phones are becoming NFC-enabled, facilitating mobile payments through simply waving or tapping the phone at a pay-point.

Qmuzik will resell, implement and support ViVOtech's NFC Trusted Service Manager (TSM) software suite in the region. ViVOtech's contactless and NFC payment software has already been used in several rollouts around the world, and also powers the reading devices of the Google Wallet.

Qmuzik MD Jan Small says the first NFC project in SA was implemented in conjunction with MTN and North-West University, in 2008. A group of students were given NFC handsets to use instead of their MiFare student cards, allowing them to use their handsets to make purchases and access facilities on campus.

In a major step forward, the South African government recently started accepting contactless cards and NFC-enabled mobile handsets, as the standard for public transportation fare collection.

Qmuzik says this development is encouraging the major banks in SA to fast-track NFC deployments.

Herman Singh, CEO of Standard Bank's Beyond Payments division, explains the national Department of Transport has mandated the implementation of electronic ticketing for public transport systems in SA. The first stage of this project is being implemented in Durban with the rollout of the Muvo smart card.

“It is a first for SA and Africa as a whole. It is also a world first in the sense that the plan is for the entire transit system (buses, trains, etc) to begin using electronic ticketing,” says Singh.

The pilot project in Durban will begin in February on buses, and Singh says this will be followed by a mass deployment across all modes of transport, first in Durban and then throughout the country.

A similar use of contactless technology was implemented at the Oppikoppi festival this year, and Singh says the tap-and-go system was “well received”.

“Beyond Payments foresees that uptake of the card will be enhanced by the fact that it will offer millions of less affluent South Africans access to a banking product.”

According to Singh, in the local environment, before NFC mobile payments catch on there will first be mass adoption of contactless cards due to their convenience, especially for transport.

Head of NFC initiatives at Qmuzik, Hansie du Plessis, says NFC is a simple and powerful technology, but one that requires a few parties to come together.

Du Plessis says three major things need to be in place for a bank to deliver a customer's credit card on their phone: an NFC-enabled handset, the relevant bank needs to have set up trusted service manager software, and the point of sale needs to be equipped with a capable reading device.

According to Qmuzik, it has already received strong support from mobile phone manufacturers such as Nokia.

Nokia's head of NFC partnerships and development for the MEA region, Adam Birchall, says the mobile company has been working with Qmuzik to identify local NFC projects and partnerships.

“We are excited about the potential of NFC within Southern Africa and look forward to collaborating on commercial campaigns within both open and secure NFC environments,” says Birchall.

Explaining how NFC mobile payments actually work, Du Plessis says a user will have to open a payments application on their handset and enter a PIN. An image of the user's credit card will then be displayed.

“You tap the image and present your phone to the credit card device by tapping your phone on the device.”

Du Plessis says a phone can be used to house multiple cards, including loyalty cards, gift cards and credit cards.

“Imagine swiping our phone at the Gautrain. No more bulky wallets or 10 different plastic cards. And in the near future your gym card, office access card and the likes will all be delivered over the air.”

“South African banks are leaders in technology and innovation and we expect NFC to be available in small controlled environments in 2012. The question now is who will be first,” says Du Plessis.

“We are all very aware of mobile network operators partnering with banks. Absa has recently announced their partnership with Vodacom and the MTN/Standard Bank partnership is also well known.”

Absa recently announced the rollout of contactless “tap-and-go” payments, which it says will be the gateway to NFC mobile payments.

Head of retail markets at Absa Arrie Rautenbach says mobile phones will become the key device for making payments in the future, and hints that Absa is aiming to be the first mover.

“We expect that over the next five years, the mobile phone will become a commonly used device for effecting payments. Absa is already playing in that space.”

Rautenbach says consumer education will be key. “Breeding familiarity will lead to a growth in usage, and ultimately, allow both consumers and merchants to benefit from faster check out and convenience.”

Visa SA country manager, Mandy Lamb, says Visa is supportive of the adoption of NFC in the country.

“In order for NFC to be successful, there is a need to ensure that a significant number of mobile phone handsets that support the technology are available. To bridge the technology gap between NFC-enabled phones and non-NFC phones, Visa supports a micro SD card-based solution, which will enable faster rollout of NFC in SA.

“Our support for this technology is in line with our vision to be the best way to pay and be paid in Africa.”

Du Plessis says it is no longer a question of if NFC will be adopted, but when. According to the global NFC Forum, 20% of handsets will be NFC-enabled by 2014.

He explains that there are four possible NFC configurations for handsets, including the SIM, SD card or PC board of the phone. Phones can also get NFC functionality through add-on devices or stickers.

“The configurations control is where the so-called secure element (SE) presides. The SE is an electronic vault that will house your credit/debit card details,” says Du Plessis, adding that the SE is extremely important for payments.

“The TSM software enables the bank to take credit card data normally encrypted on plastic to be securely transported over the air onto your phone's SE.”

ViVOtech CEO Michael Mullagh says his company has participated in multiple NFC mobile payment and marketing projects globally.

“The African market will benefit significantly from NFC, as the recent success of closed loop payments and mobile money demonstrated.”