Absa has announced the start of the first near-field communication (NFC) payments trial in SA.
The trial will see a select group of South Africans being equipped to use their cellphones as payment devices. The trial will commence in mid-December.
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, allowing mobile payments through simply waving or tapping the phone at a pay-point.
The trial is the result of a partnership between Absa, Vodacom, MasterCard, Research In Motion (RIM), VivoTech and the Department of Transport.
BlackBerry handsets will be used initially for the trial, and will be equipped with an NFC-enabled SD microchip.
Adrian Vermooten, deputy managing executive of Absa digital banking, says the initial trial will include 500 people who will be able to use their phones to make low-value payments on Absa campuses, at Vodacom World, and to pay for public transport in the Western Cape.
The payment and NFC services that are available on the handset can be accessed from the phone's main menu, in addition to information about each service, and customer support.
“By simply tapping one's phone in front of a contactless NFC-enabled pay-point, the value of the transaction will instantly be debited from one's bank account,” says Vermooten.
Advanced transport
The MasterCard Paypass Tap and Go payment card has been embedded in the handsets for the trial, allowing participants to load funds into a prepaid store of value on a secure element on the phone. Loading can be done at the point of sale, through online banking, or at Absa ATMs.
Absa says the trial includes the Department of Transport data structure, which will, in future, facilitate more advanced payments in transit.
“The application on the phone will store details of the commuter, the day and time, where they entered and exited the transit system, and use this information to calculate the fares,” says Absa.
“We are taking the next strategic step on the path to mobile and card payments converging,” says Vermooten.
“There is a growing need to be able to pay instantly and securely, wherever you are, and we are seeing strong convergence in this space worldwide. It is Absa's intention to lead in this market.
“The transport operators will play a big role in the uptake of this new form of payment. While this new form factor will start in low-value payments, it is the gateway to a much bigger world.
“Given our card base, customer base, active mobile base and our acquiring base, we believe that we have the ground swell and catalysts behind us to take us on this new journey.”
First mover
Arrie Rautenbach, head of retail markets at Absa, says: “Absa is the first institution in SA to bring NFC capabilities with an EMV (Europay, Mastercard and Visa) card payment application to a handset.”
According to Absa, the benefits of NFC for consumers include “faster transactions, shorter queues, increased levels of security, and the ability to electronically track their spending habits”.
Vermooten says: “This trial is going to provide key insights, which will prove crucial to refining the customer experience as we bring NFC on mobile to market.”
Absa says, in time, customers will be able to store any kind of payment cards in their mobile wallets on their phones.
“This new technology is paving the way and building acceptance networks for mobile payments in future,” says Vermooten.
“As we learn from the practical, hands-on experiences of the trial, we will continue our discussions and deepen our relationships with the major players in the 'NFC ecosystem' to develop the commercial models, and extend the variety of payments instruments made available by the wallet,” says Rautenbach.
Are we ready?
Arthur Goldstuck, MD of World Wide Worx, says SA is ready for NFC technology.
“The gap in readiness is, however, between the people and the devices that they have. It's not really about whether the technology is right for the country, but about having the ecosystem to support it.”
Goldstuck says the great advantage of NFC for SA lies in the transit industry: “People are catching buses, trains and taxis daily in massive numbers, and if all of those transport entities could have some kind of NFC reader fitted to them, and if everyone was carrying an NFC card, it would make people's lives easier, more efficient and safer, because they won't be carrying money around with them.
“It really takes cash out of the system and I think, ultimately, that's really what banks would like to see happening with NFC.
“Absa has gone the route of the microSD card, which will go into just about any smartphone you can buy today. But while the mass market migrates to those phones, you have to have a card solution.
“People are getting familiar with cards through things like social grant payments. So that's not a learning curve; the learning curve is when you have to migrate to the phone, and that will be interesting to see. But it will happen, and it will be good for the entire ecosystem,” says Goldstuck.
Right time
Simon Just, director of consumer at Absa Card, says that with the mobile explosion, there's a distinct demand from consumers to pay instantly and securely.
“For us to put a low-value card in a wallet on a handset that consumers can use and access is really just the first step in that journey to getting to a point where we'll be talking about real high-value cards facilitating payment at the point of sale and the new world of wallets - which is mobile.”
While NFC has long been touted as the killer technology for mobile commerce, it is yet to catch on the in the way it was expected to in mature markets.
Just, however, says Absa takes a much broader view: “We believe people will pay in three ways on mobile phones - proximity payments, virtual payments and push payments. So NFC is just one of the ways consumers will be able to pay.”
“Up until about two years ago, there was a lot of doubt about the NFC standards, but that has now crystallised.
“The speed at which the likes of MasterCard and Visa are reaching agreements with various handset makers, I think, shows that the time is now, and that NFC is going to come to full fruition.”
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