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SA could see new payment option

By Leon Engelbrecht, ITWeb senior writer
Johannesburg, 17 Jun 2008

Near field communication (NFC) could become a cashless method of payment in crime-ridden SA, if the price can be brought down and if critical mass can be achieved.

Adrian Vermooten, head of Absa's Mobile Channel, says NFC is gaining ground in markets such as Japan, Europe and the US, where it is used in conjunction with mobile phones as a form of e-ticket to gain access to mass transport systems.

The wikipedia defines NFC as a short-range, high-frequency wireless communication technology, which enables the exchange of data between devices over a distance of about 10cm.

"The technology is a simple extension of the ISO 14443 proximity-card standard (for contactless credit and debit cards, as well as RFID) that combines the interface of a smartcard and a reader into a single device," the online encyclopedia says.

"An NFC device can communicate with both existing ISO 14443 smartcards and readers, as well as with other NFC devices, and is thereby compatible with existing contactless infrastructure already in use for public transportation and payment. NFC is primarily aimed at usage in mobile phones."

Vermooten says SA will need a catalyst or ecosystem that uses the technology, as well as cheap handsets fitted with NFC. Although Vermooten didn't elaborate on the subject, the Gauteng government is looking at an e-ticketing solution for mass transport - including the Gautrain - in the province.

The Absa banker says a draw card for the technology is that on average it takes a person 29 hours to realise his credit card has been stolen, versus six minutes for a mobile phone. But NFC handsets are expensive.

"It is not an ordinary handet," he says. "There is a 'Catch 22' between the manufacturers and users. NFC is costly to install and there's still a very limited offering. The manufacturers are saying 'ask for more and we'll give you more', while users say 'there's not enough handsets around, so it is not viable'."

Vermooten adds that emerging market mobile operators tend to buy cheap $20-$30 handsets. "But these don't have NFC on them. That is in the $200-300 dollar range."

Another obstacle in SA may be the recent introduction of chip-and-pin credit cards. "We've just rolled out a chip capability for merchants. They'd probably like to recover investment on that before we roll out NFC."

But it is nearly certain the technology will reach SA, especially if a mass transit project, such as the Gautrain or the City of Johannesburg's Rea Vaya bus system, creates the right ecology.

Related stories:
Standard Bank not stopping EMV
Bank wary of chip-and-PIN
Gautrain spends R100m on IT
Joburg to call for e-ticket tenders

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