The Lowdown on Mobile Credit Cards and NFC Technology

By: Eric Wasselman

As newspaper headlines around the globe hailed the coming of contactless credit cards at the end of 2005, another form of contactless payment is starting to make an appearance. Just days before Labor Day of 2006, Nokia and Visa announced the Nokia 3220 which can be used with Visa's contactless payment system, the Visa Wave.

Concurrently, Japan's biggest cellular service provider, NTT DoCoMo announced it's entry into the credit card market with the debut of its DCMX service which allows subscribers to make payments by simply waving their mobile phones over a special reader. Japan already enjoys contactless payment methods with services such as Edy and Suica, but the new DCMX system from DoCoMo does not require users to recharge their phones with prepaid credits.

All this started on March 18, 2004 when Royal Philips Electronics teamed up with Nokia Corp and Sony Corp to create the NFC Forum with the goal of standardizing the technology and setting up inter-operational guidelines between the devices and services. The technology works in a similar manner as RFID tags, with both active and passive modes, the former having its own power source while the latter getting its power from the reader or initiator, as it is technically known. At that time however there had been no impetus for the introduction of this technology in contactless payment systems, even though the idea was there.

With mobile phones reaching market saturation, both carriers and phone manufacturers are looking for different ways to deliver various value-added services to the consumer. It is no surprise then that corporations are looking at contact-less payment systems as they are considered money making funnels. Money lenders have always prospered.

Contactless payment systems are the next big thing to happen globally, with contactless credit cards being issued en masse by J. P. Morgan Chase in the United States and Visa Wave becoming widely implemented in the Asia Pacific region. Contactless credit on mobile phones is the logical next step following the success of Japan in that arena.

In Europe however, the phenomena has yet to catch on with the German city of Hannau is the only one to embrace the technology. Nokia, Philips, Vodafone and the region's public transport authority the Rhein-Main-Verkehrsverbund (RMV) have begun a program that allows denizens of Hannau equipped with a Nokia 3220 to use their handsets as public bus tickets. The city of Caen in France is also undergoing NFC trials conducted by Philips. Residents with the Samsung D500 mobile phone embedded with the Philips NFC chip can their mobile phones for payments at selected retail stores and parking facilities.

Despite these minor hurdles, mobile phone credit card schemes and NFC technology look set to take the world by storm. As consumers start to demand more from their mobile phones, the time seems ripe for the technology to flourish.

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