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Vodafone Italy to Launch Branded Payment Application as Part of NFC Rollout

Vodafone Italia is the latest operator to disclose plans to launch its own payment application, with its announcement Tuesday that it will commercially launch NFC in 2013, starting with a trial this month in Milan.

The mobile operator, one of the two largest in Italy, said it would put its prepaid contactless co-branded payment card, Smart Pass, onto NFC SIM cards, as well as enabling other payment and mobile-commerce applications. It’s calling its branded mobile-payment service Smart Pass NFC.

The move was not unexpected. Vodafone launched contactless Smart Pass card in January of 2012 with partner CartaSi, and said Tuesday it had signed up 100,000 cardholders. Besides enabling users to tap to pay for low-value purchases and conduct a chip-and-PIN transaction for higher-value transactions, the payment card accounts also can be used for online purchases. That's expected to be the case when Vodafone expands the application to NFC phones.

As with the co-branded cards, the NFC payment service will support MasterCard PayPass. Despite an agreement between Vodafone Group and Visa Europe, announced earlier this year, Vodafone in Italy had a separate deal with MasterCard Worldwide to assist it in rolling out payment. Such other mobile operator groups or telcos as Spain-based Telefónica, Germany-based Deutsche TelekomEverything Everywhere in the UK and SFR in France have similar deals with either Visa or MasterCard.

The telcos see prepaid payment, either issued with their own e-money licenses or with small partner issuers, as a revenue source. But that isn’t the only business case, Massimiliano De Carolis, head of mobile payments for Vodafone Italia, said at a conference late last month.

“That is for us to use CRM as a payment instrument,” he said, speaking at the EFMA 2012 mobile and advanced payments conference in Paris, adding that Vodafone wanted to be an “enabler" of NFC services.

“The (NFC) model we have is an open model,” he said. “I don’t think we will go very far if we want to steal the customers (from banks).”

He added to NFC Times that payment is a way to “expand service to the customer.”

European telcos, in general, see their own NFC payment applications as a way to reduce churn and burnish their brands. They could also introduce related loyalty applications. That’s in addition to receiving transaction revenue every time a customer taps to pay with the service. But generally, the main business model for NFC among European telcos is still renting space on their SIMs to banks and other service providers.

Italy has lagged behind such contactless bank payment hotspots in Europe as the UK, Poland and Turkey, but according to Vodafone Italia’s announcement, there will be a massive rollout of contactless point-of-sale terminals in Italy, which will have 150,000 contactless terminals deployed by the end of 2013, compared with 10,000 today supporting MasterCard PayPass.

That could not be confirmed, and Stefania Gentile, head of cards and payments for large Italian bank Intesa Sanpaolo, told NFC Times late last month that there are fewer than 10,000 contactless terminals in place in Italy, most in Milan.

As NFC Times reported late last month, Intesa plans what appears to be a small commercial launch of its Move and Pay payment service with NFC around the end of the year with an unnamed Italian mobile operator, as well as its mobile virtual network operator Nòverca.

The unnamed operator could be Vodafone rival Telecom Italia. The bank and telco worked together, along with Visa Europe, on a recent trial that tested interoperability of a payWave application stored on SIM cards in the Samsung Galaxy S III smartphone. The Intesa launch would use the Galaxy S III and the Galaxy mini 2.

Vodafone Italia did not say when in 2013 it would commercially launch NFC.

 

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