Austria: Telco to Launch NFC Payment Scheme, Bypassing Major Banks, Card Networks
A1, Austria’s largest mobile operator and part of the Telekom Austria Group, is launching its own payment scheme on NFC phones and contactless stickers. The first 500 trial participants will be made up of both employees and subscribers. They will be issued NFC-enabled SIMs or passive contactless stickers, which they could tap to pay with A1’s paybox NFC application at a limited number of locations in Vienna at supermarket retailer Merkur and fast-food chain McDonald’s. They will be able to pay for purchases of up to €25 (US$32.82). The telco intends to expand the trial to a second phase of 5,000 users in early June and then plans to launch commercially in the summer. It’s not clear whether the telco’s NFC SIMs are ready from its vendor or if all five models of SWP-enabled NFC phones are available for the first phase of the trial.
A1, formerly known as mobilkom Austria, is perhaps the first telco worldwide to own its own bank, which it started in 2002. It’s also an NFC pioneer, launching NFC tag-based transit ticketing in 2007, following a pilot. So it’s not so surprising the telco would shun the major card schemes, Visa and MasterCard, in favor of its own payment brand. But among the many challenges facing A1 will be recruiting enough physical merchants to join the scheme and convincing them to deploy point-of-sale terminals supporting the contactless paybox application. Paybox NFC will also be limited to Austria and maybe only to A1, though the telco says it’s in talks with other Austrian operators. And, at least at launch, the telco is not planning to offer any other applications to encourage consumers to use the NFC service, such as loyalty or coupons. All of this means A1 faces an uphill climb in getting its payment scheme established at the physical point of sale.
* Trusted Service Manager: Defined loosely to include companies or other organizations securely distributing, provisioning and managing applications, generally over the air, on secure elements in NFC mobile phones; or licensing their platforms for this purpose.
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Last update: April 2012