Preparing for Mobile Payment: Visa, MasterCard and Isis Weigh in
While there is much anticipation that consumers will routinely pay with their mobile phones, representatives of Visa Inc. and MasterCard Worldwide–along with their would-be challenger, the telco-led Isis joint venture–say they know most consumers will need to be convinced to use their phones to pay.
And among the things the two global payment brands, and a third planning to challenge their dominance, disagree on is how big a role so-called bridge technologies–such as microSD cards and passive stickers–will play in the push to persuade consumers to pull out their phones rather than cash or cards to pay.
The representatives were speaking at a recent panel discussion, "Mobile Services Providers Views on NFC Payments and Services," during the Mobile and Transit Payments Summit put on by the Smart Card Alliance in Salt Lake City, Utah.
Sarab Sokhey, a Verizon Wireless engineer, who is a special advisor to the Isis joint venture, formed by Verizon, AT&T and T-Mobile USA, said that if designed properly, NFC mobile payment should appeal to average consumers. But it will require a combination of payment, rewards and interactivity–along with fast transactions.
Need for Speed
"It must be fast and convenient–it’s dead on arrival unless it’s three or four seconds," Sokhey said. "The most critical function will be to make the user interface convenient, simple and gratifying."
Isis is putting much thought into the form and function of the mobile wallet it plans to promote to consumers on NFC phones, said Sokhey, who added that he helped design one of the first NFC phone prototypes while working previously at handset maker Motorola.
"Adoption is the key. The proposition we put together has to be sexy, and the interface has to overcome fear, uncertainty and doubt," he said.
Prakash Hariramani, senior business leader for global mobile products at Visa, said making a compelling case for consumers to use mobile devices for payment rests with adding value, before, during and after the transaction. Among other devices, Visa is promoting use of contactless microSD cards to its banking customers in the United States.
"Some of the microSD-card trials we’ve been doing have taken this ecosystem approach, examples of which may include a compelling merchant offer tied to location or transaction history, smartphone-enabled poster (promotions) and real-time notification of account activity," he said.
Clash over Stickers
Agreeing that "payment alone won’t do it," Sadiq Mohammed, director of mobile payments at MasterCard Worldwide, said the device design and functionality are critical.
"It’s a big challenge going from a form factor like a card to a mobile device, so we want to make sure that the testing and approval processes are followed so when the approved phone is at the point of sale, it works," he said. "Stickers do work, and they’re an easy way to get started in this until we have fully integrated NFC phones available."
With Isis banking on the expected ramp-up in the availability of NFC phones, Sokhey said he saw little promise in the use of stickers or other interim ways of bringing NFC capabilities to mobile devices. Stickers can have problems with RF interference, especially when multiple stickers and antennas reside on the same device, a likely scenario.
"Two signals will kill a transaction," he said. "Having more than one antenna is DOA (dead on arrival). That’s not a scalable model."
Another representative of Isis, chief marketing officer Ryan Hughes, told NFC Times recently the venture would likely use bridge technologies, at least initially after launching the Isis service next year, to supplement full NFC phones. Such bridge technologies as microSD cards, SIMs linked to flexible antennas or even stickers are possible.
MasterCard’s strategy for mobile payment is to enable consumers to "use a mobile device anywhere MasterCard is accepted," Mohammed said. That apparently means it will continue to use bridge technologies along with full NFC phones when they arrive.
As pioneers of contactless payment, Mohammed said the card brand is eager to create a unique consumer experience, while preserving consumer choice.
All the panelists agreed that compared with the underwhelming reception the first-generation contactless payment technology got from consumers and merchants, the NFC value proposition is much stronger.
With a "richer set of features," smartphones that carry NFC could offer a dimension that goes well beyond contactless cards, Visa’s Hariramani said. And they could deliver part of the payment service and related applications over the mobile Internet, or cloud.
NFC-based services must be introduced more thoughtfully than were contactless cards, added Sokhey. Service providers should focus on tag reading, location-based advertising and ticketing up front, to ease consumers into the technology, he said.
"Start with low-risk tag reading and get them comfortable," he said. "Draw them in gradually. Convenience will overcome fear."
POS Terminals: A Different Look?
Another way to enhance the consumer experience could involve changing the point-of-sale terminal, Sokhey said. The traditional card reader is overdue for a facelift, especially considering what can be done with NFC technology in the terminals, he said.
"POS terminals will have a different look," he said. "The form factor will change, and they’ll be redesigned. You can do a lot more with that screen. Tablets are being looked at as next-generation POS terminals."
Visa and MasterCard, which devote significant resources to making sure POS terminals are certified and secure might not agree that POS terminals are due for an overhaul anytime soon. But just the same, staffers from Visa and MasterCard involved in mobile payment also see big changes ahead for all parts of the ecosystem thanks to the wide deployment of smartphones and the coming of NFC.
"We think mobile pay is at a tipping point for all stakeholders," said Visa’s Hariramani. "The card is moving into the cloud."