Visa microSD Now in Testing, but When Will it be Certified?

Given the publicity that DeviceFidelity has been receiving the past several months for its contactless microSD card technology, In2Pay, I figured the makers of rival contactless microSDs would be busy making excuses.

DeviceFidelity has been capturing headlines since February when Visa Inc. announced its endorsement of the company’s technology, which can turn smartphones and other handsets into payment devices. DeviceFidelity has since made news with its contactless sleeve for the iPhone and reports that four of the top five retail banks in the United States will be trialing its technology starting this fall.

But competitors Tyfone and Giesecke & Devrient don’t seem too worried by the attention their rival has been garnering and the fact their own product launches appear to be behind that of DeviceFidelity–perhaps well into next year for G&D.

Some of this might be posturing by Tyfone and G&D, that is, playing down the DeviceFidelity public relations coup. As interest soars among big U.S. banks for a technology that could enable them to introduce contactless-mobile payment while snubbing mobile operators, DeviceFidelity’s head start could be hard to overcome. The company’s exclusive supply contract with Visa, while restrictive and not too lucrative so far, according to sources, does not seem to be hurting it too much.

But as both Tyfone and G&D point out, there are no agreed upon specifications yet for certifying open-loop payment applications on contactless microSD cards. How do you test flash cards that fit into a variety of phone models–some with different configurations for the microSD card slot or metal components that might partially block the transmissions from the tiny antennas embedded in the cards.

The Visa payWave application on DeviceFidelity’s contactless microSDs has to work every time a consumer taps his phone, just as a contactless card would. And you can’t tell the consumer to tap the phone on the corners of the reader, where the contactless signal is strongest, or on the part of the phone where the card is inserted. EMVCo, owned by the major card schemes, is not about to change its standard requiring contactless readers to communicate from a range of 2 to 4 centimeters with cards (or devices).

“Until (all) that is completely worked through, you won’t see anyone able to issue anything,” said Martin Maloney, director of global sales and marketing for Giesecke & Devrient Secure Flash Solutions, the German smart card vendor’s joint venture with Taiwan-based flash memory supplier Phison Electronics.

There are other potential problems with achieving a consistent consumer experience. What if the phone’s battery dies before or during a transaction, for example?

Tyfone CTO Siva Narendra told me he doubts the certification, or type-approval, process is ready for any NFC or contactless-mobile form factor, whether microSDs, phones or SIMs with flexible antennas. Until that is resolved, large rollouts by banks of contactless open-loop payment on microSDs are just a dream.

“Needless to say that the type-approval process for plastic is not sufficient for several reasons,” he said.

Visa, as usual, is not saying much publicly beyond its official line. And that is that it plans to be “commercially ready” by the end of the first quarter with a payWave-enabled microSD card product that its banking customers could use. But the card company declines to further define what “commercially ready” means.

DeviceFidelity chief Deepak Jain was at the recent Near Field Communications World Asia conference in Singapore showing off an In2Pay card working fast in a slick Galaxy S Android phone from Samsung. He intimated to me that labs would have criteria by which to certify his cards in coming weeks.

He declined to comment further. But it seems clear that Visa plans for consumers to use the microSD in only a limited number of phone models at first. Certification labs will get microSDs with payWave onboard along with perhaps a few popular Android and BlackBerry models. The device list almost certainly will include the iPhone. The DeviceFidelity contactless sleeve, or case, for the iPhone–for which it recently introduced a version compatible with the iPhone 4–not only has a special slot for the microSD but also has a full-size antenna. That means the card and application doesn’t need to draw power from the handset to complete a transaction and could have a sweet spot marked on the case, helping consumers to know where to tap the case on readers.

Tyfone and G&D appear to believe the first rollouts of contactless microSDs will be part of closed-loop payment schemes or perhaps small regional, open-loop systems, not a nationwide Visa-branded launch. Certification by the major card schemes for large rollouts of microSDs is a long way off, they suggest. But for some observers, when Visa says it will be "commercially ready," it means ready with certified microSDs. 

If that’s the case, banks could be issuing the tiny flash-memory cards by mid-2011. Then the main question is: Will consumers want to tap them to pay any more than they’ve wanted to tap contactless cards at the point of sale? More specifically, will consumers want to enrobe their iPhones in a rubberized case just for the privilege of making payments with their phones?

The answer had better be yes since contactless microSDs will be a lot more expensive than simple contactless cards for banks to issue.


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