Contactless payments, are we talking money?

Contactless payments really seem to have exploded recently. In the past month alone, we have heard announcements from both MasterCard and Visa about trials they are conducting in cities such as Liverpool, New York and LA; but it was the announcement of a trial that Visa is conducting in Guatemala that caught my attention.

In particular, some observations by Michael Mullagh, CEO ViVOtech in a Finextra news story on this subject (https://www.finextra.com/fullstory.asp?id=19231) caught my attention. Michael commented that "NFC mobile payments have the potential to greatly increase the reach of banking and financial services into large under-banked populations that have hundreds of millions of mobile users.” For once the “hundreds of millions” is a low figure with 4.5 Billion handsets already in distribution Michael so this could be an opportunity to left shift your spreadsheets for a change!

Contactless payments have the potential to now become international – combining the ease of touch-and-go transactions with a wide range of implementation options, financial services can now tailor payments to suit various local demographics. This also means that, when integrated with a consumer-friendly authentication method, it will be far more accessible to a larger range of people.

There are however some challenges to still over come in terminal distribution, in particular use outside MMA’s (Massive Metropolitan Areas) and top up capabilities. At an Intellect conference in  London that I presented at Visa demonstrated their mobile phone integrated NFC SIMM and using the same phone we could also process any other large scale transactions using our Voice Pay system with no additional software requirements on the mobile phone. We are now able to automate the top up process enabling a consumer to sign on the go from their Voice Pay additional credit to their NFC chip account and during 2009 will explore this further within our Cashflows prepayment card division.   

I see great benefit in the implementation of more accessible, simple and unsophisticated payment options into the unbanked populations, and in particularly those with low literacy rates; these groups are a great source of largely untapped potential for the financial services industry, and those in the International Remittance business are already aware of the growing potential here.  There are also very significant benefits in integrated mobile phone payment and financial signature process applications in the massively underexploited B2B sector as well and it will be interesting to see what partnerships emerge in the near term to try and land grab these opportunities where language and not technology is now largely the barrier.