Future banking – Near Field Communication

Barclays has made waves (pun intended) with its Barclaycard/Oyster Card tie-up (using VISA’s “payWave” contacless payment system). You may have seen the advert with a guy in a waterslide (a bit obscure I thought).

Other banks are launching contactless payment cards, that allow you to pay for smaller items without cash or PIN codes. The main advantages to retailers is the time saved – think how long it takes at the till to pay using cash or conventional payment cards – and avoiding the cost of handling cash.

But even using a card seems old fashioned.  The future (I believe) is using your mobile phone to pay.  The enabling technology is called Near Field Communication (“NFC”), and it is already here.

Imagine a simple journey to work. First stop, the coffee shop You’ll be able to pay for your coffee by ‘waving” your mobile over a sensor – simulataneously racking up loyalty points with the coffee co. Next, get on the bus (careful with that coffee). Again, ‘wave and pay’. You get off the bus and pass a “smart poster” – wave your phone at it for “money off coupons” to be redeemed later.

The holy grail with all these proposals is to be the “one” card or device that people will carry with them at all times. Hence the huge commercial benefit to Barclays from the Oystercard tie-up (no one goes anywhere in London without their Oystercard, and London 2012 will be THE big event for adoption of smart payment technology in the UK).  sQuid is getting its e-purse technology on to a number of cards issued under the Scottish Government’s entitlement card scheme, and the mobile phone carriers also want a piece of this market.

People are bound to be concerned about fraud, but safeguards are in place to help prevent this. Advances in biometric security may well address these concerns too.

So welcome to the near future and Near Field Communication. Not science fiction at all.

(Brodies’ resident smartcard technology expert) (with assistance from my trainee, also called Martin)

2 Responses to “Future banking – Near Field Communication”

  1. 1 douglasmathie September 4, 2009 at 11:15 am

    Interesting points Andrew.

    Currently the value in the wave and pay purse is limited to a small amount – say £20. That limits how much you can lose if someone nicks your card/phone.

    I remember using this technology in Hong Kong about 6/7 years ago. They called it an Octopus travel card – but you could wave any pay for papers and egg cakes. I loved it.

    As regards fraud I think the next stage is to require a finger print or similar to require payment. So for example, payment is only authorised where the account holder’s thumb is pressed to the screen, and the thumbprint matches the bank’s records – Cool. Unless theives start cutting off vitim’s thumbs – Not Cool.

    Also I think it will be really interesting to watch the banks and the mobile carriers and the transport companies battle for control of the epurse (and the associated revenue).

  2. 2 Andrew Grant September 3, 2009 at 5:11 pm

    Remember the case of the lady who lost her card, didn’t report it in time and the thief racked up £10k worth of bills. The bank refused to pay because she kept her PIN with her card. The amounts might be smaller, but could this not be a big winner for the banks?

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