No Contact: Could smart phones spur contactless payment card adoption?

RFID-based contactless payment cards are fast, secure and largely unused. Smart phones may be called in to help.

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Beyond POS

Smart phones are central to an overall strategy that includes not just POS payments but also e-commerce and social networking. The NFC phones, Lee says, will become an initiation point for an ongoing dialogue with consumers.

> With the price of RFID tags at about 10 cents, tags could appear not just on posters but also on displays or individual items such as Thrashers T-shirts. If the store were out of one size, touching the display with an NFC phone could redirect the shopper to a Web site where he could order that shirt online.

> Contactless technology also ties into bank and merchant loyalty programs. Visa, for example, works with merchants to provide information on Visa cardholders who, based on card activity, might be potential customers. Those candidates can receive a promotion or digital coupon via phone as bar-code images that can be scanned at the point of sale, Zuercher says. For such a system to work, the phone must have sufficient screen resolution to allow a scan, and the merchant must have a bar code reader. “It’s important to match the coupon type to the consumer handset and to the merchant environment,” Zuercher says.

Nokia

Nokia Other aspects of such programs also need to be worked out, says Peter Ho, product manager in the card services division at Wells Fargo & Co. For example, he says, “if the customer uses the [NFC phone] at the grocery store and the sale prices aren’t calculated, who does the customer call?”

For Visa, NFC is central to a three-pronged strategy involving contactless payment, NFC-initiated e-commerce over the Web and person-to-person money transfers, says Zuer­cher. And banks such as Wells Fargo see the technology as another way to link customers to their online banking services. “We really see mobile as having the ability to deliver payments and payment-related services,” Zuercher says.

> NFC-enabled phones can also function as electronic wallets, allowing users to select which credit card to use for payment and to check account balances online. NFC chips can be integrated into the phone’s existing circuitry or reside on a separate card inside the cell phone.

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