Bank of America Corp. is building on its mobile payments strategy with plans to issue contactless stickers to its credit and debit card customers next year.
Contactless stickers can be attached to mobile phones and other devices, allowing the devices to be used like a contactless card at the point of sale. Bank of America also plans to expand the types of contactless cards it offers to include debit.
"Offering contactless debit cards and payment stickers is another step in" B of A's push to add "more convenient, more secure and faster" payment types, David Owen, the company's payment products executive, said through a spokesman Monday.
Payment stickers are considered a bridge to more advanced mobile payments options that involve embedding near-field communication chips inside mobile phones. Efforts to make such systems available to U.S. consumers are under way, though experts say it could be a few years before NFC phones gain wide-scale adoption.
"Everybody's getting on board with this idea of mobile payments and payments being initiated from the [mobile] device," said Philip Philliou, a partner with the payments consulting firm Philliou Selwanes Partners LLC in New York. "I think these sticker trials are definitely a step in the right direction."
Most large banks have completed or are conducting mobile payments trials in certain geographic markets or customer segments.
Bank of America is also working with Visa Inc. on a test that involves inserting a microSD card that stores payment information into a consumer's mobile phone. Visa, which is partnering with DeviceFidelity Inc., also has trials under way with JPMorgan Chase & Co., Wells Fargo & Co. and U.S. Bancorp.
Consumers can wave their phones in front of a merchant terminal equipped to accept Visa contactless payments to pay for transactions.
A spokesman for the San Francisco payments network referred to B of A questions about whether it was working with Visa to issue its planned contactless payment stickers.
That the Charlotte, N.C., bank would be moving forward on multiple approaches to mobile payments makes sense given that no single consumer preference has yet to emerge, analysts said.
"Issuers make all kinds of bets on a day-to-day basis as to what particular product features are going to appeal to their customer base," said Paul Grill, a partner with First Annapolis Consulting in Linthicum, Md.
Stickers are one "form-factor bet that they're going to make from a marketing perspective to see if they're going to drive a higher level of engagement," Grill said.
Brian Riley, a senior research director with TowerGroup in Needham, Mass., said stickers are a "low-impact way" of getting into the mobile payments market.
"Everybody should have some kind of position in it," Riley said.
Last week AT&T Inc., Verizon Wireless and T-Mobile USA Inc. formally announced a joint venture to develop an NFC mobile payments network called Isis with Discover Financial Services and Barclays PLC's Barclaycard US. The group plans to add other banks as issuers of the accounts.
Google Inc.'s chief executive, Eric Schmidt, has said the next version of the company's Android mobile operating system would be able to support NFC technology.
While the payments industry's attention has lately been focused on moving toward the use of mobile phones embedded with NFC technology, there is some skepticism that the current efforts will get far.
Banks and telecommunication customers still have to wrestle with the issue of determining who owns the customer using the technology, Riley said. "I'm not convinced that the deal with [Isis] will ever come to fruition," he said. "The banks in this field are still facing a long-term question of, 'Is the bank customer using a phone device or is the wireless customer using a bank system?' It's still a major open issue in the United States."
However, banks still need to be doing something in mobile payments or they risk "having to follow … rather than lead," Riley added.
Bank of America, which already issues MasterCard-branded contactless credit cards, is among several players that are offering or considering contactless payment stickers as a part of their overall mobile payments strategy.
Citigroup Inc. this year began offering stickers to some of its customers with MasterCard Inc.-branded credit cards.
Discover has tested stickers for its Zip contactless card technology with more than 700 employees at its Riverwoods, Ill., headquarters and at a facility in Salt Lake City.
The payments processor First Data Corp. last year announced a program with the French contactless chip maker Inside Contactless called Go-Tag, which allows users to set up a Visa-branded prepaid accounts and affix a sticker to their phones.
First Data, a unit of Kohlberg Kravis Roberts, is working with a handful of banks to roll the program out to their credit card and debit card customers next year, said Bengt Horsma, the Atlanta company's vice president of mobile solutions.
Horsma would not say whether Bank of America is among its partners.
Stickers are a way to get consumers more comfortable with the process of using their phone as a payment device, Horsma said.
"The whole idea is just to initiate the industry … and get more banking customers, financial institutions interested in stickers, showing that consumers would actually put this on a phone and use this," Horsma said.
