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Mobile-network operators, banks and other service providers have held dozens of mobile-payment and ticketing trials using phones that support Near Field Communication technology over the past three years. But few of the pilots have involved more than one telecommunication company or issuer.
The French are taking a different approach to laying the foundation for rollouts of NFC, which enables mobile phones and other devices to perform not just contactless payments, but also two-way communication so the devices can capture special merchant offers, movie trailers off of posters and other information. The major French mobile operators are forming consortia with banks and other service providers to hash out rules and standards for how NFC phones will work once they hit the market in significant numbers. Some experts believe that will occur in 2010.
The latest such working group, launched in December, involves several of France's largest retailers and the country's major telcos. The group will set procedures for delivering coupons, product promotions and other loyalty programs at the point of sale, and it would set rules to help ensure the applications work in the same way at the point of sale no matter the merchant or mobile operator.
It is the first group of retailers worldwide that have joined to discuss the finer points of rolling out NFC technology or, perhaps, any other type of mobile commerce. It counts among its members such French retail giants as Carrefour Group, competing hypermarket chain Auchan, and the consumer-finance arm of department-store chain Galeries Lafayette.
The new consortium joins two other working groups formed earlier by France's major banks and its transit operators, along with the telcos, to set rules and standards for how NFC will work in practice.
The banking group is holding the largest NFC mobile-payment trial to date worldwide in the French cities of Caen and Strasbourg. It involves seven major banks, four mobile operators and 1,000 users. Visa Europe and MasterCard Worldwide also are participating.
Though banks and telcos in other countries, such as the United Kingdom, are talking about bilateral agreements to launch the technology, French mobile-commerce players believe such agreements will not sustain mass-market rollouts.
"NFC is not feasible without cooperation," Bruno Prexl, m-payment marketing manager for France's third-largest mobile operator, Bouygues Telecom, tells Cards&Payments magazine. "We need to have some common strategic view."
The new retailer group was perhaps the most difficult to put together because its members take more of a short-term view of the return on investment in new technology to increase sales, say observers.
But the French retailers view NFC as a promising technology with which to target consumers wherever they are, including right at the point of sale, says Prexl. NFC will enable consumers to tap their handsets just as they do contactless payment, transit or loyalty cards, but users also will be able to download information or links to photos, videos or music by tapping NFC chips embedded in posters or other surfaces. And NFC is designed to enable two users to exchange information by tapping their phones together.
A merchant, for example, could enable consumers to tap a chip embedded in a promotional display as they enter the store, which would open a mobile Internet connection and enable them to download one or more coupons. The consumers then could redeem the coupons by tapping a reader when they check out.
The formation of the retailer group, called "Ergosum," indicates France's big retailers are "keen to roll out (NFC) services," says Prexl.
But certain issues will need to be worked out first. "Think about it," Prexl says. "You are in a large retail store. You have an NFC phone with [private-label] payment cards, multiple loyalty-scheme cards; you have coupons," he said at a recent conference. "You tap your phone on an NFC device. What happens? Which payment card will be used? Which loyalty card will be used? What about coupons? What will the customer experience be? It's really tough issues to solve both on the technology side and business side."
Among other large retailers in the new retailer group are consumer-electronics chain Fnac and home-improvement merchants Leroy Merlin and Castorama.
French merchants, including Carrefour, Auchan and supermarket chain Intermarché already have expressed interest in accepting contactless payment from cards, and the terminals later could be used both for NFC payment and loyalty programs.
Major French banks might begin rolling out contactless cards next year. And Carrefour and Auchan have indicated they would issue their own contactless cards through their banking or consumer-finance arms.
But the group approach among retailers, and banks and transit operators in France, still will enable telcos and service providers to differentiate their services, says Mung-ki Woo, vice president for payment and contactless product lines for France Telecom Group and its Orange mobile brand.
"Once again, it's about defining the whole service, from an end-to-end point of view," he tells Cards&Payments. "Once you have that, you share between everybody. And (for example) everybody can design their own couponing system with their own features."
