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The U.S. marketplace seems receptive to contactless-payment technology. Although the payment method is still in the early adoption phase, merchants say they can use it to process transactions almost twice as quickly as with other cards because they need no signature for small-ticket purchases. Consumers like the convenience of the speedy payments, while merchants appreciate being able to handle more transactions during busy periods.
Combining contactless technology with mobile phones to facilitate payment transactions will revolutionize the industry. Not only will mobile payments offer significant benefits to end-users and merchants, they also will increase revenue opportunities for banks.
Still, banks and retailers are not the only constituencies eager to maximize efficiency with the technology. The transit market has keenly embraced contactless ticketing to reduce payment times and let travelers enter and exit transport networks more quickly.
Given those benefits, one might assume the payments industry has created a ubiquitous mobile contactless payments infrastructure, but that is not the case. Although mobile contactless technology is progressing at a lively pace, it has been through individual deployments often incorporating different types of technology from suppliers whose services and products are not interoperable. Mobile contactless payment technology has not come into wide use, and committing to the technology can seem risky.
Sustainability of a contactless system is a key to achieving mass-market adoption and realizing the full potential of contactless payments. The ability to offer issuers and end-users products and choices that are appealing and relevant will enable this payments technology to evolve.
Offering choices is vital to encouraging end-users to stay engaged. The technology also has to be cost-effective and scalable to provide businesses with an attractive return on investment and ensure companies bring creative solutions to market.
With so many markets involved and many new and complex business relationships forming, designing a common and neutral infrastructure flexible enough to support a range of current and future models presents challenges. However, a common infrastructure appears essential because advances in technology are dynamic and unpredictable.
Meanwhile, the costs of maintaining current programs are unknown, and companies have yet to identify potential business partners.
GlobalPlatform, the international smart card specification body, is one organization aiming to address that fundamental contactless payments requirement of agreeing upon a common platform. Our technology is already widely deployed in the financial payments and mobile marketplaces. According to the latest conservative figures released at the end of 2007, 195 million GlobalPlatform cards have been deployed, and an estimated 1.4 billion GSM cards use GlobalPlatform specifications for over-the-air application download and management worldwide. Those figures are set to increase dramatically by the end of the year.
Because of the cross-market nature of mobile contactless payments, no single association is responsible for harmonizing industry specifications. Therefore, GlobalPlatform is not working in isolation, but forming alliances with industry bodies across a variety of sectors, working collectively to mitigate the risk of mobile contactless payment standards fracturing at this crucial time.
Alongside GlobalPlatform, those trade groups are promoting debate and encouraging industry cohesion to ensure that the market moves toward a platform that is standardized and interoperable across different technology providers and mobile operators.
For example, GlobalPlatform, the European Telecommunications Standards Institute and the Near Field Communication Forum expect to release an industry mobile contactless services standard before the end of the year. By combining resources, the groups hope to establish an infrastructure that will ensure fair competition, simplify and accelerate the rate of new application development-significantly reducing time to market-and prevent deployment of proprietary products and technology that can be costly to maintain long-term.
To complement that work, GlobalPlatform is updating and enhancing its technology.
One such initiative, which aligns with the evolution of mobile devices to facilitate contactless payment, is an amendment to GlobalPlatform's card technology. That form of payment will require a fundamental transition in consumer payment habits. For example, today's end-user chooses one card from a personal wallet but, in the future, will select a contactless service via the screen of a mobile handset.
Technology soon will store secure downloaded information and provide access to applications on the SIM card, such as the commercial logo of the service provider, and the type of service, such as transit or payment. That will help users decide which service to select when making a contactless payment. The activation state of all applications will be managed securely, reassuring consumers that financial institutions will process payment only for the services selected.
The last two years have been witness to various trials, highlighting the potential success of this innovative technology. With these tests completed, the market will begin to move quickly; GlobalPlatform predicts that 2009 will be the year when companies start to create products for the commercial and standardized offers, before consumers receive mass-market deployments in 2010. This is just the start of realizing the potential of mobile contactless payments.
Kevin Gillick is executive director of GlobalPlatform.
