Apple
Inc just unveiled its mobile payments application Apple Pay - expected to debut in the US this October. Apple Pay uses Near Field Communication (NFC)
technology inbuilt within Apple’s latest iPhones and iWatches to allow the user
to make payments for goods and services at retail stores. The application joins a number of other already
established mobile payment apps including Google’s Google Wallet, Softcard (Formerly ISIS) by T-Mobile,
Verizon and AT&T, Square, PayPal , the list goes on.
Mobile
payments which is a convergence of two major industries - Commerce and Communication
– is big business and will only grow bigger in years to come. According to
research firm, Juniper (April 2014),
global payments via mobile devices is expected to be US $507 billion in 2014,
up 40 percent from 2013. Such statistics, are the reasons why major players in both
industries - financial institutions, telecoms and mobile manufacturers – and beyond,
are all positioning themselves to benefit from the increase in adoption of
mobile payment technology.
Mobile payments simply defined are “Payments for products or services between
two parties for which a mobile device plays a major role in the
realization of the payment” (Atos Origin). A mobile device has to play some part in the
whole payment scenario for it to qualify as mobile payment. There are two main types of mobile payments which
are (1) Remote and (2) Proximity
Remote
Mobile Payments, widely used in Kenya, cover payments that take place online
with the mobile phone used to authenticate personal information stored remotely. In this case, in a transaction scenario the
buyer can be anywhere and the transaction still take place, so long as the
necessary funds are transferred from the buyers account to the sellers account.
Remote
mobile payments typically rely on text messaging, a mobile app or a mobile
browser. Safaricom’s Mpesa and Airtel’s Airtel Money which allow subscribers to
shop, pay bills, transfer funds, top up prepaid accounts using their
phones are some of the examples of Remote
mobile payment. Airtime deduction for micro transactions like logos, ringtones
and music purchases are also a form of remote mobile payments.
Proximity
mobile payments refer to contactless payments where a mobile phone equipped
with contactless technology such as Near Field Communication (NFC) interacts
with a physical POS device to allow the transfer of a buyer’s payment
information and complete a transaction. Proximity
mobile payments can also be achieved by the use of bar codes where a 2
dimensional (2D) bar code displayed on a smartphones screen is read by an
optical scanner at the POS or the phones camera is used as an optical scanner
to read a bar code displayed on a POS terminal.
Prerequisite
to proximity mobile payments using NFC is that both the buyer’s phone and the
seller’s check-out counter need to be NFC enabled, and that is where the limitations
come in. Handset manufacturers have been releasing NFC enabled device into the
market since 2011, but it’s taken a while for retailers and organizations to
adopt the technology and start accepting contactless payments.
Some
countries and organizations have already deployed NFC mobile contactless
applications in such places as public transportation, parking bays and
events. For examples, In the US, the
state of San Francisco uses NFC for their parking meters and Japan became the
first to launch the first commercial service worldwide that enables passengers
to use NFC phones as boarding passes for Japan Airlines.
In
Kenya, NFC is also gaining ground, in fact this morning I had a very interesting
conversation with my client Njoroge Thairu who has been utilizing
this technology to shift between profiles on his phone as he moves from place
to place. When he purchased his smartphone, a Huawei P7, he noticed that it said
that the phone was NFC-enabled; being a curious fellow he decided to inquire
about it then to put it to the test.
With
the NFC tags provided with the phone, he put one in the car and another at his
office. Now immediately he gets into his car, he just taps the phone to the tag
and the profile changes to hands free where he can answer calls via Bluetooth,
in his office it changes to ‘meeting’ profile.
Marvelous
isn’t it? Now if only he could use the same for mobile payments, at the ATM, Supermarket,
parking lot, Laundromat…it sure will help cut down on all the cards (credit,
debit, loyalty, ID) that bulk up his leather wallet and attract
the wrong attention from suspicious characters. Strategy Analytics in October 2013 predicted that by 2017,
there will be 115 Million NFC handset owners spending just over $48 billion
using their NFC phones. I do believe that by then Kenya will have fully caught
up with the rest of the world and all you will need to get your weekly shopping done, will be your shopping list and a Smartphone.
Article by Shiyayo Makatiani, Corporate Technologies (K) Ltd
Twitter: @CPTECHKenya
Email: info@cptech.co.ke
Website: www.cptech.co.ke
