Mobile credit just a wave away

  A contactless payment trial may be the beginning of the end for cards

By Charis Palmer

Telstra, NAB and Visa will team up to trial contactless mobile payments in an Australian first.

The trial will take place in the Melbourne CBD in early 2008 and, through the inclusion of contactless technology and a SIM card loaded with a Visa card application, will allow customers to make payments simply by waving their mobile phone over a contactless reader.

Despite other Australian banks investigating the technology, the announcement makes NAB the first to go public with its contactless mobile payments intentions. NAB general manager of consumer deposits Andrew Maitland says “We are trying to get ahead and embrace new technologies ahead of our competition.”

Andrew Thorburn, executive general manager of retail banking with NAB, says “This is cutting edge technology that is being tested by leading banks and telcos around the world.” Similar trials have been conducted by Chase in North America, Maybank in Malaysia and Chinatrust Commercial Bank in Taiwan.

NAB is one of Australia’s largest suppliers of terminals for merchants, and Thorburn says the bank is excited about the benefits for business customers, including less cash handling, faster service times and less queuing at the checkout.

Maitland says “When you boil it down there’s about 1.7 billion cards in the world, but there’s 2.7 billion mobile phones.”

“Cards have been a staple of our diet for a long time, but now we’ve got to start migrating to direct platforms, and with 2.7 billion mobile phones out there you realise you’ve got to move pretty quickly.”

Maitland says “We have researched across our staff and our branch network to understand whether they think this is technology that is going to be acceptable. We’ve also looked at all the industry research on it and that too has been very positive.”

But before contactless payments can become ubiquitous a wide range of banks, merchants and mobile carriers will need to come to the party.

Maitland is confident other mobile phone carriers will look to enable contactless payments. “I don’t think you’ll see only one carrier doing this. Over time it will move to other carriers.”

Likewise, Telstra is confident contactless enabled mobile phones will be used for a variety of purposes in the future, including loyalty and membership cards, marketing offers, public transport tickets and secure building access. Telstra group managing director for enterprise and government David Thodey says “Instead of having a wallet or purse full of plastic cards, you could soon have them all supported on a single Telstra mobile phone, providing enhanced security and convenience.”

Maitland says he is also excited about the security advantages likely to be gained. “We have the ability to be able to switch off that payment device the second we know it’s lost. The time to do this is much faster with a phone than it is with credit cards.”

And he says “We know that on average people report their phone lost within about 26 minutes … with a wallet it can take up to 24 hours.”

Maitland says the bank envisages a cap on payment amounts of somewhere between $30 and $50. “This reflects the nature of what this technology is best used for, which is those convenience purchases such as fast food, restaurants, convenience stores, pharmacies, newsagents, etc where often you want to go in there and grab something quickly and move on.”

The trial will run for three months, and Maitland says a key success factor for the bank will be customer acceptance and feedbackfrom both merchants and end consumers.“We’ll be assessing their feedback and understanding how they view it.”

Another aim of the pilot is to ensure the technology works reliably. “The ability for people to use the open-air network and download these applications in a seamless way is also going to be important for us.”

Visa International executive vice president for Australia, New Zealand and the South Pacific Bruce Mansfield says existing trials in the US and Asia will help. “Visa expects the experience from those initiatives will be of great benefit to this partnership with NAB and Telstra and will help ensure a smooth introduction to Australia.”