Mobile payment: A1 starts NFC-testing project

Paying for a hamburger or a bun via mobile phone while you are making a call. This is now possible and should take less than a second. This has been promised by the new A1 and Paybox Bank pilot project. This is the second time, that A1 has started an experiment with Near Field Communication (NFC), the technology that makes touchless data transmission over short distances and therefore cashless payment possible. In 2007 "Wiener Linien-" und "ÖBB" ticket machines were equipped with NFC chips. Back than Nokia 6131 mobile phones already had an NFC chip. But the experiment remained just that.

"We were too early then. Now the right time has come. The technology is advanced enough to make a mobile phone a virtual wallet.", Hannes Ametsreiter,  CEO of A1 explained at a presentation of "Paybox NFC" on Tuesday. Last autumn GSMA developed a consistent standard, Ametsreiter mentions. Alexander Sperl, head of marketing at A1 adds, that there will be 200.000 NFC-capable devices by the end of this year and growth will be exponential during the next year.

A solution with stickers is possible
In the new project "Paybox NFC" clients may pay amounts up to € 25,00 with their mobile phone, touchless, cashless and without using a pin-code. The daily transaction limit is € 50,00. When using mobile phones without NFC technology (like iPHone 3, 3GS, 4 and 4S) the required module can be installed on a secure chip of a specially developed paybox-NFC-sticker, which can be stuck on the mobile. "You can take the sticker with you and put it into your wallet, if you don`t want to stick it onto your mobile", Bernd Hartweger, CEO of Paybox Bank says.

Pilot project until autumn
„Paybox NFC" is said to have been designed as a pilot project. As partners, "Merkur" and "McDonald`S" could be taken on. McDonald`s is testing touchless payment via NFC in three branches on Mariahilferstraße and at Westbahnhof. Merkur has supplied two branches at Westbahnhof, and also the express-cash desks at Gerngroß, LugnerCity and at the "StadionCenter" with NFC-terminals.

Until the end of May a „small, select" group of 500 clients is testing payment via mobile phone. After that the project is going to be expanded up to 5000 participants. In autumn there will be an evaluation – and then another extension – of the project. "Interested testers" who shop regularly in Vienna`s 6th or 7th district, can register directly at Paybox.

In terms of security, one is convinced, that due to a daily limit and security measures, a large fraud with paybox is not possible. The payment will be transmitted encoded (with a 1024 bit end2end encryption). Furthermore the client receives a confirmation via SMS after each transaction. Paybox mentions that in case of loss or theft an immediate cancellation is possible.

Additional pilot projects in Austria
„We want to establish mobile payment on the market and use it for other fields and points of acceptance.", Sperl of A1 explains. It is planned to extend it to virtual loyalty cards. Even here the competitors don`t sleep:  Last autumn, the mobile network operator T-Mobile, together with its sister-company T-Systems, BIPA and the NFC provider Kadona, started a project in Austria, that is to make loyalty cards on NFC-based mobile phones available. One works with NFC-enabled mobile phones as well with so called "stickers". These stickers are only seen as an interim solution by experts, until there are enough NFC-capable mobile phones on the market.

Beside T-Mobile and A1, Orange is also running successful pilot projects in France. In Austria Raffeisen Bank International (RBI) is very acitve in the NFC field. In addition to an NFC-credit card, RBI offers a solution for the iPhone. The device is furnished with a protective cover, which has an antenna and an SD-card slot. This solution is also seen as an interim one by experts, until the iPhone is equipped with NFC. At the moment you can pay this way at selected "Zielpunkt" shops.

Future Problems
Having asked A1 and Paybox about the compatibility of their NFC Terminals with single providers and competitors, one found out that this would be possible, but is not currently planned. Establishing this technology in the mass market might be difficult. Gaining acceptance by consumers would  probably be hindered if they could pay at Merkur but not at Zielpunkt, for example.

For now, it also remains in question how much the cost for paying by mobile phone  would be.  Nobody wants to go into these details as long as the pilot phase is ongoing. But it`s a fact that more and more market players are starting  NFC test projects. Additionally, the Paybox Bank is striving for cooperations  with further mobile providers. Paybox NFC shall – as many other Paybox services – become interoperable. One says there are ongoing talks but one could not provide  more information.