Using a mobile phone to pay for goods and services is clearly a big part of Apple and Google’s gameplan.
The concept is very simple – a customer stores details of their credit card on their mobile phone using an app (e.g. Google Wallet or Apples ApplePay and Passbook) that encrypts this information. When making a purchase they can choose to swipe the mobile phone over the reader in much the same way that other contactless payment works with cards from American Express, Visa or MasterCard. The payment is processed in the same way as a contactless credit card at the point of sale or POS. The Apple offering adds fingerprint verification to this through TouchID available on iPhones which adds another layer of security to the transaction.
An interesting fact about using a smartphone for payment this way is that the phones NFC device is still available for a period of time after your phone has gone flat. This is due to thethe way NFC works and the phones batteries own residual power which can last for weeks – so a flat phone can still buy you lunch.
Contactless payment relies on three things:
1. An App
An app which in the case of Apple and Google means a distinct advantage as they control the market through their respective App Stores – iTunes and Play Store. The Australian banks are also looking to get involved with ANZ, WestPac, Commonwealth and Bendigo Bank including Mobile Contactless Payment into their existing Apps. Coles supermarket is also launching a trial offering.
2. The right phone
A contactless technology being available in the Phone which in most cases means a Near Field Communication antennae.The iPhone 6 launched in 2014 with a NFC antennae making this possible when using Apples Apple Pay. Many smartphones running Googles Android are also NFC enabled including the Samsung Galaxy range and the HTC One. This would allow users to take advantage of Google Wallet. Some offering have used a NFC tag attached to the smartphone to get around the problem where phone has no built in NFC capability.
3. Something to buy
A POS (Point Of Sale) that accepts contactless payment from the specific provider. Most of these have been linked to the Credit card providers such as as Visa payWave, American Express ExpressPay or MasterCard PayPass but independent providers will emerge and potentially grow.