Dubai
Isn’t there anything that today’s smartphones can’t do? UAE’s smartphone users can soon make payments and buy products when Near Field Communications (NFC) technology gains traction.
Carrefour has confirmed that it is testing the service and other retail majors are planning their own launches.
NFC, a technology similar to Bluetooth, allows two smartphones to interact with each other. NFC works within a small range of four inches while Bluetooth can pair devices up to 50 metres.
NFC is built upon radio-frequency identification (RFID), which uses radio waves to send data to another gadget.
NFC operates on 13.56MHz frequency while Bluetooth on 2.4-2.5GHz. NFC supports data transfer at a relatively slow speed of 424 kbps. In NFC, no pairing is needed unlike Bluetooth and uses very low power.
Gaining momentum
NFC was first launched in 2004 and it is slowly gaining momentum in certain parts of the world.
For the phone to work, it needs a certain infrastructure. The consumer needs to have an account with a bank and a credit card. He needs to enter his card details on to a chip which is known as secure element. No one can tamper with after saving on to secure element. It cannot be rewritten again and that is done only by a third party processor.
Once the credit cards details are in, the users can download an app and when he taps the phone on the NFC-enabled reader the transaction is done.
In this part of the world, there isn’t any organisation that can open up the secure element on behalf of smartphone manufacturers. So the only two models available today are the telcos which puts the card details on a SIM card or on a memory stick.
All smartphone manufacturers use their own encrypt element around the secure element and it is not shared with the banks at the moment. Only the manufacturers can open the secure element and enter the card details of the user and that is not done in the UAE right now.
The only other option is use NFC-enabled SIM card. The telcos save the card details on the SIM card and are highly secure.
Banks want to be independent from the telcos. So, on some phones banks will give users a memory card and they can use it to make a transaction.
Google launched its Google wallet in 2011 to take advantage of NFC technology. The basic function is to replace your physical credit card and also store special offers and customer loyalty cards. These services are available only in the US.
But consumers in the UAE can purchase apps from Google app store using Google Wallet.
Flous is the mobile wallet service by etisalat. Etisalat has launched this service in Egypt recently and is planning to offer it in the UAE..
The UAE Central Bank recently announced that its plan for 2014 to 2016 will include an initiative for creating an e-wallet system using the Emirates ID card. “We are waiting for UAE Central Bank’s approval to launch NFC services in the UAE. We are ready with the technology, just waiting for the green signal,” said Khalifa Al Shamsi, Chief Digital Services Officer for the Etisalat Group.
Etisalat will be launching its NFC services with NFC-enabled SIM card. Many app developers have already developed apps to support NFC and are available on app stores.
Similar services have already been launched in the UAE like NOL and Salik cards which use RFID.
Salik card reader picks up a signal from the small chip that sits on the card that is stuck on the car and it is very powerful when compared to NOL card.
Consumers will be able to buy products from retailers and pay with their smartphones soon by tapping their devices in front of a NFC reader. Commuters will be able to use their smartphones soon to use it as a NOL card.
In future, the advertisements and posters will have a NFC tag built into it and users will be able to scan the tag with their devices to know more about the products or buy an item from a retailer without leaving their homes and it is known as smart posters.
Hassle free
With the smart posters, consumers can scan the bar code with their smartphone cameras and buy the products sitting at homes and you can also get it delivered at home. It is easy and hassle free.
Payment is only a small part of NFC. There are lots of functions you can do with NFC.
Consumers can also use it for variety of payments and transactions, including domestic and international money transfers, bank account management, opening the doors of your car and home, and purchase of tickets for transport.
An NFC tag, which contains a chip inside, is available in the market and consumers can set different tasks on each tag.
For example, users can download an app from the app store and set a tag to switch off the 3G and on the WiFi when the users are at their desks and save it to the tag by touching the smartphone with the tag, so the tag is saved to do this function. He can stick this tag on his desk. Whenever the user enters the office and taps his smartphone on the tag, it switches off his 3G and on the WiFi. Similarly, anyone can set different tasks for each tag. The tags can also be erased and a different set to tasks can be assigned to it. To avail this facility, users need to have a NFC-enabled smartphones or tablets and many of the smartphones come with this technology built into it.
Visa and MasterCard have already launched contactless credit cards – PayPass and payWave. In the UAE, Mastercard has tied up with Emirates NBD for a credit card and with Abu Dhabi Commercial Bank for a debit card, where users can buy things and tap the card in front of a reader to make payments.
“This credit card has an antenna and it is connected to the chip. In that card, we encrypt the card details of the owner and we place it into a compartment. The chip has 99 compartments and each compartment for different applications like loyalty, access ID, etc. We personalise the chip,” said Julian Phillips, vice-president, acceptance and commercial development at MasterCard UAE.
The card looks exactly like a debit card. With the debit card, he said the retailers need to enter the card into a reader and the owner needs to type the PIN while in the contactless card users just need to make contact with the reader. The chip in the card sends small amount of data to the reader and which in turn sends it to the bank and MasterCard and confirms it within three seconds.
“If the transaction is less than Dh100, it does not ask for a PIN. In certain countries the value has gone up to £100. There is also a pre-paid contactless card where consumers can load money into it.,” he said.
MasterCard has 950 terminals in the UAE and by end of the year expects to have around 500,000 contactless cards in the market. Around 73 merchants and 423 outlets in the UAE accept these cards.
According to Visa, more than 200 locations in the UAE have payWave terminals in the UAE.
National Bank of Fujairah will be launching the Visa Platinum Credit which will have contactless payWave option as well. Acquirers also intend to deploy at other merchants including cinemas and ice cream/fast food chains based on the level of PayWave card issuance in the market. According to Pyramid Research, around 28 per cent of smartphones to be sold by 2015 will be NFC-enabled. Efforts to standardise the NFC experience across all platforms in a few years’ time will usher in a new era for mobile wallet and mobile payments. NFC is a developing standard; it will evolve as time goes by.
