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NFC-based mobile phones emerge for contactless payment

Posted: 21 Sep 2004 ?? ?Print Version ?Bookmark and Share

Keywords:royal philips electronics? near-field communications? vivotech?

In a prelude to an announcement next week about a mobile phone with near-field communications (NFC) features, Royal Philips Electronics unveiled a partnership Wednesday (Sept. 15) with smart-card reader and software developer ViVOtech. The partners will launch NFC-based contactless payment and promotion for retail applications.

Philips is expected to announce an NFC deal next Tuesday (Sept. 21) with an unnamed handset vendor.

The partnership would allow consumers to make purchases by waving their NFC-enabled mobile phone near a reader made by ViVOtech at checkout, according to Sour Chhor, general manager of contactless and embedded security at Philips Semiconductors. The NFC chip inside the mobile phone communicates a ViVOpay reader to transfer payment data, and the reader automatically initiates a payment.

Philips, a developer of NFC technology and proponent of contactless identification technology, is pitching an NFC-featured mobile phone as the next generation of credit cards. The Dutch company expects NFC technology to provide mobile phone users "easier access to content and services of their choice such as entertainment, transit and shopping."

NFC, which operates over distances of a few centimeters, relies on a device reader to provide power to the NFC chip through inductive RF coupling. The scheme reduces the chip's standby power to zero, a key selling point for power-sensitive mobile devices.

NFC, which operates in the 13.56MHz frequency range, is compatible with current contactless-card technologies utilizing Philips' Mifare or Sony's Felica wireless protocols.

Several key components, crucial to building a universal mobile payment infrastructure based on NFC, are already coming together, said Chhor. Leading credit card companies such as Visa and MasterCard are already onboard with a so-called "contactless pay card" concept, with trials proceeding in Europe, Asia and the United States.

Chhor said the new partnership with ViVOtech solves one of the biggest obstacles to promoting the NFC: lack of equipment for contactless payments. Replacing or upgrading the installed base of 30 million merchant point-of-sale (POS) terminals could cost billions, according to Philips. ViVOtech developed a low-cost contactless reader that can be simply attached to existing terminals. The company develops readers and software that allows banks, retailers and wireless operators to offer a choice of payment devices.

Several mobile phone products will use NFC technology over the next year, according to Chhor. Samsung Electronics announced last month that it will deploy cellular devices using the Philips' NFC chip and technology. Mario Rivas, executive vice president of Philips Semiconductors' communications businesses, said it would not be surprising if Philips' next NFC announcement involved Nokia, a cofounder along with Philips and Sony of the a href="http://www.nfc-forum.org">NFC ForumEarlier this year, when Philips Semiconductors and Visa staged several NFC demonstrations, Philips CEO Scott McGregor said, "We'll seek to put NFC [chips] in all the major handsets."

Consumers could use mobile phones with embedded NFC chips either as an e-wallet (for purchasing small items), or as a smart card-based credit card (for high-end products and services). Users could hold mobile phone several centimeters from a music concert poster, for example. The NFC chip would then download a ticket onto the mobile phone. For more expensive purchases, customers could use NFC-enabled mobile phones to ViVOtech POS terminals to conduct transactions by keying in a code. Secure payment methods could be adjusted in software, according to applications, Chhor said.

As for consumer response, Chhor said "people are amazed at how easy it is to use" NFC, adding that a larger-scale NFC trial is scheduled here at the end of 2004 in partnership with Universal Music. In that trial, consumers will download or purchase music and concert tickets.

- Junko Yoshida

EE Times





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