An Over-the-Air Test Could Move NFC Closer to Commercial Use

A successfully completed test of specialized mobile technology developed jointly by a U.S.-based maker of contactless-payment readers and software and a German smart card manufacturer could bring closer the commercialization of mobile phones that make point-of-sale payments in the same way contactless cards do. The test, whose results were announced last week by ViVOtech Inc., Santa Clara, Calif., and Munich-based Giesecke & Devrient, showed that ViVOtech server software can download over the air payment applications based on near-field communication (NFC) technology to the SIM card inside a mobile phone. NFC is the technology that allows a handset to perform tap-and-go payments with contactless readers. The test was the first time NFC payment functions had been successfully downloaded to a SIM card over a wireless network, says Mohammad Khan, president and founder of ViVOtech. Up to now, such applications as credit cards or payment coupons had been loaded directly into the SIM by hand, he says. The significance of the test is two-fold. First, it furthers the goal of so-called OTA (for over-the-air) provisioning for NFC. This type of download allows banks and other payments providers to send payment applications to phones?and to update those applications over time?en masse. Without having to provision each phone manually, these providers can more readily prepare for commercial NFC use. Second, the test involved a number of handset models that rely on what has come to be called the Single Wire Protocol (SWP), a standard adopted in Europe late last year that governs the connection between the SIM card and the NFC chip, which is the phone's contactless interface. While such phones are few in number currently and are chiefly used in field tests, Khan says they could start to appear in commercial quantities as early as next year. Indeed, he sees the SWP protocol becoming a global standard. “All the GSM operators want to go toward SWP over the next year or so,” he says. He adds that the test also establishes that ViVOtech's servers can support NFC payments in both SWP phones and phones with so-called embedded NFC. In these phones, payment applications reside on so-called crypto-chips rather than on the SIM. With ViVOtech and Giesecke & Devrient having established that ViVOtech servers can do an over-the-air download of NFC-based payment applications to a Giesecke & Devrient SIM card, the two companies say they will be using the technology for an NFC field trial involving an unnamed large wireless carrier and issuing bank in Europe. Khan says the trial should start next month. A promising technology because it enables cell phones to make tap-and-go POS payments, NFC has been hindered over the past few years by disputes between banks and bank networks, on the one hand, and wireless carriers, on the other, over business issues such as how transaction revenue will be shared. As a result, the technology has been confined to a number of pilots around the world. ViVOtech, for example, says its technology is involved in 25 pilots and that it has shipped more than 450,000 NFC readers to 30-plus countries.