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Proximity payments using mobile phones and micro Secure Digital (SD) cards took an important step toward commercial reality in the U.S. market with the news that Bank of America Corp. will start a pilot next month in the New York area. While the news is of yet another pilot at a time when many backers of near-field communication (NFC) regard the contactless technology as proven and ready for rollout after years of trials around the world, SD cards represent a form factor many consumers are accustomed to for photos and other digital content but not for payments. “This is an opportunity for us to see how our customers and associates use it,” says a BofA spokesperson. “It’s a lot about learning and what capabilities need to be improved.”
Some observers, however, have few doubts a commercial service will quickly follow the pilot, which is set to begin the week of Sept. 13 and run til the end of the year. Einar Rosenberg, chief technology officer at Narian Technologies, a developer of NFC applications and other software for mobile payments, says he is encouraged by the backing of BofA, one of the country’s biggest and most technologically adept banks. The pilot is “a big deal,” he says. “BofA is pretty quick to implement new technology. A good example is mobile banking.”
Rosenberg says banks may be feeling some competitive heat and so may be eager to get commercial NFC payments services into production. Earlier this month, for example, news emerged of a joint venture led by AT&T Inc. and Verizon Wireless, the country’s two biggest mobile networks, to create an NFC service that will reportedly begin testing next year (Digital Transactions, Aug. 3). None of the principals in that venture, which also include T-Mobile, Barclaycard U.S., and Discover Financial Services, will comment on the venture. “It’s the first time [banks] have felt there’s real competition coming out,” Rosenberg says.
The BofA spokesperson, however, calls any speculation about a commercial introduction after the pilot an “overinterpretation” of what the bank is trying to do. “We just need to get through the pilot, and then we’ll determine the next steps,” she says.
The BofA pilot follows a six-month test that the bank ran in its headquarters city, Charlotte, N.C., and that wrapped up in May. That test, however, relied on contactless stickers rather than memory cards, which are capable of much more functionality. “Micro SD is the perfect scenario,” says Rosenberg. “It’s comfortable to most people. Stickers have had a negative reaction.” The BofA pilot’s launch will be followed in October by one that U.S. Bank is planning that will also rely on SD cards and run to the end of the year, according to a U.S. Bank spokesperson, though further details about that trial were not available.
Memory cards for NFC come embedded with an antenna and a secure chip containing an e-wallet that can store payment-account details, coupons, or loyalty points. Once consumers slide the card into the slot in their phones, the handsets can communicate with contactless readers that some merchants have installed. The BofA pilot will work with iPhone and BlackBerry models, and will offer a special “sleeve” that will allow the iPhone, which doesn’t have a memory-card slot, to accept SD cards. The sleeve was developed by DeviceFidelity Inc., Richardson, Texas, which has also developed memory cards for NFC under an agreement with Visa Inc. (Digital Transactions News, May 18, 2010). A DeviceFidelity spokesperson confirms that the company is the vendor for the BofA pilot.
While both customers and employees will participate in the BofA pilot, the bank will not reveal how many. The spokesperson says the memory cards will work with any contactless reader, though she did not have a count for how many have been installed in and around New York City. And, while some early news accounts portrayed the pilot as one BofA will conduct with Visa, the spokesperson says it will run credit and debit card transactions on “other networks” as well, without being specific. This apparently is a reference to card accounts BofA has issued on the MasterCard Inc. network.
A spokesperson for Tyfone Inc., a Portland, Ore.-based competitor to DeviceFidelity, says it has “a couple” of “big” North American pilots coming up as well, though she can’t give any details yet. The company in March said it would work with First Data Corp. to promote its Sidetap SD cards for NFC (Digital Transactions News, March 16). Tyfone is encouraged by the BofA pilot, the spokesperson says, even if its products aren’t involved. “It brings awareness to consumers, institutions, and retailers,” she says. “It’s a validation of something we’ve been working on for the past six years.”
