Let 1,000 Flowers Bloom: Inside’s Strategy for NFC Workarounds

Impatience in the electronic-payments business with the snarled progress of near-field communication for mobile payments is prompting a number of technology providers to develop products that can facilitate transactions without relying on full-fledged NFC. Now Inside Contactless, a major supplier of chips for contactless cards, has entered this arena with plans to support a panoply of such workaround solutions, including stickers, handset “skins,” and Secure Digital (SD) cards. A French company that supplies chips for more than two dozen bank-sponsored contactless-card programs in North America, Inside will begin pilots in the first quarter and launch the first product rollouts by the end of March, says Charles Walton, executive vice president. Walton says Inside is responding to sentiments expressed by financial institutions that are growing increasingly uneasy with the stalled negotiations with mobile carriers over revenue and risk-management issues. Also hobbling NFC is the paucity of mobile-phone models with integrated NFC chipsets. “There's a lot of anxiousness among banks,” he says. NFC is a very short-range, two-way linking technology that allows handsets to act as contactless-payment devices at the point of sale, transmitting card or other payment data from electronic wallets stored on the phones. To permit handset-based transactions without waiting for NFC, a number of processors have introduced so-called stickers, or contactless inlays embedded in an adhesive tag, that can be affixed to phones. First Data Corp. with its Go Tag product is a prominent example. Others, such as Mobile Payment Skins LLC (Digital Transactions News, June 23), have embedded the contactless inlays in the so-called skins, or soft casings, that consumers use to cover their phones. And a Tyfone Inc., a provider of software for mobile banking and payments, has found a way to embed a secure element for e-wallets along with an NFC chipset on SD cards that can fit into the slots found in about 70% of mobile phones (Digital Transactions News, Sept. 23). Walton says Inside's intent is to supply chips for all of these form factors at once. “A lot of different peripherals make sense,” he says. “We just wanted to make sure the people creating these peripherals are aware of Inside.” Stickers, for example, are evolving, he says. They can now be outfitted with Bluetooth technology so that once they are affixed to a phone, they can communicate with the device's operating system. With this link, “I can leverage and use the keypad and screen,” Walton says, a key advantage offered by NFC. “I can't use a wallet, it's not the grand vision of NFC, but it's a step toward that,” he says. Of the North American financial institutions whose cards now use Inside's technology, Walton says perhaps 10 will be using at least one of these peripherals for a mobile-payments program within a year. The company is already in talks with “six or seven,” he says. One complication could be cost. A contactless card costs close to $1 in high quantities and before printing, Walton says. A sticker is more expensive, though not twice as much, while a Bluetooth-enabled sticker would nearly double the cost of a basic sticker. The payoff, though, could be worth it. “These technologies will spark a lot of innovation,” predicts Walton.