Looking to Mass NFC Usage, MasterCard Tries Over-the-Air Downloads

Seeking to remove a roadblock standing in the way to eventual mass consumer usage of mobile phones equipped with a form of contactless technology called near-field communication (NFC), MasterCard International this week unveiled a service that will allow cell-phone users to download their account data and other critical information to their handhelds over the air. Relying on a platform developed by Giesecke & Devrient, a Munich-based smart card company, as well as the Nokia 3220 phone model that has been involved in NFC tests so far, MasterCard says tests of the new service will start soon, with the first trials coming in the U.S. Giesecke & Devrient demonstrated the service, known in the payments business as “OTA (over-the-air) personalization,” this week at a major trade show in Las Vegas managed by the Cellular Telecommunications & Internet Association (CTIA). No issuers were announced for the service. Oliver Steeley, vice president of mobile and wireless in MasterCard's Centre of Excellence, says the card network is in discussions with issuers but is not yet prepared to say how many or which ones will participate. With NFC, cell phones can be equipped to perform contactless payments–transactions that rely on radio links between payment device and point of sale terminal–at points of sale rigged with transceivers, much as contactless cards with chip-and-antenna inlays perform transactions in MasterCard's PayPass program. Visa USA and American Express Co. have competing contactless programs. Up to now, the number of consumers who can participate in NFC trials has been limited by the need among credit card issuers to manually program customers' phones with the necessary card account data and related applications. This differs crucially from the case of contactless cards, which are manufactured under rules set by the card associations. “That high-volume machinery to load PayPass card chips doesn't take phones,” Steeley said in a presentation he gave at an NFC conference that ran in parallel with the CTIA show. “We need to move to over-the-air personalization using the carriers.” With OTA personalization, data can be transmitted by mobile carriers to thousands of subscribers, allowing for large-scale NFC trials and, ultimately, rollouts. Indeed, without OTA personalization, Steeley said, “we will never get beyond the 500-user trial there, the 600-user trial here.” So far one trial of NFC for payments has been launched in the U.S., at Philips Arena in Atlanta, and it involves 250 cell-phone subscribers. Others are in progress or are planned in France, Germany, the Netherlands, Taiwan, Thailand, and the Philippines. And more pilots are planned for the U.S. (Digital Transactions News, Dec. 23, 2005). Though no timetable for these has been announced, card-network officials expect the next one to start within as little as six months. Speaking to Digital Transactions News, Steeley said the OTA personalization service will allow phone users to log on to their banks via an online banking site to program their phones. Sitting at a home computer, the user will tap in his cell-phone number and the phone's serial number. The bank will respond with a short-message-service (SMS) message to authenticate the user. Authentication will trigger the download via the subscriber's carrier. “We've been scratching our heads over how to do this, and we think we have it figured out,” Steeley said in his presentation.