MasterCard Streamlines OTA for Its Spokane M-Payments Pilot

With its latest pilot for near-field communication (NFC) technology, which was announced on Monday and got under way last Thursday with select U.S. Bancorp credit card holders in Spokane, Wash., MasterCard Worldwide is testing a streamlined version of handset personalization it hopes will make it easier for consumers to adopt mobile payments at the point of sale. “Our objective is a very slick, user-friendly experience,” says James Anderson, vice president for MasterCard's Mobile Center of Excellence, which oversees the card network's NFC pilots. “That's easy to say but hard to deliver.” In the six-month Spokane pilot, an undisclosed number of cardholders will use Nokia 6131 handsets equipped with NFC chips to perform contactless transactions at any of just over 70 merchant locations in the area, including stores belonging to Regal Cinemas, McDonald's, Jack in the Box, and 7-Eleven. The phones can also be used at some vending machines at Gonzaga University and at other locations. U.S. Bank began handing out phones on Thursday to what it considers a representative sample of its card customers, though neither the bank nor MasterCard will say how many or give other details. While it is conducting its first mobile-payments pilot with MasterCard's PayPass contactless platform, Minneapolis-based U.S. Bank has historically issued far more Visa cards than those branded by MasterCard. Also on Monday, First Data Corp. said it will announce on Tuesday an NFC pilot in San Francisco involving the BART mass-transit system in that city as well as the Jack in the Box hamburger chain. The pilot is expected to involve private-label accounts rather than card accounts belonging to either of the bank card networks. With NFC, consumers can use mobile phones to make contactless transactions at retail points of sale equipped with contactless readers. Users in Spokane are personalizing their phones with so-called over-the-air (OTA) downloads. With this process, MasterCard and U.S. Bank can download not only the user's credit card account details but also applications allowing the user to receive text messages from the bank and to access a Web service run by MasterCard that can give locations of accepting merchants both in Spokane and around the country. Managing the downloads is Venyon, a joint venture of Giesecke & Devrient and Nokia based in Helsinki, Finland. OTA downloads are considered vital to eventual mass issuance of NFC phones, since the process will allow large numbers of phones to be enabled for NFC payment one time. While this is the third NFC pilot MasterCard has conducted in the U.S involving over-the-air personalization (the card network ran similar NFC pilots last year in Dallas and New York City), the OTA process for Spokane has been considerably simplified, says Anderson. “The basic flow is the same, but we've reduced the steps the consumer has to take to make it easier for the consumer to understand,” he says. The process now involves three steps, he notes, that a consumer can perform at a personal computer, down from at least five in previous trials. All card-account information resides in a so-called secure element separate from both the NFC chip and the phone's SIM card, the chip that identifies the phone to the carrier network. The phones work on both U.S. GSM networks, AT&T Mobility and T-Mobile. To make things easier for users, U.S. Bank held demonstrations at Gonzaga University, where users went last week to get their phones and enroll in the service. Dominic Venturo, chief innovation officer for the bank's retail payment solutions division, says customers were able to personalize their phones at computers the bank had set up on campus and then try them out at a vending machine in the same room. The bank has been testing the Nokia 6131 internally since October, says Venturo, and now wants to learn how consumers will react to it in real-world situations. To that end, the bank plans to conduct a number of surveys with consumers over the course of the pilot to check on how well the transaction process works, how lost or stolen phones are handled, and other matters. “This is an emerging technology test,” he says. “We want to get feedback about [consumers'] experience.”