Cuscal and CUA have commenced the rollout of redi2PAY mobile payment app that turns any NFC-enabled smartphone running the latest Andorid operating system — KitKat 4.4 or later — into a contactless payment device.
The app uses Host Card Emulation technology (HCE), which means there is no requirement for a third party, such as a telecom provider or handset manufacturer to be involved.
Adrian Lovney, Cuscal product and service general manager, said mobile contactless payments have traditionally been approached in one of two ways either through a sticker or sleeve, or via access to the secure element of an Android phone.
"Generally, secure element based solutions involves accessing the hardware element of the phone, whether it's located in the sim card or phone, and then the payment credentials from inside the card is placed inside the secure element, which is owned by the network operator and that space needs to be rented out," he explained.
"A trusted service manager is then needed to play a role in providing access to that locked container. While it has a lot of its advantages it's relatively complex and need multiple parties, and can be costly.
"Meanwhile, HCE exists on later models of Android phones and that secure element is replaced by a secure software, so the credit card credentials are stored in the cloud, the application is loaded onto the phone which communicates via the NFC controller to a point of sale terminal. It's relatively easier, simple and cost effective."
CUA's commercial rollout is the first from amongst Cuscal's client base, and comes following the successful pilot of the HCE-based mobile payment in March.
A Newspoll research, commissioned by CUA, showed that nearly 60 percent of Australians expect to be using tap and pay devices in the next five years.
Lovney said the launch of the app will further drive Australia's fondness for contactless payments.
"Australians love contactless and Australians love their smartphones. In just over three years, more than 50 percent of face to face transactions that Cuscal processes are contactless," he said.
"Even Woolworths and Coles, I believe, said that 70 percent of their transactions are now contactless. Australians love contactless because it's quick, it's easy, and it's convenient. Retailers love it because it's quick, and obviously the next step for Australian's love for their smarpthones is to get the contactless technology inside the phone."
According to Lovney, Cuscal's clients have estimated that about 30 to 50 percent of their cardholders own an NFC-enabled smartphone, with the Samsung Galaxy series being the most popular.
CUA CEO Chris Whitehead said the app is one step closer to creating a cardless and more mobile society.
"CUA understands Australians' love affair with mobile devices and will continue to play a leading role in meeting their expectations — bringing innovative, convenient and secure mobile-payments technology to customers as soon as it is available," he said.
As for customers with Apple's iPhone, where NFC technology is non-existent, Lovney suggested: "They need to use a sticker or sleeve."