Around the world in ... NFC and contactless payments

The technology that could eventually make your bus pass, bank card and coins obsolete is already here -- and it's on its way to your phone.

NFC is a short range wireless technology, very similar to RFID and reminiscent of Bluetooth, commonly used for contactless payments. When an NFC device -- normally a smartcard or mobile phone -- is passed within a centimetre of the reader, data is transmitted between the two.

Most often that sort of data transfer takes the form of payment -- but applications are already going beyond that to contactless ticketing and information exchange.

Australia
Australia is currently very much at the experimental stage with NFC although, with the wind blowing in the right direction, NFC could soon find itself on a steep uptake gradient.

Telstra, along with Visa and NAB, announced a trial of the technology due to start early this year, with around 250 users.

The guinea pigs will be customers of all three companies and will trial NFC by paying for goods and services using their mobile phones. By placing the mobiles on readers in shops, payment will automatically be deducted from their accounts. Typically, contactless payments cut down waiting times for customers by removing the hassle of hunting for coins and speeding up the processing of electronic payments.

While no retail partners have been announced yet, NFC payments are typically accepted in petrol stations, convenience stories and newsagents.

Meanwhile, Commonwealth Bank has introduced Mastercard's contactless payment tech PayPass into its credit cards, following a trial in NSW that lasted six months and involved 35,000 participants.

Commonwealth has included the technology on most of the credit cards it has sent out recently -- a total of over 300,000 to date, with 60,000 new PayPass cards being issued every month.

Both Commonwealth and the NAB/Visa/Telstra experiment allow users to make purchases of AU$35 and under without secondary verification; users making purchases over that amount will be asked to enter a PIN code to authenticate the payment.

The ill-fated Tcard, initially conceived as a smartcard ticketing system for Sydney transport, is another well-known example of contactless tech. The scheme has been dogged with delays and unmet deadlines since its conception -- the project was initially intended to go live for the Sydney Olympics but, seven years later, Tcard vendor ERG has only succeeded in undertaking limited trials.

Asia
Asia Pacific has been the most enthusiastic adopter of NFC so far, with Japan arguably the most mature market in the region, with Japanese mobile operator NTT DoCoMo's "osaifu keitai" -- Japanese for "wallet phone" -- considered one of the most interesting uses of the technology.

Another is Hong Kong's Octopus card: an NFC-enabled debit card which users load up with credit to be spent, contactlessly, as payment for the island state's transport system, in retailers like 7 Eleven or even by swiping the cards on vending machines.

The system, which was launched in 1997, now has 15 million cards in circulation with 10 million transactions carried out every day. Octopus technology is now also accepted outside Hong Kong, making its way recently into Macau and Shenzen, in China.

Octopus is now looking beyond traditional smartcards and is introducing NFC into watches as well as keyrings, such as the Hello Kitty example seen here which debuted late last year.

The Hello Kitty NFC keyring
Credit:Octopus

While the Octopus is a staple in most Hong Kong residents' wallets, Japan prefers to integrate wallets into phones. Leading the charge is the country's largest operator, NTT DoCoMo.

DoCoMo sells a number of handsets with NFC-alike technology included, using Sony's FeliCa system. To date, there are around 20 million customers using FeliCa for debit card transactions and by March this year, a projected four million will also use it as a credit card.

To exploit the use of the technology, DoCoMo has set up its own post paid credit card brand iD, where users can go shopping or withdraw cash from their credit card account -- whether DoCoMo's DCMX or from other banks -- by waving their phone over a reader.

DoCoMo says there are now over 190,000 readers for the system in use, a number it predicts will rise to 250,000 by March. As well as the usual suspects for outlets, taxis are starting to install FeliCa readers, allowing Japanese users to pay for their ride simply by tapping their mobiles against the taxi's NFC reader.

Europe
While Asia has exploited the potential of NFC for moving money around, much of Europe's treatment of contactless payments has focused on ticketing, including London's Oyster card, used for both pre or post payment for the Tube.

The Oyster card replaces weekly, monthly and annual paper tickets; and can store pre-pay credit for individual journeys.

With the Oyster a fixture in most Londoners' pockets, it's hardly a surprise that companies are seeking to exploit its popularity by adding financial services to the mix. In late 2007, Barclays bank added Oyster functionality to its credit cards under the OnePulse brand name, allowing customers to use their cards for normal chip and PIN payments, to pay contactlessly using NFC for small purchases and as a Tube ticket.

Barclays is getting even deeper into NFC with the announcement in November last year that it will be trialling mobile contactless payments by giving 500 guinea pigs NFC-enabled phones, which they can use to make purchases under £10.

Meanwhile, mobile operator Orange is also experimenting with NFC-enabled mobiles as a ticketing mechanism for Manchester City FC ticket-holders to gain access to the grounds.

In its home territory of France, the operator has taken NFC deployments further and hopes to deploy a full commercial system in Bordeaux early this year, allowing the Bordelaises to use their NFC mobiles for "services in urban transport, payment and loyalty programs".

Orange is also part of a working group called Ulysse alongside fellow mobile operators Bouygues Telecom and SFR, as well as transport companies Keolis, RATP, SNCF, Transdev and Veolia Transport, to develop standards that will see NFC-enabled mobiles used as tickets across bus, tram and train networks.

In Germany, a 10-month trial of mobile NFC bus ticketing in the city of Hanau has gone from the trial phase to a commercial deployment, with commuters able to tap their phones against a reader to pay for bus journeys.

Spain meanwhile is taking its first tentative steps towards NFC, with a trial using employees of the country's BBVA bank.

Despite most deployments of NFC remaining small scale or in the experimental phase, many of the technology's best-known cheerleaders are based in Europe, including Nokia. As well as adding NFC functionality to some of its handsets, the mobile phone maker has set up a joint venture with German company Giesecke & Devrient -- which supplies banknote paper, banknote printing, currency automation systems, as well as smart cards -- called Venyon, to provide services to the NFC ecosystem.

Eindoven-based NXP, the semiconductor division of Philips, is also working to encourage NFC uptake, collaborating on interoperability with rival Sony, and taking part in a trial that saw various locations -- including carparks, supermarkets and monuments -- in the French city of Caen kitted out with NFC readers.