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Contactless payment: what’s at stake for tomorrow’s payment solutions?

12 12 2008

By 2011, a third of mobile phones will be equipped with a contactless chip. It is estimated that, in the near future, some 20 billion Euros of transactions will be generated via this type of service. Undeniably, contactless payment and Secure Electronic Transactions (SET) are among the major stakes for the future.

The TES Cluster (Secure Electronic Transactions) now has 123 members | “Pay mobile” extended for one year | Contactless mobile services forum

The TES Cluster (Secure Electronic Transactions) now has 123 members
The cluster has 123 members: SMEs, major companies, universities, research centres… A total of over one million people! 126 million Euros have been invested in research and the cluster is working on the implementation of an international strategy. In January 2008, the TES Cluster moved to the EffiScience Park in Colombelles.
Pôle TES, Campus Effiscience, 8 rue Jean Perrin, Bât D, 14460 Colombelles
www.pole-tes.com

“Pay mobile” extended for one year
Since December 2007, around 1,000 individuals from Caen have been participating in the “Pegasus” contactless payment experiment. Given the success of the venture and the participation of new players, the operation has been extended, for a one-year period, up to the end of 2009. All consumers need to do is to pass their mobile phones in front of an appropriate terminal. A ticket is printed for each purchase and, for those over 20€, a keyed-in code is also required. This type of service is now available thanks to NCF - Near Field Communication. Six leading banks, four mobile phone operators and around one hundred trade outlets are partners in the project. Intermarché in Louvigny, one of the Les Mousquetaires supermarket group’s outlets, is also experimenting contactless payment on checkouts 1 and 5.

Contactless mobile services forum
On the 27th of May, the first “contactless mobile services forum” was inaugurated by Luc Chatel. The aim: to encourage the development of NFC, hence facilitating short-range information exchange between a mobile and a reader, without contact. In due course, our mobile phones could well become genuine electronic wallets! The forum’s players: industrialists, banks, operators and consumer associations, are all carefully contemplating, under the auspices of Jean-Yves Granger (former member of the Laser group - Galeries Lafayettes and BNP Paribas - and director of the Pôle Études, Prospectives et Innovation), the implementation of contactless mobile services, the creation of a propitious ecosystem and of the economic spinoff they may generate. Website: www.forum-smsc.org

“Services, administration, health… tomorrow, secure electronic transactions will be involved in all fields of activity. With Internet, we need to work even harder in order to secure information exchange. The TES cluster therefore needs to pursue and develop its efforts,” notes Pascal Baisnée, the competitiveness cluster’s president.

As a pilot region, experiments using TES are progressing well in Lower Normandy.
For example, six months from now, the inhabitants of the town of Saint-Lô will be given the opportunity to test a double interface smart card system - with contact, to access standard terminals, but also contactless - enabling them to pay for public transport, to join a nursery, etc. “We hope to develop access to a number of services, in keeping with individual needs,” explains Hervé Jean, technical director at CEV Group, and also the man behind the project. “After the smart card, inhabitants will be turning to their mobile phones to access such services. In due course, we should be able to identify ourselves via any communicative device. However, exchanges pertaining to consumers’ personal and private life will need to be increasingly and sufficiently secured.”

The “Les Mousquetaires” supermarket group is also experimenting contactless payment in its Intermarché in Louvigny, on checkouts 1 and 5. Stéphane Leray, an NICT consultant in Les Mousquetaires’ technical management department resumes the experiment, “We noticed that our customers’ habits were changing. They were becoming digital consumers. We consequently decided to take part in the integrated monetics experimental hub recently launched in Caen. And our customers have positively welcomed this new contactless payment method. It’s reassuring to key your credit card number into a device of your own. Every day, two to three hundred clients pay with their mobile phones. The average basket is around 20€ but can range from 1€ to 70€.”

“Making contactless technology more attractive”

Jérémie Leroyer, Chairman of Airtag, overtly admits to the appeal of this type of initiative: “Mobiles are being transformed into tools, becoming genuine Swiss army knives. In Japan, contactless mobile phones are already commonplace. In the country’s leading small-scale supermarket group, contactless payment is associated with a fidelity card system in the form of a Tamagotchi. Every time the client pays, the “animal” is fed.” Nevertheless, Jérémie Leroyer believes that it will take a while before contactless mobiles become available on the French market. In the meantime and thankfully, smart cards already offer a number of possibilities. For example, many a wallet could be relieved of a cumbersome collection of fidelity cards, by incorporating them within a mobile. Or customers could download precious information on a purchased product, before even reaching the checkout. The association between a screen, a connection to the network and a keyboard, enable the consumer to interact with his/her environment.

However, as yet, impetus in France is insufficient with regard to this type of innovation, according to Franck Lefèvre, co-founder and director of Digital Airways. “New technologies are extremely costly, so they need to be incorporated within large-scale projects initiated by major telecommunications operators. However, the latter categorise their clientele into two groups: the under 30’s for whom entertaining experiments need to be developed and the over 30’s for whom efficient experiments need to be developed. But, in order to render contactless technology more attractive, we need to offer more than just a payment solution, to make the entire experience more enjoyable. As such, the Japanese Tamagotchi is an excellent idea. The I-phone, for example, offers a very sexy interface which is playful, pleasant and efficient. Apple has consequently and successfully forestalled its competitors in the field! But they have also shown the way. Only major players have the required resources to conduct far-reaching innovation projects.”

“Generating the impetus towards convergence”

France is nevertheless aware of the importance of the contactless phenomenon. Last spring, Luc Chatel, Secretary of State for Industry and Consumer Affairs, inaugurated the contactless mobile services forum, coordinated by Jean-Yves Granger. The founding general assembly was organised, for the first time, on Friday the 10th of October. For Jean-Yves Granger, “It is time to accelerate the use of contactless mobile services. To create a gateway between a number of sporadic and individual initiatives. We need to generate a genuine impetus towards convergence, and fast!”

Pascal Baisnée