Home Articles Vodafone, Visa take a stab at the future of payments processing

Vodafone, Visa take a stab at the future of payments processing

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Staring soon, Vodafone will hand out the highly coveted Samsung Galaxy SIII phones to 101 people to test the future of payments.

Its vision of that future consists of contact-less checkouts, using an intelligent app loaded and a prepaid card worth up to $1,000 into the smartphone, and Visa’s payWave reader, backed by advanced processing technologies.

Rev will provide technology that connects to VisaNet to process transactions. The key feature that enables the whole thing is Near Field Communication, a technology embedded in phones such as the Galaxy SIII.

Many payment methods are being tested but, by and large, the world believes the future lies in the NFC-enabled phone.

Quantum leap ahead

Last year, only 30 million phones were shipped with NFC chips, according to a Swedish technology analyst, Berg Insight. That number will jump over 23 times over the next five years to 700 million in 2016.

Similarly, the value of mobile payment transactions using NFC is estimated at a mere US$4 billion this year. But in 2016, it is forecast to be $100 billion, nearly doubling to US$191 billion the next year, according to ABI Research. Frost & Sullivan puts the number in 2015 at $110 billion.

“We expect to see NFC smartphones eventually replacing all the cards we carry in our wallets, whether for payment, travel, loyalty, ID, or gift vouchers, enabling access at a whim,” said Thomas Roets, Vodafone’s general manager of Strategy and Business Development. “The opportunities are endless!”

To Vodafone, payments processing represents a new market with huge potential. To Visa, the new technology represents ongoing change in its core business, and perhaps an opportunity to improve upon its RFID-based contact-less card, introduced in 2007, that left a lot of users worried about the security of the transactions, and the card.

In Visa’s payWave system, the RFID-enabled card could be used by anybody without an additional level of authentication like a PIN. In the NFC system, the smartphone app has password protection that could prevent, say, lost phones from being misused.

Over the next few months, Vodafone expects to carry out intensive trials of its SmartPass app, running initially on Android phones, and Visa’s security features, not to mention consumer responses, before a likely commercial launch early next year.

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