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Gadgets & Home Improvement

No rush expected for phone wallet feature

Mass adoption of tap-and-pay plan using near field communication-enabled smartphones will take a few years, say industry players
The Straits Times - May 2, 2012
By: Tan Chong Yaw
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No rush expected for phone wallet feature -- ST PHOTO: TAN CHONG YAW

Singapore's tap-and-pay plan to let you use your cellphone as a wallet is on track to be rolled out as early as the end of next month.

But EZ-Link does not expect a mad rush for this mode of cashless payment.

EZ-Link chief executive officer Nicholas Lee said: 'It will happen progressively over the next three to five years. There won't be an immediate pick-up.'

Two things stand in the way. There are few suitable handsets and fare payment on public transport is not being offered just yet.

For such payments to be made as easily as tapping a farecard on an MRT gate or a card reader on a bus, a cellphone must have a near field communication (NFC) chip.

Such phones include the Nokia 700, BlackBerry Bold 9930 by Research In Motion (RIM) and the Samsung Galaxy S II.

More NFC handsets have been announced this year but they are a fraction of smartphones available on the market.

'It is like pouring water into the desert,' said Mr Koichi Tagawa, who chairs the Massachusetts-based NFC Forum, a non-profit industry group that promotes the standards, certification and use of NFCs. He was here for the Cards & Payments Asia 2012 trade show.

The other barrier to adopting NFC-based payments is whether consumers will bite.

EZ-Link's Mr Lee pointed to the slow adoption of Bluetooth, another wireless technology.

The first Bluetooth handsets and headsets appeared in 2000, but it was not till 2004 that people really started using the devices.

When a user chooses a phone, said Mr Lee, his thinking is 'I will buy a phone because I like it, but not because it comes with NFC'.

Add-ons or bridging solutions can add NFC functions to phones that do not come with NFC chips.

These may be in the form of SIM cards, microSD cards, cases or even stickers with NFC chips in them. But they need an external antenna or they will change the look and feel of a phone.

A case that adds NFC smarts to an iPhone may cost US$50 (S$61) or more. 'Will people want to pay for this?' Mr Lee wondered.

Then, there is the issue of a missing 'killer app' for NFC payment. Industry experts, including those at the market research firm IDC, see transit payment as key to mass adoption of this new technology.

IDC's associate director for consulting and research Michael Araneta said: 'Public transport is the best environment to have a killer app or killer use. Transaction volumes are high and transaction values are low.'

Trials for paying bus and train fares with NFC phones have yet to start in Singapore. MrLee hopes they will start this year. He estimates that trials will take six months.

Performance requirements for transit payment are higher than those for retail payment.

'Different NFC phones behave differently with different readers,' he explained. 'But the consumer experience must be very smooth and seamless,' he added.

Even if the trials succeed and all the kinks are ironed out, NFC will remain only one of the options available.

'It needs to compete with existing solutions which are already working well,' said IDC's Mr Araneta.

The plan to make payment by smartphone available across Singapore was announced last October by the Infocomm Development Authority (IDA). A consortium of seven companies is supposed to begin the roll-out by the middle of this year.

The consortium comprises telcos SingTel, StarHub and M1; DBS, Citibank, the card issuer EZ-Link and the French smartcard chipmaker Gemalto.

The roll-out will involve about 15,000 retail points, including those in Guardian pharmacies, Takashimaya, Mustafa Centre, Giant hypermarkets, Burger King and Bengawan Solo.

Also included will be more than 20,000 Comfort, Premier, SMRT and TransCab taxis.

So for now, the NFC payment roll-out in Singapore is on track, but do not expect it to gain traction till you can use it to pay train and bus fares.

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