M-COMMERCE PAYMENT SYSTEMS - CONTACTLESS PAYMENT SYSTEMS - exploiting the technology of NFC - NEAR FIELD COMMUNICATIONS

pic of a Treo being used with a NFC device

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.	This page used in the following courses taught by Prof. Richardson . MGT D06 MGD 415 FSM 620 BCS 555 MRK 619

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INTRODUCTION

M-commerce payment systems involves several sub-topics which will be explained within this unit NFC - Near Field Communications Tap and Go Contactless payment systems proximity payments micropayments PAD - pre-authorized debit (and real-time pre-authorized debit) P2P - Peer-to-peer money transfers associations and regulatory institutions such as the  CPA - Canadian Payments Association RFID - radio frequency identification (see  witiger.com/ecommerce/RFID.htm )

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INTRODUCTION Terms

M-commerce In early 2013 when discussions of m-commerce is still fairly new and there are many "players" such as the handset manufacturers, credit card companies, financial services (PayPal), etc. all positioning themselves, strict definitions of what is m-commerce is still in flux. For the purposes of business and marketing students understanding the basics, the field of m-commerce can be divided into three areas by usage. 1. using a web connected mobile device, such as a smart phone, tablet, netbook etc. to access the web and conduct some transaction buy a movie ticket, pay for parking, etc.   2. using a mobile device such as a smart phone, tablet, netbook etc. to interact with a device (like a parking meter) through WiFi, Bluetooth or some other connectivity in order to pay for a service such as access to a parking ticket or a rapid transit ticket machine . 3. using a mobile device such as a smart phone, tablet, netbook etc. to interact with another mobile device such that you can receive payment... and this payment would be processed in a way that funds would go into your bank account, or a "stored value" unit. Another example would be using your device to accept someone paying you by credit card and you utilize an accessory device to allow for the card to be swiped and the payment info is read by your mobile device.

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M-payments 2013

It is still early "Only 7.9 million U.S. consumers (less than 90 percent of the total) had adopted (Q4 2012) a consumer-facing NFC-compatible system like "Google Wallet," or apps that use QR codes or other methods to generate a payment." adoption is growing fast "in-store mobile payments nearly quadrupled last year: eMarketer has estimated in-store mobile payments as adding up to $640 million in transaction volume in the U.S., up from $170 million in 2011. However, this figure does not include swipes on mobile credit card readers like Square and PayPal" Mobile payments as part of mobile commerce is exploding 'PayPal processed some $14 billion in mobile payments last year, evidence of mobile catching on as a transactional platform.' from http://www.businessinsider.com/bii-report-the-state-of-the-mobile-payments-race-2013-2#ixzz2MnIVaqCW

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Industry Association websites and Industry news portals are a great way to keep up-to-date with this fast-paced topic (link still good 2015 Jan)

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Example of NFC Technology pic supplied by Tiffany, of her holding her Octopus card

Student Tiffany K. in MGD415 in Feb 2011 at UTM emailed to say "Here is an example of M payment system that I would like to share with you. The Octopus Card  www.octopus.com.hk/home/en/index.html (link still good 2015 Jan) Octopus card is a rechargeable contactless stored value smart card used to transfer electronic payments in online or offline system in Hong Kong.  It is first launched to collect fares for the city's mass transit system. The use of this card quickly expanded for multiple other purposes. It can be used for payment at convenience stores, supermarkets, car parks, fast food  restaurants and vending machines. More than 1,000 merchants also accept the card.

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Tiffany adds "I think this company is very successful in a sense that its products really do help the company to achieve the goal, which is to help making everyday life easier. Besides of having cash, debit or credit card as payment options, people can simply pay things such as groceries, food, or even transportation by using this card. One advantage of using the Octopus card is its security it provides to users. The card is preloaded with a monetary value before users even purchase them. Thus, there is never any communication between the card and the user's bank account. If the smart card is stolen, only the amount of money on the card is subject to theft, as opposed to a user's entire bank account. "

NFC Near Field Communications

Near Field Communications is a category of technology that makes it possible to have the infrastructure of m-commerce payments When we (WTGR and students) say a "category" we are referring to the fact that NFC is considered an application of RFID technology "NFC has evolved from a combination of RFID standards and proprietary technologies for the contactless interconnection of electronic equipment. RFID was originally developed to provide simple identification of ‘tags’ using short-range radio technology, to support applications such as supply-chain management. NFC can support similar applications, but can go beyond this by enabling peer-to-peer communication between two active devices and adding control software that can take a variety of additional actions." from http://research.analysys.com

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NFC Forum

NFC Forum  www.nfc-forum.org "The Near Field Communication (NFC) Forum is a non-profit industry association that promotes the use of NFC short-range wireless interaction in consumer electronics, mobile devices and PCs. The NFC Forum supports implementation and standardization of NFC technology to make it easier to get information, easier to pay for goods and services, easier to use public transport, and easier to share data between devices." - includes the top three mobile vendors in the world,    o Nokia,    o Motorola and    o Samsung (with a collective market share of approximately 60%),  as well as by  NEC, Panasonic and Sony.  Members of the NFC Forum also include  MasterCard, Microsoft, Texas Instruments and VISA.

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NFC Forum

NFC Forum  www.nfc-forum.org The NFC Forum presented its 2007 Technology Roadmap to press and analysts at 3GSM Barcelona (2006 Feb). Also, GSMA presented its NFC Mobile Initiative.  NFC Forum explains "the presentation slides are now available for download."  www.nfc-forum.org/resources/multimedia/NFC_Forum_14Feb07_Press_and_Analyst_Briefing_Slides.pdf  The NFC Forum has released a white paper that "highlights the capabilities of NFC technology and its potential to transform consumers’ everyday lives." the white paper can be read online here  http://www.nfc-forum.org/resources/white_papers/nfc_forum_marketing_white_paper.pdf

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NFC Near Field Communications

Near Field Communications NTT DoCoMo in Japan is "demonstrating the massive potential of NFC" with its FeliCa® service, which is based on a forerunner of NFC.  Launched in 2004, over 10 million FeliCa handsets have been sold, and over  20,000 FeliCa terminals deployed around Japan, in shops, airports, railway stations, cinemas and theatres. From nttdocomo.com's online "glossary" FeliCa:  A brand name for the contactless IC card technology developed by Sony.  (see  http://www.sony.net/Products/felica/ ) RECOMMENDED VIEWING The card includes integrated non-volatile memory and wireless communication chip, facilitating data exchange when held adjacent to compatible reader/writers. The main applications include e-money, prepaid cards for mass public transit systems, employee ID cards, student ID cards and card-keys. A FeliCa chip is embedded in all "Osaifu-Keitai" mobile phones.  www.nttdocomo.com/glossary/f/FeliCa.html  'Osaifu' means 'wallet' and 'keitai' stands for 'mobile phone' in Japanese. It has a wide variety of uses beyond electronic money, including serving as train and airplane tickets, membership cards, and house entry keys.  www.nttdocomo.com/glossary/o/Osaifu-Keitai.html

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NFC Near Field Communications

Near Field Communications Netherlands-based NXP Semiconductors  www.nxp.com , the former chip unit of Philips Electronics, was profiled in a story by ECT Sept 2007. ECT explains "Philips coinvented NFC with longtime collaborator Sony, and now NXP is leading the charge to popularize the technology." Jennifer Schenker, writing for ecommercetimes.com, explains "Hundreds of trials have taken place across the world in recent years, and on Sept. 4, wireless operator Mobilkom Austria announced the world's largest commercial rollout to date of NFC, with plans to offer payment services for mass transit, parking meters and vending machines. In the U.S., Citigroup is testing a service that replaces credit cards with NFC-equipped mobile phones."

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NFC Near Field Communications conferences and events

NFC events This screen capture links to the conference titled "Near Field Communication World Asia 2006" which was held in Singapore in Nov 2006 The link for the sponsors tells you what companies are leaders in this technology.

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proximity  payment  systems

proximity payment systems In developing this unit (March 2007) it became apparent to the writers that the term proximity payments  is sometimes associated with "Contactless payment systems". The two terms are slightly different. Proximity payments means literally that the process of paying means you are "very close" to the receiving instrument. You may have actual contact (like a swipe system), or it may not be contact (like a RFID based system)..

 

Contactless  payment  systems

Contactless payment systems In developing this unit (March 2007) it became apparent to the writers that the term "Contactless payment systems" is sometimes used in conjunction with the term "Near Field Communication" However the two terms are not synonomous. Contactless payment systems is an application that can exist when near field communications are created so for the understanding of readers of this unit, we'll consider contactless payment systems a sub-set, or an application, of NFC.

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Contactless  payment  systems

Contactless payment systems - examples of the technology in use Vantage Card Services, Inc., based in the state of Georgia (USA) has a website on which they describe Contactless payment systems in the context of RFID  (see  witiger.com/ecommerce/RFID.htm ) Vantage explains "Contactless transaction processing utilizes Radio Frequency Identification technology (RFID) and typically consist of a small card or token that you pass by a nearby reader. The reader communicates with the token via a radio signal to verify the transaction against your credit card or checking account." further explanation at  vantagecard.com/solutions/contactless.html

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Contactless  payment  systems

Contactless payment systems - examples of the technology in use Vantage Card Services, Inc. has launched a hardware device they have branded "ViVO" (pic to the left) Vantage explains "Merchants are able to plug a ViVOpay™ terminal into their existing point-of-sale (POS) systems in just minutes and enjoy the increase in average transaction amounts of consumers using payment cards instead of cash" Vantage describes on their site "ViVOpay™ is a patent-pending, plug-n-play hardware application that enables existing merchant magnetic stripe point-of-sale systems to accept payment from contactless credit and debit cards as well as from infrared-enabled cell phones and PDAs. ViVOpay enables proximity payments without any hardware or software changes to existing devices at a minimum cost. Merchants themselves can easily install the ViVOpay terminal to make legacy systems proximity-compatible." Vantage's system enables both infrared and contactless proximity payment technologies on existing POS systems.

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applications in Asia

Contactless payment systems through a cell phone 2005 Student Emmery C. at UTM in MGD415 in April 2007 sent an email in which he shared some pics he took of a coke machine in Singapore, which allows you to make payment through your cell phone. Emmery said "Hello Prof. Richardson I got these pictures when I went to Singapore in the summer of 2005 and I thought it would be useful for your website as an example of mobile payment systems.  Coke is in partnership with Telstra Corp Ltd (Singapore) to create these dial a coke machines.   Currently the way they work is that after you call the machine and enter a pass code it will drop out the coke and bill your phone.   These machines are currently in Singapore and Japan which really shows how mobile payment systems are starting to creep up all over the world.

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applications

Contactless payment systems through a cell phone 2008   Student Simeon K at UTM in MGD415 in early Feb 2008 sent an email in which he shared some information from an article in ecommercetimes.com Simeon explains "The article is about a new phone payment system where a credit card is "integrated" in a person's cell phone for easier transactions"   The article is called "Wading Into the M-Commerce Waters" by Tom Sowa, dated 3rd of February 2008.  http://ecommercetimes.com/story/Wading-Into-the-M-Commerce-Waters-61487.html

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PAD - pre-authorized debit

PAD - pre-authorized debit (and real-time pre-authorized debit)  www.preauthorizeddebit.com/debit.html

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P2P Peer to Peer

P2P - Peer-to-peer money transfers

 

Associations

Master List  www.mobilepaymentforum.org/mobile_commerce_industry_resources/industry_resources/industry_organizations BlueTooth  www.bluetooth.com  CDMA Development Group  www.cdg.org/  "an international consortium of companies who have joined together to lead the adoption and evolution of 3G CDMA wireless systems around the world." Cellular Telecommunications Industry Assoc. (CTIA)  www.ctia.org EMVCo  www.emvco.com/  "formed 1999 by Europay International, MasterCard International and Visa International to manage, maintain and enhance the EMV™ Integrated Circuit Card Specifications for Payment Systems." ETSI  www.etsi.org "Based in France, the European Telecommunications Standards Institute (ETSI) is officially responsible for standardization of Information and Communication Technologies (ICT) within Europe." Global Platform  www.globalplatform.org focused on establishing and maintaining interoperable specifications for single and multi-application smart cards and acceptance devices. Based in California GSM Association  www.gsmworld.com "GSM (Global System for Mobile communications) is an open, digital cellular technology used for transmitting mobile voice and data services. GSM differs from first generation wireless systems in that it uses digital technology and time division multiple access transmission methods."  www.gsmworld.com/technology/what.shtml International Telecommunication Union (ITU)  www.itu.int/home/index.html "headquartered in Geneva, Switzerland is an international organization within the United Nations System where governments and the private sector coordinate global telecom networks and services." MeT www.mobiletransaction.org Mobile Data Association  www.themda.org  non-profit global association for vendors and users of mobile data and their advisors. Mobey Forum Open Mobile Alliance Oasis Forum Radicchio Third Generation Partnership Project (3GPP) UMTS Forum

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Associations CPA Cdn Payments Assoc.

Canadian Payments Association  www.cdnpay.ca - discussed herein in the context of the regulations that WPS and other entities must abide by in order to develop their systems The CPA is not an industry association initiated by the companies in the sector, rather, the "Canadian Payments Association (CPA) is a not-for-profit organization created by an Act of Parliament in 1980 under the Canadian Payments Association Act." The mandate of the CPA is to:  www.bank-banque-canada.ca/en/financial/financial_cpa.html    o "establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments."   o "facilitate the interaction of its clearing and settlement systems and related arrangements with other systems or arrangements involved in the exchange, clearing, or settlement of payments"   o "facilitate the development of new payment methods and technologies."

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CPA Cdn Payments Assoc.

Canadian Payments Association  www.cdnpay.ca  o "facilitate the development of new payment methods and technologies." implications ...........................

Associations Mobile Payment Forum

As they explain on their website  www.mobilepaymentforum.org "The Mobile Payment Forum is the only global, cross-industry alliance of leading organizations from the wireless and financial industries dedicated to realizing the full potential for mobile (m) payments."

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2007 March 6th Prof. Richardson (to the left) and former student Michael Williams (to the right) gave a talk/conversation/presentation to the UTM MGD 415 class on emerging mobile commerce payment systems. Michael - the sharp looking guy in the dark suit, worked (2006/2007) in a marketing job with wpspay.com which is a consortium of    o Bell Mobility,    o Telus and    o Rogers for the purposes of launching a mobile payment system using the wireless cell phone network of these three  cell phone carriers in Canada.

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Michael has been deeply involved in many aspects of these developments so he came to a UTM class and was essentially a "guest lecturer" on this emerging subject. As a result of Michael's helpful explanations and useful comments, I decided (2nd week of March, 2007) to create this new Teaching Unit / Learning Object with the help of two UTM students, Ryan and Sidra. In the 3rd week of March, 2007, UTM Students Ryan McKenzie and Sidra Khan of MGD415 took on the task of taking Michael's comments and information + additional information they sourced, and created the content you see above.

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On this page there may be several quotes from ecommercetimes.com. Permission was given by Richard Kern, Associate Publisher of the E-Commerce Times, in an email to Prof. Richardson 2004 Dec 10th, a hard copy of the email is kept on file in Richardson's permissions binder.
 
 

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