Will Your Smart Phone Rat You Out? (Updated 7/18/2011)

GPS Location Tracking: Track and Spy Any Cell Phone

SpyingBubbles.com
September 17, 2010

This is the ultimate in covert surveillance, the best spy bug in the world. Simply insert the software as you would in an ordinary mobile phone and then the Mobile Phone is converted into an ultimate spy tool. You can now call the device using a telephone from anywhere you like and the device will automatically activate, allowing you to hear all conversations from the device with crystal clarity.

Government Can Eavesdrop on You Even When Your Cell Phone Is Turned Off

Fox News
June 17, 2009

Using your cell phone's tracking device and microphone, the government can eavesdrop on your conversations even if your cell phone is turned off. The only way around it is to remove your phone's battery.

From CNet, December 1, 2006:

The FBI appears to have begun using a novel form of electronic surveillance in criminal investigations: remotely activating a mobile phone's microphone and using it to eavesdrop on nearby conversations.

The technique is called a "roving bug," and was approved by top U.S. Department of Justice officials for use against members of a New York organized crime family who were wary of conventional surveillance techniques such as tailing a suspect or wiretapping him.

Nextel cell phones owned by two alleged mobsters, John Ardito and his attorney Peter Peluso, were used by the FBI to listen in on nearby conversations. The FBI views Ardito as one of the most powerful men in the Genovese family, a major part of the national Mafia.

The surveillance technique came to light in an opinion published this week by U.S. District Judge Lewis Kaplan. He ruled that the "roving bug" was legal because federal wiretapping law is broad enough to permit eavesdropping even of conversations that take place near a suspect's cell phone.

Kaplan's opinion said that the eavesdropping technique "functioned whether the phone was powered on or off." Some handsets can't be fully powered down without removing the battery; for instance, some Nokia models will wake up when turned off if an alarm is set.

While the Genovese crime family prosecution appears to be the first time a remote-eavesdropping mechanism has been used in a criminal case, the technique has been discussed in security circles for years.

The U.S. Commerce Department's security office warns that "a cellular telephone can be turned into a microphone and transmitter for the purpose of listening to conversations in the vicinity of the phone." An article in the Financial Times last year said mobile providers can "remotely install a piece of software on to any handset, without the owner's knowledge, which will activate the microphone even when its owner is not making a call" ...

The Pocket Spy: Will Your Smartphone Rat You Out?

By Linda Geddes, NewScientist
October 14, 2009

... A decade ago, our phones' memories could just about handle text messages and a contacts book. These days, the latest smartphones incorporate GPS, Wi-Fi connectivity and motion sensors. They automatically download your emails and appointments from your office computer, and come with the ability to track other individuals in your immediate vicinity. And there's a lot more to come. Among other things, you could be using the next generation of phones to keep tabs on your health, store cash and make small transactions -- something that's already happening in east Asia (see "Future Phones" below).

These changes could well be exploited in much the same way that email and the internet can be used to "phish" for personal information such as bank details. Indeed, some phone-related scams are already emerging, including one that uses reprogrammed cellphones to intercept passwords for other people's online bank accounts.

"Mobile phones are becoming a bigger part of our lives," says Andy Jones, head of information security research at British Telecommunications. "We trust and rely on them more. And as we rely on them more, the potential for fraud has got to increase."

So just how secure is the data we store on our phones? If we are starting to use them as combined diaries and wallets, what happens if we lose them or they are stolen? And what if we simply trade in our phones for recycling?

According to the UK government's Design and Technology Alliance Against Crime (DTAAC), 80 per cent of us carry information on our handsets that could be used to commit fraud -- and about 16 per cent of us keep our bank details on our phones. I thought my Nokia N96 would hold few surprises, though, since I had only been using it for a few weeks when I submitted it to DiskLabs. Yet their analysts proved me wrong ...

In February, Google launched Latitude, networking software for smartphones that shares your location with friends. It can be turned off, but campaign group Privacy International is concerned by Latitude's complex settings and says it is possible the program could broadcast your location to others without your knowledge.

"Latitude could be a gift to stalkers, prying employers, jealous partners and obsessive friends," the organisation warns.

A phone-based calendar could also leave you vulnerable. Police in the UK have already identified burglaries that were committed after the thief stole a phone and then targeted the individual's home because their calendar said they were away on holiday, says Joe McGeehan, head of Toshiba's research lab in Europe and leader of DTAAC's Design Out Crime project, which recently set UK designers the challenge of trying to make cellphones less attractive to people like hackers and identity thieves.

"It's largely opportunistic, but if you've got all your personal information on there, like bank details, social security details and credit card information, then you're really asking for someone to 'become' you, or rob you, or invade your corporate life," McGeehan says ...

Future Phones

By next year about 1 in 3 new smartphones will have accelerometers. Pressure sensors and gyroscopes will follow, and soon your handset may keep tabs on your health and pay your bills too.

For example, Nokia is experimenting with adding biosensors capable of monitoring heart and breathing rates, as well as glucose and oxygen levels in the blood.

"Your phone could act as a wellness diary, and start to integrate data with the primary health records kept by your doctor," says Marc Bailey, a researcher at the Nokia Research Centre in Cambridge, UK.

Meanwhile mobile commerce, or M-commerce, in which phones are used to transfer money or pay for shopping, is already expanding rapidly. Cellphone users in Japan can buy train or airline tickets with their handset, while people in Afghanistan, the Philippines and east Africa can use their handsets to transfer money to each other.

"M-commerce is coming, and the expectation is that it will become prevalent in the UK and other European countries within four years," says Joe McGeehan, head of Toshiba's research lab in Europe.

Though these developments should bring many benefits, security is expected to become a problem. "As soon as you put money on anything, criminals become more interested in it," says McGeehan.

To counter this, manufacturers are developing more secure ways of encrypting data on handsets. According to Nokia, users will be able to alter security settings depending on how much data they want available at any one time. Phones with built-in fingerprint scanners are already on the market, and Sharp has experimented with face recognition on handsets, though hackers have recently shown that face recognition is easily defeated with just a photograph.

Meanwhile, Apple is thought to be considering adding biometric security measures, such as a fingerprint scanner, to future iPhones. However effective these security features are, though, they will only work when turned on.

Phone Security Q & A

If I delete a message or photo on my phone will it disappear completely?

Data often remains on a phone's memory chip until it is overwritten. Phones also create extra copies that are spread around its memory. It is possible to overwrite files by copying new data onto the phone. Commercial software will "zero fill" a memory or SIM card to overwrite it.

Where do recycled handsets end up?

According to Andy Jones, a security specialist at British Telecommunications, the main markets for recycled phones are Nigeria and China, "both of which are regarded as areas posing a high threat to the security of information."

What if I smash up my SIM card?

Forensic analysts can often recreate SIM cards using the data that's stored on the handset. How much information they can retrieve depends on the phone model. It is also possible to stick a damaged SIM card back together and then extract its data.

Can my movements be tracked, even if I don't have GPS on my phone?

A technique called cell site analysis can be used to track someone to within 10 to 15 metres, using cellphone masts to triangulate their position. GPS can give more detailed information, such as your altitude or the speed you are travelling at.

Can my handset be used to spy on me?

If someone can get direct access to your handset, they can install software that lets them listen to conversations and monitor text messages without your knowledge. Without direct access, they can still monitor your phone usage remotely, but not eavesdrop on your conversations. It is also possible to send text messages that look like they come from someone else -- a technique called SMS spoofing. This makes it possible to upload messages to someone else's Twitter account, or send your boss rude messages using a colleague's number.

How do I improve my phone's security?

Switch on all security options such as handset PIN codes. Download software to wipe your phone before you throw it away or send it for recycling. Consider buying a handset with fingerprint recognition security. Alternatively, add software that can find your phone or even take control of it remotely should it be stolen, allowing you to encrypt all data stored on it, disable it entirely or even make it emit a loud alarm.

Is it legal for my employer or partner to send my cellphone for analysis?

If it is a company phone, or was a present from your partner, beware. Chances are that they can claim legal ownership and so can do what they want with it.

Smartphone Tracks User Interests, Habits, Finances, Location

The International Herald Tribune
March 11, 2009

The millions of people who use their cellphones daily to play games, download applications and browse the Web may not realize that they have an unseen companion: advertisers that can track their interests, their habits and even their location.

Smartphones, like the iPhone and BlackBerry Curve, are the latest and potentially most extensive way for advertisers to aim ads at certain consumers... Advertisers will pay high rates for the ability to show, for example, ads for a nearby restaurant to someone leaving a Broadway show, especially when coupled with information about the gender, age, finances, and interests of the consumer.

Eswar Priyadarshan, the chief technology officer of Quattro Wireless, which places advertising for clients like Sony on mobile sites, says he typically has 20 pieces of information about a customer who has visited a site or played with an application in his network.

“The basic idea is, you go through all these channels, and you get as much data as possible,” he said.

The capability for collecting information has alarmed privacy advocates.

“It's potentially a portable, personal spy," said Jeff Chester, the executive director of the Center for Digital Democracy, who will appear before Federal Trade Commission staff members this month to brief them on privacy and mobile marketing.

He is particularly concerned about data breaches, advertisers' access to sensitive health or financial information, and a lack of transparency about how advertisers are collecting data.

"Users are going to be inclined to say, sure, what's harmful about a click, not realizing that they've consented to give up their information" ...

Banks Spying on Your Bills, Rent Payments, Paychecks

November 6, 2010

Raw Story - The age of the plain old credit score is gone, says a report at the Wall Street Journal, and it's been replaced by ever more intrusive efforts by banks and credit agencies to gauge exactly what you're worth, and what you can pay.

To that end, financial firms are now tracking their customers' bank deposits, rent payments or home values, and even utility bills to figure out who may soon become a financial risk, reports WSJ's Karen Blumenthal.

So, for example, if your employer pays you through direct deposits and those deposits stop, financial institutions can now have warning that your money situation is likely to tighten, and may deny you credit on that basis.

But the efforts don't end there. A new area of research, income estimation, "took off earlier this year," WSJ reports, and involves financial firms collecting information about mortgages, personal loans and credit history to determine how much an individual makes and how much credit they should be given.

In this new era of deep data-mining, even your utility bills and rent check aren't out of bounds.

An estimated 40 million consumers, including young people and people who prefer to pay in cash, have too little credit experience to generate a useful credit score. But they are likely to pay rent or utility bills, which could help credit bureaus better assess their credit-worthiness.

Experian, one of the three major credit bureaus, bought RentBureau—which collects rental-payment data from large property managers—and expects to integrate that information into credit records before the end of the year.

Credit bureaus say they also would like to offer data on cellphone payments, but have run into concerns over privacy issues, which may require legislation to untangle.

BUSINESSES TARGET CELL PHONES, SOCIAL NETWORKING SITES

The WSJ report comes as new concerns emerge over the extent to which businesses are digging into the lives of their customers in order to assess risk or market products.

Raw Story reported this week on SocialMiner, a new software application from Cisco Systems that allows businesses to monitor social networking sites such as Facebook and Twitter. The software has raised concerns over the prospect of employers spying on the personal lives of their employees.

"With more and more Web-based conversations taking place over these social platforms, it's now more critical than ever that businesses are aware of what their customers are saying about them and are able to respond to general inquiries or rectify customer service issues so as to enhance and protect brand reputation," Cisco stated in a press release.

Meanwhile, a federal class action lawsuit alleges that numerous media companies, including Fox News and CNN, received detailed personal information on millions of cellphone users from an advertising company that circumvented security measures on their phones. Courthouse News reports:

Delaware-based Ringleader "stamped" a "Unique Device Identifier" into customers' cell phones, compatible with iPhone, iPad, iTouch and PDAs and other devices, the complaint states.

Once entered into their phones, the class claims, say the code sent their private information to a database that Ringleader shared with AccuWeather, CNN, ESPN, FOX News, Go2 Media, Merriam-Webster, Travel Channel, and WhitePages, all of them named as defendants.

"Essentially, defendants hacked the mobile phones of millions of consumers ... by embedding a tracking code in each user's mobile device database to circumvent users' browser controls for managing web privacy and security," the complaint states.

The class claims the database collected information about "gender, age, race, number of children, education level, geographic location, and household income."

When they learned about the invasion of their privacy, some customers tried to delete the code, but it was programmed for "perpetual re-spawning, creating in effect: 'Zombie Databases,'" the complaint states.

Security Holes Discovered in iPhones, iPads

The Associated Press
July 7, 2011

A new security hole has opened up in Apple Inc.'s iPhone, iPad and iPod Touch devices, raising alarms about the susceptibility of some of the world's hottest tech gadgets to hacker attacks.

Flaws in the software running those devices came to light after a German security agency warned that criminals could use them to steal confidential data off the devices. Apple, the world's largest technology company by market value, said Thursday that it is working on a fix that will be distributed in an upcoming software upgrade.

With the security hole, an attacker can get malicious software onto a device by tricking its owner into clicking an infected PDF file. Germany's Federal Office for Information Security called the flaws "critical weaknesses" in Apple's iOS operating system.

Internet-connected mobile devices are still subject to fewer attacks than personal computer, but they could eventually prove a juicy target for hackers because they are warehouses of confidential banking, e-mail, calendar, contact and other data.

Software vulnerabilities are discovered all the time. What makes the latest discovery alarming is that the weaknesses are already being actively exploited — albeit in a consensual way.

The latest concerns were prompted by the emergence of a new version of a program to allow Apple devices to run any software and circumvent the restrictions that Apple notoriously retains over software distributed through its online store. There are security risks of doing so, but many people find it liberating to install their own software.

Although this program is something people would seek out, the weaknesses that its authors discovered could easily be used for malice, security experts say.

There is an irony in the controversy: The site distributing the program offers a fix for the problem, but to get the fix, a user has to first install the program in question. So a user must defy Apple's restrictions to get the protection until Apple comes up with a fix of its own.

Charlie Miller, a prominent hacker of Apple products, said it likely took months to develop the program to break Apple's restrictions, but a criminal might need only a day or two to modify it for nefarious purposes.

Apple Inc. spokeswoman Bethan Lloyd said Thursday the company is "aware of this reported issue and developing a fix." She would not say when the update will be available.

One reason for gadget owners to take heart: Attacks on smartphones and other Internet gadgets are still relatively rare. One reason is PC-based attacks are still highly lucrative. Still, vulnerabilities such as the ones Apple is confronting show that consumers should take care of securing their mobile devices as they would their home computer.

"These things are computers — they're just small, portable computers that happen to have a phone tacked onto them," said Marc Fossi, manager of research and development for Symantec Security Response. "You've got to treat them more like a computer than a phone. You have to be aware of what's going on with these devices."

Out of Financial Chaos, Futurist Predicts Cashless Society and Robocops
New Monopoly Game is Cashless
Using RFID-enabled Cell Phones, Customers Scan Products and Pay for Purchases
Road warriors: Smartphones with built-in GPS
GPS on smartphones is no longer an emerging trend. It's almost a must-have feature nowadays, and more and more handsets are offering it. With the embedded GPS receiver and a mapping service, you can get real-time position tracking, text- and voice-guided directions, and points of interest. However, taking advantage of GPS, and the navigation powers that come with it, sometimes come at a price. If you want features, such as voice-guided directions, you often have to subscribe to a location-based service (LBS), such as TeleNav or VZ Navigator, which require a subscription fee. However, Google and Nokia are shaking things up by offering the premium features for free on such devices as the Motorola Droid, Nexus One, and Nokia 5800 Navigation Edition. How this will affect the LBS business remains to be seen, but one thing's for sure: if you're forever getting lost or are constantly traveling, there's help out there for you.

A Cashless Society is Right Around the Corner; the Endgame is the Microchip Implant

At First Data, we’re working hard to help make Near-Field Communications (NFC)-enabled mobile commerce a reality. Many companies across the payments industry share the vision of an NFC future for commerce, and activity in this space seems to be accelerating. Why are we so excited about NFC? Because an NFC platform on a mobile handset opens up a whole new world of possibilities. Combining the power of the mobile network and the mobile handset with the ability to exchange information at short range in the physical world creates endless possibilities. What could you do with your mobile phone? Think about touching your phone to a point-of-sale terminal to buy a cup of coffee with your debit card. Touch your mobile phone to your babysitter’s mobile phone to pay her, instead of fumbling for cash. You could use your mobile phone at the front desk of a hotel at check-in to download your room key and then touch your phone to the hotel room door to unlock it. Or imagine touching your mobile phone to a reader at your doctor’s office to have the information from your latest visit downloaded to the medical file on your phone. - Perspective: Accelerating Mobile Commerce with Trusted Service Management, First Data, October 13, 2009

Now Make Payments Via Mobile Phones

By ANI
January 3, 2010

Oxford University researchers have developed a new technology that enables safe payments to be made through mobile phones.

The technology, designed by professor Bill Roscoe of the Computing Laboratory and colleagues, will now be launched into the market by Isis Innovation, the university's technology transfer company. Roscoe said:

"A key requirement of new payment systems will be the ability to make payments from person to person, such as paying a builder or a friend."

"What we have is technology which enables anyone to easily create a secure connection between two devices: it can work via Bluetooth, WiFi, the internet or across ordinary telephone or SMS connections.

"The core of our technology is a new security protocol that enables strong cryptographic keys to be created with the least possible work. The key to the protocol is that it prevents anyone from doing any searching to break into the transaction."

A user of the technology checks if a 4-8 digit numeric code generated within their own phone matches with the one generated by the payee. This number is random and there is no need to maintain secrecy.

This guarantees that the customer's mobile is connected to the correct store, or to the cell phone of the person they have to pay. Thereafter, the payment takes place without exchanging sensitive details like credit card numbers or PIN.

No hardware is expected to be needed for the use of the technology. The Oxford team says the payment can be made in numerous ways—by using electronic cash or credit stored on a mobile phone, via authorisation of a credit card payment, or by asking a bank to pay a person a specified sum of money. Roscoe said:

"The technology is designed to put the payer in charge of the connection and let him or her have direct control over how much is paid and to whom—very much like a cheque.

"It is clear that banks will be looking for innovative solutions to avoid the limitations of current technology and that the ability to pay using mobile phones in the same way that you do now using a cheque will need to be phased in over the next eight years. The beauty of this system is that it can be used for many different methods of payment."

Mobile Payment: The Linchpin of the Mobile Commerce Economy

First Data provides insight into Mobile Payment being the payment option of the future.

By Barry McCarthy, First Data
October 8, 2008

Mobile payments will likely emerge as the way to pay, ultimately eliminating your dependence on credit and debit cards, check—and even cash.

Mobile devices are on the forefront of revolutionizing how consumers monitor finances, make purchasing decisions and pay for transactions. Planning for this change will help position all of us for success in mobile commerce.

Commerce is making payment and receiving payment. If there is no payment, there is no commerce.

This statement is every bit as true for mobile commerce as it is for traditional commercial activity. But how does payment actually work in a mobile commerce economy?

Let’s take a look, and pretend you are a commuter taking the Bay Area Rapid Transit (BART) to work everyday.

On a typical day you race out of the house and head to your transit station, wave your phone at the turnstile’s electronic reader, dash down to the platform and just make your train. Perhaps you read the morning paper as you pass under San Francisco Bay.

The train pulls into your stop, and as you step off, you notice a panel advertisement for a Jack-in-the-Box® mango smoothie. The ad has a logo signifying it’s a smart ad—an advertisement that transfers information to your phone when you tap it on the logo.

You tap the smart ad and your phone displays the nearest Jack-in-the-Box location: there’s one on San Francisco’s Mission Street, right by your station. You leave the station, step around the corner and order that smoothie. You pay for it by tapping your phone at the checkout stand. You remember that, because of your enrollment in a loyalty program, you also downloaded a 10 percent discount coupon when you tapped the smart ad. That amount was automatically deducted from the price of the smoothie.

What does this simple transaction mean to you as a merchant or financial entity? What will it cost you? How does it affect the shopping experience and your ability to build customer relationships? And what does it mean to traditional credit and debit card payments?

To answer these questions and understand how central mobile payment is to the entire mobile commerce ecosystem, let’s take a closer look at what’s behind a simple mobile purchase. Later in this paper, I’ll talk more about the technology that made this transaction happen, but for now, take a look at the transaction itself, because this is at the heart of commerce—exchanging value for value and receiving payment from the customer.

In this case, the merchant produces the mango smoothie, and you enter a code into your phone, wave the phone near a reader, receive a 10 percent discount, see a display of the transaction details and then are on your way.

What was special about this transaction?

First, it was fast. The merchant did not need to ask if you had a coupon or a discount card or some other customer-loyalty incentive. Nor did you need to dig around for a coupon or punch card. If you had signed up for these incentives, they would already be in the mobile device and automatically calculated during the transaction.

Also, the merchant did not need to receive cash or make change, nor did the merchant need to handle a debit or credit card. Just as significantly, you as the customer did not have to deal with cash or cards. It was a faster and simpler transaction for both the merchant and you.

Pilot programs in Europe have shown that mobile purchases cut the average transaction time in half. A study recently conducted by First Data demonstrates this as well. The study, carried out in several corporate cafeterias around the country, measured factors related to the use of prepaid contactless stickers. A contactless sticker is like a miniature adhesive gift card with a Near Field Communication (NFC) chip inside. The study showed that contactless payments are typically two to three times faster than cash or no-signature card payments and about five times faster than card payments requiring a signature.

The second big difference between this mobile transaction and a more traditional payment is that there was no leather wallet full of cash and credit cards involved. You left your traditional wallet at home.

Third, just before swiping your phone near the reader, you entered a short personal security code that enabled the transaction. The phone’s purchasing capability automatically locked as soon as the transaction was complete. This means that if you lost your phone, nobody would be able to use that mobile device to make unauthorized purchases. This provides a higher level of security compared to credit cards or other payment methods that typically reside in the leather wallet.

On the merchant side of the transaction, the point of sale is equipped with an NFC chip reader. As I will explain later, your phone is equipped with an NFC chip. When the phone passes close to the reader, the reader is able to pull essential personal identification and account information from the phone, similar to the data contained on the magnetic strip of a credit or debit card. The NFC terminal reads this information in much the same way a credit card swipe is read (although no physical contact is needed to read the NFC chip) and the account information is transmitted to the transaction processing entity (First Data, for instance). The payment transaction is then processed in the conventional way.

One other critical action took place during this transaction. Before you passed your phone over the reader, you made an important choice. Because mobile devices will be provisioned with several payment accounts, you can choose which account to debit the cost of the smoothie against. You may select a credit or debit card account, or (and this is of great significance to the merchant) a merchant-specific prepaid stored value account—something like a refillable gift card. Commerce-enabled mobile devices today can manage multiple accounts.

This capability puts merchant-sponsored prepayment incentive programs on exactly the same footing as major credit and debit cards—or cash—from the customer’s usability perspective. And that opens a whole new world of opportunity for merchants to build customer loyalty and possibly even lower their transaction costs.

This transaction has implications for the entire mobile commerce value chain, which includes merchants, point-of-sale equipment manufacturers, financial entities and transaction processors, mobile phone manufacturers and mobile carriers who provide the network.

Many people do not realize that most of the infrastructure needed to support this mango smoothie transaction is in place today—all around the world. In fact, the mobile payment scenario discussed above actually took place in San Francisco in early 2008 as part of a First Data pilot program.

Mobile Payment White Paper: Download PDF – 810 KB

Wallet of the Future? Your Mobile Phone

By John D. Sutter, CNN
August 17, 2009

These days, it seems that most Americans carry three things in their pockets or purses at all times: keys, a wallet and a phone.

But, in the not-too-distant future, you may be able to leave the wallet and the keys behind.

The mobile phone is staging a coup.

Some analysts say that within five years, mobile phones in the United States will be able to make electronic payments, open doors, access subways, clip coupons and possibly act as another form of identification.

These futuristic uses for phones are becoming reality in countries like South Korea and Japan, which typically are ahead of the United States when it comes to mobile technology.

A 963-person survey by Forrester Research, for instance, found that 15 percent of Japanese mobile phone users make payments and purchase products in stores with their phones.

The ideas have been tried in the United States too, but with less success.

In the late 1990s and early 2000s, banks and cell phone makers started conducting trials with U.S. customers. Limited groups of people were given the ability to scan their phones to make payments, enter stadiums and access public transit.

Those phone-forward guinea pigs didn’t like the new functionalities as well as expected, and the ideas never took off on a commercial scale, said Ed Kountz, a senior analyst at Forrester.

But Kountz said there’s now resurgent interest in merging phones with wallets and keys. In 2009, people are more dependent on their phones than they used to be.

“I think it is different this time around,” said Kountz, who believes that phones in the United States will be used to make mobile payments within five years.

“The overall utility of cell phones has expanded, and more consumers are using the data aspects of cell phones,” he said.

Phones everywhere

At the end of 2008, there were an estimated 4 billion mobile phone subscriptions worldwide, according to the International Telecommunication Union, a United Nations agency. That’s about two cell phone subscriptions for every three people.

The fact that phones are everywhere and are commonly used to access the Internet and compute means they’re well poised to overtake wallets, said Justin Denison, vice president of strategy for Samsung Telecommunications in the United States.

Gartner Inc., a technology research company, issued a report in May saying mobile payments will increase 70 percent in 2009, to 73 million people worldwide.

By 2012, the company says, 190 million people will make mobile payments.

Still, that adoption rate is relatively low. Only 3 percent of people in North America are expected to conduct mobile payments in 2012, Gartner says.

Potential problems

There are no guarantees that the technology will catch on in the United States as it has in Asia, Denison said.

“We can make investments. We can test things. But it’s not always the case that [new technologies] get adopted here,” he said.

And technology that turns phones into credit cards and IDs poses several potential problems.

If phones replace wallets, would-be thieves will see every person walking down the street talking on his or her phone as a target for robbery, said Lillie Coney, associate director of the Electronic Privacy Information Center.

“It would be the ultimate form of identify theft, that’s for sure,” she said.

Banks and mobile phone makers say the technology is safe. But it’s not clear whether consumers will demand the change.

There’s also no firm plan about who would pay for the technology to be added to phones and put into stores, said Simon Pugh, vice chairman of the NFC Forum, which supports the technology, and head of mobile payments at MasterCard.

“With any new technology, there’s an ecosystem that needs to develop to make it viable,” he said. “One of the key things that’s needed is new hardware. You need a special chip in the phone, and you need another radio frequency antenna to communicate … and that costs money.”

Swipe a phone

Squeezing the contents of a person’s purse into a phone relies mostly on a technology called near-field communication, which allows any enabled device to communicate with a cash register or subway turnstile through a secure radio frequency.

The technology is similar to the scanners and passes that allow commuters to pay for drives on a turnpike without stopping at a toll booth.

When a phone is enabled with near-field communication technology, shoppers can load bank and credit card information onto their phones and then scan them to buy goods at the grocery store, gas station, subway or any other place set up to read the device.

Doug Brown, head of mobile product development at Bank of America, said the idea is popular with consumers because it simplifies their lives.

“You don’t need cash anymore. You don’t need your wallet. That’s really the endgame here, is that we can replace the physical wallet and all of the cash needs and the plastic that you’re using today,” he said.

Similarly, phones could include scannable identification information.

Eye scans and fingerprints would make phone IDs and payments more secure, Brown said. The ID technology might work like a corporate security badge, which pulls up personal information when scanned.

Some hotels have played with the idea of using near-field communication technology to enable a guest’s phone to act as a room key. According to the NFC Forum, a New Zealand hotel last month installed locks that are opened with mobile phones.

Texting and barcodes

People can make transactions with their phones through lower-tech means, too.

Mobile banking apps use the Internet to allow people to transfer money and purchase goods online. And in some parts of the world, text messages sent by mobile phone are used as a form of currency.

In Kenya, for example, more than 6 million people are registered with M-Pesa, a service that lets people send text messages to make payments and transfer money from phone to phone.

Some of those users have access to banking for the first time because of their phones, said Susan Teltscher, head of market information and statistics at the International Telecommunication Union.

iPhone users in the U.S. and elsewhere already can upload plane tickets onto their phones and then scan a digital version of the ticket’s barcode instead of presenting paper tickets.

There’s hope that, eventually, bank customers here may have individual barcodes they can use to purchase goods in stores.

Kountz, the analyst at Forrester, said the economic recession may hold many of these ideas back. And consumer interest in mobile payments remains low: less than 10 percent, he said.

Still, many companies and consumers want to ditch plastic cards, unwieldy cash and hefty wallets.

To them, it’s just a matter of how and when — and who will pay.

What's the Future for Your Mobile Phone?

From Google to Microsoft and Sony Ericsson to Apple, new devices, products and services unveiled at Mobile World Congress this week hint at the sort of handsets we'll be using in the months to come.

By Claudine Beaumont, Telegraph
February 18, 2010

The message from this week's telecoms show could not have been clearer: mobile is the future. As established players, such as Samsung and Nokia, rushed to play catch up with the likes of Apple, technology companies, including Google and Microsoft, laid down clear markers to their rivals.

Eric Schmidt, Google's chairman and chief executive, used his keynote address at Mobile World Congress to underline his company's commitment to mobile in all its forms. Google was, he said, now a "mobile first" business, with programmers and developers building mobile versions of applications and software before they built the desktop versions.

He said that more than 60,000 devices running Google's Android mobile operating system were being shipped every day, and that smartphone sales would overtake PC sales in the the next few years.

Indeed the phone, said Schmidt, is no longer just a device:

"It's your alter ego — it's fundamental to everything you do."

That was a view echoed across the show floor in Barcelona, where phone makers unveiled their latest handsets designed to "inspire" and "delight" users, and become the anchor point for their work and social lives. Developers showed off their latest software and apps, designed to simplify communication and make the mobile phone the ultimate do-anything gadget ...

Want to Launch Mobile Payments? Buy a Bank

By Steven Carlson, CITT Project
December 19, 2008

Several years ago, a former business partner and I were speculating about how the mobile operator industry would evolve. The mobile phone business was booming, but it was already clear that growth had limits. What to do once every citizen had a handset?

The solution seemed obvious even then. As mobile services evolved, the phone would eventually be used as a payment mechanism. By controlling the payment interface, operators stood to make a fortune from transaction fees. Could mobile operators eventual evolve into financial institutions or even banks?

Something like this has happened in Austria, as I learned at a recent conference, IIR’s Mobile and NSF Payment Strategies, held here in Budapest.

It’s easy to imagine a world where your mobile handset works just like a virtual wallet. The trouble is getting others to play along. Launching a mobile payment scheme means navigating the competing interests of mobile operators, financial institutions and merchants. It also means building a critical mass of services and customers.

Three years ago I posted to nowEurope about SEMOPS, an FP6 funded project that brought together a consortium of (mostly) Hungarian banks, technology providers and mobile operators. SEMOPS developed a mobile payment technology and conducted tests with a major local book retailer.

Unfortunately, the SEMOPS scheme never took off. None of the consortium members stepped up to champion the project and drive it toward commercial success. Quite possibly this is because none of the members could claim solitary ownership of the project, as the technology was jointly owned by the consortium.

In Austria, exactly the opposite thing happened. The country’s largest mobile operator committed to building its mobile payment structure, first by purchasing a technology provider (Paybox, 2001) and then by founding a fully owned bank (A1 Bank, 2002).

At the Mobile and NSF Payment conference, A1 Bank COO Thomas Capka described how Mobilkom and A1 had progressively rolled out new tiers of service, including mobile parking payments, municipal transport tickets, Internet payments and vending machines.

Capka related that in Austria cigarettes can only be purchased from vending machines using A1’s mobile payment scheme, which simultaneously verifies that the purchaser is 18 years of age or older.

As Mobilkom and A1 developed critical mass around their mobile payments technology they were then able to negotiate interoperability agreements with competing mobile operators. At the time of this writing, all major Austrian operators are onboard, with the solitary exception of Hutchison.

In all, four million Austrian consumers are now equipped to use the mobile payments scheme. By comparison, just 2m Austrians have credit cards.

Capka stated that his company hopes to develop a national standard that can then be applied to international payments. It will be interesting to see how this develops. Mobilkom has subsidiary companies in several Central European markets, where they might decide to roll out their payment technology.

A further issue is how to integrate bank cards into the payment model. At present, a customer’s mobile phone payments appear on the same statement as his phone charges. In future, A1 and Mobilkom’s payment scheme may evolve into a service bundled with a bank card. Already the distinction between mobile operator and financial institution is becoming blurry.

Paper, Plastic ... or Phone?

Terri Bradford, Payments System Research Specialist at the Federal Reserve Bank of Kansas City, has written a briefing paper titled "Paper, Plastic......or Phone?" that examines mobile-phone payment and banking alternatives in the United States. The paper explores prospects for growth, available technologies, and the outlook for one or more technologies coming to dominate the market.

By Terri Bradford, Federal Reserve Bank of Kansas City
Originally Published on December 2006

In the December 2005 issue of the Briefing, it was noted that contactless technology could reside in several devices, including traditional payment cards, key fobs, watches, and even mobile phones. One year later, discussion in the United States about the use of mobile phones as a payment device and as a means to facilitate online banking has intensified. Such mobile functionality already has been adopted in other parts of the world, and adoption in the United States may not be far off. Soon, instead of choosing between paper and plastic when making a payment, the phone may be an option as well.

Prospects for growth

A number of forces are at work suggesting that mobile-phone payments may be poised for growth. The growing number of mobile devices, increased consumer willingness to adopt new payment methods, the surge in the use of payment cards, and a wide-ranging choice of service providers all point to mobile phone payments becoming a reality in the not-too-distant future.

According to a June 2006 survey conducted by CTIA, The Wireless Association, there are more than 219 million wireless subscribers in the United States. That means that more than 72 percent of the total U.S. population owns some type of wireless device, including mobile phones, Blackberries, and PDAs. And, when it comes to mobile phones, for many users—because of the variety of features and functionalities—phones today are being used for much more than simply making and receiving calls. They have become full-service electronic devices providing access to the Internet, music, videos, games, text messaging, graphics, and more. So, it is entirely conceivable that consumers may be ready to adopt mobile phones as a means to access payment and financial information as well.

Mobile technology can be thought of as the latest offering in a line of emerging payments. Though it has taken some time, consumers have become more familiar and comfortable with making payments in new ways. A December 2005 poll taken by the Pew Internet and American Life Project, for example, found that 43 percent of U.S. Internet users, or about 63 million American adults, bank online. PayPal reports that it now has over 100 million accounts, which consumers use to make person-to-person (P2P) payments online as well as for other transactions.

And, contactless payments also are on the rise. Where consumers have been exposed to contactless payment methods, such as Speedpass at Exxon-Mobil gas stations and PayPass and blink at CVS pharmacies, they reportedly have liked them and would use them more often if they were more widely available. Mobile phone technologies provide another platform to enable all of these types of activities.

Consumers also are increasingly using credit, and especially debit, cards for low-dollar transactions, which may further encourage mobile phone payments. Networks are offering differential pricing and creating new merchant class categories to encourage low-dollar merchants to accept cards. In turn, consumers are increasingly using plastic to make payments everywhere from the grocery store to the convenience store to the fast-food drive-thru. Speed and convenience are important in such transactions for both merchants and consumers. Mobile payment technology could make such transactions even quicker.

Finally, a host of service providers have taken initial steps into the mobile-phone payment industry, suggesting a level of interest and ensuing competition that could help spur activity in this market. A number of banks, nonbank payments providers, and telecommunications companies are offering, piloting, or seriously discussing mobile payment and banking services.

Available technologies

Several technologies are available for mobile-phone payment and banking. These include near field communication (NFC), short message service (SMS), and wireless application protocol (WAP) technologies. In addition, payments-related applications can be downloaded to reside directly on the mobile device.

NFC is a short-range wireless connectivity technology that evolved from a combination of existing contactless identification and interconnection technologies. SMS technology, which exists on most of the mobile phones available on the market today, allows users to receive and send short text messages (from 150 to 160 characters) to other mobile phones. WAP technology is an open, international standard for applications that use wireless communication and is primarily used to enable Web access from mobile devices. And, application downloads use a mobile device’s WAP capabilities to allow the user to type the Web address of the site from which they want to obtain an application, download the application, and essentially “register” their device for use by entering the phone number and creating a PIN.

JPMorgan Chase, the deployer of the blink contactless card, launched a mobile payments trial in December 2005 using NFC technology. In that trial, a small number of Atlanta Thrashers and Hawks season ticket holders, who also had Chase-issued Visa credit card accounts and Cingular wireless accounts, were provided the ability to make mobile payments at special contactless readers installed at concession stands throughout the arena. Results were evaluated and focus groups were conducted after the trial. Speedier transaction times and greater convenience were among the observations made by trial participants. In addition, participants indicated that they would like to use their mobile devices for payment at other merchant locations, for all purchase sizes, in the future.

Earlier this year, PayPal, the online P2P payment service owned by eBay, began offering an SMS-enabled payment product called PayPal Mobile. PayPal Mobile allows users to make payments or send money from their PayPal account by registering their phone at the PayPal Web site and creating a mobile PIN. Once done, users either can text message the payment information directly to the recipient or call a PayPal automated system. PayPal then notifies the recipient of the payment and tells them how it can be claimed. In addition, PayPal Mobile offers a “text to buy” feature: anytime a PayPal mobile user sees the PayPal “text to buy” icon on a poster, online, in a magazine, or at an event, they can text the item code to the number shown. PayPal then calls the user back and requests a PIN to confirm the order. Once done, the item is shipped to the consumer.

Launched in 2005, Obopay is another early-entrant mobile payment provider. Its mobile service utilizes a prepaid MasterCard account, an assigned PIN, and either SMS technology, WAP technology, or an application download to conduct mobile payments. Obopay users establish their account online. Those choosing the application download option must also identify their mobile telecommunications provider. Application download instructions specific to that provider then will be furnished. Using any of the three options Obopay customers can send money, request money, conduct balance inquiries, and review payment history from their mobile phones. Customers also can use the prepaid MasterCard card at ATMs and merchant checkouts.

A fourth mobile-phone payment example is Firethorn LLC. Firethorn provides services to banks that facilitate them in offering mobile-phone payment and banking services to customers. Taking the approach of establishing strategic alliances, last month, Firethorn announced two such relationships, one with CheckFree and the other with Cingular Wireless. These relationships tap into each provider’s strengths in their respective industries: CheckFree’s established relationship with banks in providing an electronic billing and payments infrastructure and Cingular’s position as one of the largest wireless providers in the United States. To date, two banks have signed on to offer Firethorn services: Bancorp South of Tupelo, Miss., has begun offering Firethorn-enabled services to its customers and it was announced that Synovus of Columbus, Ga., anticipates doing the same by the end of second quarter 2007.

Market dynamics

An interesting question to ask is the extent to which future deployment of mobile payment and banking products will mirror the deployment of online banking and P2P payment products. With online banking, the experience was that nonbanks were at first more prominent, but banks are now major providers of the service as well. In the case of P2P payments, however, banks have not fared as well. Nonbanks dominate that space.

Banks currently play a prominent role among participants providing NFC-enabled mobile payments. Moreover, the actual payment transaction is typically recognized as being handled by a bank. With the SMS- and WAP-enabled models and downloaded applications, on the other hand, nonbank providers appear to be at the fore. The strategic alliance model adopted by Firethorn appears to strike a balance between the two. Which approach will “take hold” in the marketplace could hinge on a number of considerations. Among them: which technologies and firms consumers feel most comfortable with; which options offer the most convenience; which option provides the best perceived security; and how widely accepted the payment methods become.

At present, consumers already are to some extent familiar with NFC-enabled, and SMS- and WAP- enabled, technologies. NFC payment via a tap or a wave of a card is becoming more familiar. And, for those already using that form of payment, a mobile phone as the payment device may not be much of a stretch. Likewise, SMS instant messaging and WAP-based Internet browsing are commonplace for some users of mobile devices, and the use of a PIN is a familiar process for many whether at the ATM or point of sale. So, mobile payment via SMS or WAP may not be much of a stretch either. Downloading applications to a phone, however, is a less familiar process.

Convenience considerations largely depend on the situation. If there were a need to make a payment in a physical environment, for example on the subway or at the point of sale, NFC likely would be the preferred method. If the need were to arise in a virtual environment or across distances, on the other hand, SMS, WAP, or an application-based payment would likely be preferred. However, if the desire were to obtain financial information or to conduct banking transactions, a downloaded application or WAP would be required.

Security considerations raise other issues. With mobile technology in general, it is known that some data, such as phone numbers and text messages, can be stored on the actual device even when the data have been deleted from the subscriber identity module (SIM) card within the device. Might this be an issue for payment and financial data as well?

A security consideration associated with NFC technology is whether the information being transmitted can be captured by something other than the intended contactless reader. In addition, if a phone is lost or stolen, since there is no PIN required, there is the possibility that some unauthorized transactions could be made before the payment component could be deactivated. SMS technology employs the use of an assigned PIN and confirmations.

The use of a PIN, while not full proof, provides some protection against unauthorized use, and may therefore be more appealing to some users. The use of WAP has considerations, such as encryption of information and spoofing, similar to WiFi and Internet use in general. Ultimately, application download may offer the most protection. In addition to utilizing PIN protection, the information that resides on a phone is encrypted and is said to be comparable in amount to the information provided on an ATM receipt. Further, should the phone be lost or stolen, it could be remotely wiped clean of any financial information.

Finally, as it relates to payment acceptance, NFC-based mobile payments may experience growth related to payment terminals already deployed for use with contactless payment cards. However, it remains unclear how transactions beyond purchases might be facilitated with NFC. SMS-based mobile payments, in contrast, may require a kind of “viral” adoption to succeed, as sender and recipient devices will have to be able to “talk” to one another. WAP provides an additional screen from which to access the Web and there already is growing acceptance of transacting online. Application download will have to gain acceptance not only from consumers, but also telecommunication companies and banks.

Conclusion

Mobile payments may be positioned for a meaningful level of adoption in the United States. While there are yet challenges to overcome, a significant portion of the population owns a mobile device, acceptance of previous emerging payment methods continues to increase, and there are a number of interested parties and available technologies that address a variety of mobile payment needs. As with other emerging payment methods, it will be interesting to see how the mobile payment and banking market evolves.

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Mobile Payments - Cellphone manufacturers like to say that your phone is the object aside from your wallet that you're least likely to leave home without. So why not combine the two? In fact, carriers Mobilkom in Austria and NTT Docomo in Japan already allow users to make small purchases by swiping their cellphone across a sensor. The technology has yet to catch on in the U.S., but credit card companies including Visa and MasterCard are experimenting with similar phone-based payment systems.
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Banks and Mobile Operators Go Head-to-Head for Control of Mobile Payments

Banks and Mobile Operators to Go Head to Head for Mobile Payments Business

NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash.

NearFieldCommunicationsWorld.com
January 14, 2010

Banks and mobile network operators are set to go head to head in a bid to control the market for NFC mobile payments services, according to a new research report published today.

"NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash," says Sarah Clark, editor of NFCW and author of the new report. "What hasn't yet been decided, however, is who will win the battle to provide consumers with their new hi-tech mobile wallets."

So far, banks and operators have worked together to run field trials of NFC technology but, the report predicts, the emergence of new ways to add near field communication technology to existing mobile phones means they will soon find themselves in competition for control of this important new market.

"New products are now available that enable NFC functionality to be retrofitted to current mobile phones. These will enable banks to deliver NFC services to their customers without the involvement of mobile network operators, and this has fundamentally changed the balance of power between banks and operators," Clark explains.

While a collaborative approach between banks and operators may work in some instances, 'NFC: The Road to Commercial Deployment' predicts that most commercial deployments will have only one lead player. And that lead player will not necessarily be a mobile network operator.

"Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field," says Clark. "Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market."

"We now expect a competitive market to develop between mobile operators and banks in each market," Clark adds. "Here, overall leadership will not be determined by what business the company is currently in. Instead, it will be based on their overall business strength, on how well they execute their NFC strategy and on the alliances that they put into place."

Strong banks, for instance, will be able to make deals with weaker mobile network operators. And strong mobile network operators will make deals with weaker banks so that, ultimately, who ends up as a lead player in each market will depend not on whether they are a bank or an operator but on key factors such as:

• The strength of the company’s existing presence in its core market.


• How loyal its customers are.


• The level of risk it is willing to take in terms of investing in the deployment of NFC services.


• How successful it is in developing an attractive business proposition for potential key service providers and how quickly it manages to sign them up.

Although the widespread introduction of commercial NFC services can begin from early 2011, another year of field testing will need to take place before the trials this year will be different to those that have gone before.

"This year's trials will not be simple technical tests," says Clark. "Instead they will be pre-commercial trials, designed to enable NFC service providers to finalize their business plans."

The UK, France, United Arab Emirates, Singapore, Taiwan and Korea will be the first countries to introduce NFC commercially, the report predicts, beginning in 2011. The US, Canada, Spain, Germany, Italy, Norway, the Czech Republic, Romania and Australia are also expected to be early adopters of NFC.

'NFC: The Road to Commercial Deployment' examines the international market for near field communication technology from 2010 to 2014. It is published by SJB Research, a UK company specialising in analysing the market for emerging technologies in the mobile and payments fields.

The report provides detailed guidance for banks and mobile operators looking to introduce NFC successfully and for companies wishing to offer NFC-based services to their customers. It includes an analysis of the technical and business challenges that still need to be resolved and explains how mobile operators, banks, handset manufacturers, industry suppliers and key potential NFC service providers will resolve those issues during 2010.

'NFC: The Road to Commercial Deployment' explains the key factors that will decide which companies will become the mobile wallet market leaders and details what the first NFC services will need to offer in order to succeed.

One of the Players Must Take on the Risk Before NFC Can Succeed, Says Founder of Japanese Mobile Wallet

NearFieldCommunicationsWorld.com
January 21, 2010

Carl Atsushi Hirano, the driving force behind the introduction five years ago of Japan's Osaïfu Keitai mobile wallet service, has set out his thinking on what was required to make the service a success and what it will take to successfully introduce NFC services in other countries.

In the foreword to a new report on the Japanese mobile wallet service Osaïfu Keitai, Carl Atsushi Hirano, president and CEO of consultants NetStrategy and the head of mobile wallet services at NTT Docomo during the launch of the operator's Osaïfu Keitai service five years ago, has set out his thinking on what it will require to launch NFC services in other countries and why the technology has been a success in Japan:

"The first reason is that I researched the dissatisfactions and inconveniences of daily life. I'm convinced that these 'dissatisfactions' and 'inconveniences' are the mother and father of every new industry. Why do I have to have so many loyalty cards or credit cards in my wallet?

"Everything started with this idea. After a theft I would lose all of these cards, but if all of my cards are integrated on my mobile then all I need to do is make one phone call to my telephone operator to stop them. In order to create such a world, I created Osaïfu Keitai.

"I am certain that there is a demand for such a market the world over, as much in Europe as in the United States."

"It is important to construct an ecosystem from which all participants of the value chain — mobile operators, providers of contactless card technology, companies managing the services of the real world, such as retailers, public transit companies or beverage dispensers — earn a profit," Hirano adds.

"However, to create this ecosystem, we need to solve the hen or egg causality dilemma, as Andrei Hagi (a professor at Harvard Business School) explained in his Multisided Platform Theory, and one of the players has to take the risk to create and coordinate the ecosystem," he adds.

"In Japan, NTT Docomo took on the role of the market coordinator taking on a high risk. I wish, from the bottom of my heart, that another company or brave person will give birth to this ecosystem in Europe and in the United States. I am impatiently waiting for the day when I can buy a café au lait and a croissant in a Parisian café with my Japanese ''mobile.'"

According to the report, Mobile Felica in Japan, there are now a total of 60 million consumers equipped with Mobile Felica-enabled handsets. Of these, 35 million are customers of NTT Docomo's i-mode service, 10 million are signed up with KDDI and a further 10 million with Softbank Mobile.

Visa Europe to Invest €200 Million in Development of Contactless Payments by Card and Mobile

NearFieldCommunicationsWorld.com
February 4, 2010

"M-commerce is a strategic priority," says Visa Europe's head of UK and Ireland, "we are working and talking with all the mobile operators and handset manufacturers to develop standards for payment on mobile phones."

Visa Europe is to spend €200 million on R&D for low-value contactless payments by card and mobile device, says Marc O'Brien, Visa Europe's head of UK and Ireland.

The information was revealed by O'Brien during a visit to Dublin to brief Irish banks about the potential of contactless cards and NFC payments.

"Ulster Bank and Halifax now issue Visa Debit cards to their customers," a Visa Europe spokesman told NFC World. "Visa Debit is an innovation path to both contactless and mobile payments. Visa Europe discussed the successful trials it has had with contactless payments in other markets and shared information about them with Irish banks."

A report in Irish tech news publication Silicon Republic provides further details on Visa Europe's strategy and the size of the investment it is willing to make in the contactless and NFC market:

"Looking to the future, O'Brien said Visa is hard at work researching and developing new ways for people to pay, and one of the areas being given serious consideration is contactless payments via mobile phones using near field communication (NFC).

"For us, m-commerce is a strategic priority, and we are working and talking with all the mobile operators and handset manufacturers to develop standards for payment on mobile phones."

O'Brien says Visa spent €800 million over the last five years on R&D, out of which €170 million went into chip and PIN. "We envisage spending a further €200 million on R&D into low-value contactless payments by card and mobile device."

An earlier newspaper report that the Irish banks are looking to implement NFC as early as 2011 has been dismissed, however.

"The report was slightly overzealous, there are no confirmed plans to launch NFC mobile payments next year," says the Visa spokesman.

Visa and MasterCard Launch Mobile Payment Technology

NFC-enabled mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys, and even cash. - Banks and Mobile Operators to Go Head to Head for Mobile Payments Business, Mike Clark, January 14, 2010

Visa Seeks to Extend Retail Dominance With Pay-By-iPhone Service

DeviceFidelity partnered with Visa to provide mobile payments using an iPhone app and a special case with a microSD payment card inside it.

Wired
May 18, 2010

A battle is heating up over the right to process payments when you wave your cellphone over a sensor to buy goods at a local merchant. Visa made waves this week by announcing a collaboration with DeviceFidelity, which makes an iPhone case called In2Pay with a near-field communications (NFC) microSD card embedded in it that will allow iPhone users — whose devices lack a microSD card — to get in on the action.

To pay at any of Visa’s swipe-free payWave payment terminals, already found at over 32,000 retailers nationwide, all you would need to do is tap an app in your DeviceFidelity-encased 3G or 3GS iPhone and wave it over the terminal. Retailers like the system because it saves them time on each transaction, according to Visa.



Apparently, swiping a credit or debit card simply takes too long.

Mobile payment is fast becoming a red-hot sector. Square, from Twitter co-founder Jack Dorsey, which allows small businesses to accept credit card payments using an iPhone. Meanwhile, eBay’s Paypal allows customers to pay in stores using a simple smartphone app — no chip required.

DeviceFidelity announced a microSD card version of this system in March, but the iPhone lacks the requisite slot. This In2Pay case adds room for the slot, allowing DeviceFidelity’s microSD card to be used with the iPhone, also adding a micro USB slot for charging the iPhone and, according to the company, syncing it to a computer without Apple’s proprietary cable. DeviceFidelity expects (.pdf) to begin trials of the device and service this summer.

“Visa is working to bring the security and convenience of digital currency to mobile users around the world,” said Visa head of mobile contactless payments Dave Wentker in a statement. “Our collaboration with DeviceFidelity can extend the reach of Visa mobile payments to millions of iPhone users.”

With this move, Visa seeks to maintain its strong position in the credit and debit payment system, from which it extracts fees from retailers, who pay Visa about 30 cents when you enter in a PIN code or 75 cents when you sign a debit receipt. Under its payWave system, Visa requires a signature for any purchase over $25. When it comes to these iPhone payments, the fees will be set by banks.

“Pricing of the mobile payment services will be determined by the financial institutions,” confirmed Visa spokeswoman Carolyn Chiang. Depending on the institution, users could pay transaction fees, enrollment fees, and/or annual fees for paying by iPhone, the same way they do with Visa payWave.

In addition to Visa, DeviceFidelity will allow third-party app developers to integrate the system into other apps too, enabling secure transactions with an optional password such as access to corporate buildings and computer networks, purchasing goods from cashier-free kiosks, and paying for transit.

Retailers need to accept Visa and Mastercard, which is why those companies can extract these fees from them. But Visa and Mastercard face at least some tiny degree of potential competition from an upstart with the unlikely name Bling Nation, which currently offers a pilot program in Woodland Park, Colorado (population: 7,300).

Crucially, Bling Nation claims to undercut fees charged by traditional payment companies, “streamlin[ing] payment processing and reduc[ing] costs by eliminating processing middlemen” such as Visa. The company is focusing first on small regional banks to solve what Bling Nation co-CEO Meyer Malka calls the “chicken and egg problem” of Visa already having so many swipe-free terminals installed nationwide.

Given Visa’s massive and growing install base, it appears unlikely that Bling Nation or any other payment system can scale up in time to compete, because Visa already has swipe-free terminals at so many locations. However, Malka says, any swipe-free payment terminal that accepts Visa can be made to accept BlingTag with a software upgrade.

Merchants would prefer not to be held hostage to Visa’s and Mastercard’s fee systems, of course, and consumers have reasons to prefer Bling or something like it too. Rather than a bulky case like In2Pay, Bling Nation’s solution involves affixing a tiny transmitter card called a BlingTag to the outside of a mobile phone without increasing its overall size, which Malka said can be linked to a checking account in 30 seconds. iPhone users, whose devices are already barely small enough to fit into a pocket, might prefer such a solution to DeviceFidelity’s bulky-looking cases.

Malka says the problem with Visa’s iPhone payment announcement is that it duplicates the legacy credit card/debit system, along with the fees and privacy issues for merchants and consumers that come with it. In addition to streamlining fees, Bling allows merchants to see anonymous user data that would allow them to offer their 50 most frequent customers free merchandise. And it puts power in the hands of consumers by allowing them to pay using any of their accounts or bonus points from a bank, receiving a receipt via text message — all without handing over their name, address, and other identifying information to the merchant.

Congress is reportedly so likely to approve an amendment curbing “swipe fees” that Visa and Mastercard stocks each fell nearly ten percent on the news last week. Hopefully, for local merchants and consumers, the new rules will extend to “swipe free” payments made by cellphone as well.

MasterCard to Test NFC Add-on for Mobile Payments in Singapore

NearFieldCommunicationsWorld.com
May 5, 2010

MasterCard is to run a pilot test in Singapore of a new SIM+antenna NFC solution developed by Gemalto.

The Upteq N-Flex device is the first NFC add-on to conform to the Single Wire Protocol (SWP) and is designed to add near field communication functionality to a wide range of existing mobile phones.

For the trial, MasterCard is collaborating with DBS Bank, mobile network operator StarHub and EZ-Link, operator of a contactless stored value card with over 20,000 acceptance points in Singapore including public transport services and retail outlets. Participants in the trial will be existing holders of DBS and EZ-Link Fevo MasterCards.

"This innovation is aimed at accelerating mobile NFC payments in the region," explains MasterCard's Ajay Bhalla. "MasterCard's collaboration with Gemalto marks an important milestone for the contactless payments industry, with mobile services expanding beyond simple payments and fueling economic connections for consumers in the global marketplace."

Participants will be able to use their phones to make payments at merchants equipped to accept MasterCard PayPass contactless cards and, later, possibly pay use them for transport ticketing too:

"We are also exploring the possibility of using the Upteq N-Flex solution for our contactless e-purse application (CEPAS) to enable mobile NFC payments for small ticket retail and mass transit including buses and trains," says EZ-Link's Nicholas Lee.

In February 2009, Singapore became the first country to give the go ahead for the creation of a central Trusted Third Party (TTP) designed to deliver a fully inter-operable, multi-application national NFC ecosystem. Government funding is being used to encourage merchants to switch to contactless card accepting terminals and a number of NFC trials have taken place in the country over the last couple of years.

Visa to Launch Contactless Mobile Payments for iPhone

ReadWriteWeb
May 6, 2010

Want to pay for purchases by waving your iPhone in front of a payment terminal at checkout? That will soon be a reality thanks to a new partnership between Visa Inc. and DeviceFidelity, which has teamed up to launch a mobile payment technology for iPhone 3G and iPhone 3GS devices.

The news comes by way of a leaked press release that temporarily appeared on MarketWatch, but has since been taken down. Several versions remain on the Web, however, thanks to Google's cache.

payWave for iPhone

According to the release, the new Apple-certifed technology combines a protective iPhone case with a secure memory card that will host Visa's contactless payment application, Visa payWave.

PayWave, introduced in September 2007, allows cardholders to wave their card in front of terminals in order to pay for purchases at point-of-sale. The technology is similar to MasterCard's PayPass solution, which rolled out to select markets in 2005.

Visa's contactless technology already works at over 32,000 retailers from top brands, notes the company's corporate website, and the list is "rapidly growing," it says.

The iPhone-enabled payWave technology, too, will be made available at thousands of merchants, claims the release, including fast food restaurants, retail stores, in taxis, during sporting events (such as baseball games) and even at vending machines that have contactless payment terminals.

Beyond iPhone: Works on Any Phone with a Memory Card Slot

What's even better about this news is that the mobile payment technology won't be limited to iPhones. It will also work with "a majority of smart phones that have a slot for a memory card," which means that owners of other popular smartphones won't necessarily be out of luck. To use Visa's technology on non-iPhones, users can insert the card into their phone's memory slot to transform their phones into mobile payment devices.

Visa already released a similar technology in Malaysia and Japan. Last year, for example, the company teamed up with Nokia and Maybank, a leading financial institution in Malaysia, to offer Visa payWave on mobile devices. But at the time, the company claimed that several barriers to U.S. adoption still remained, many of which had to due with the limited adoption of NFC-enabled devices and terminals here in the U.S. (NFC, or near field communications, is a wireless communication technology that enables data exchanges between devices. The technology is popular overseas in Europe and Asia, but has yet to catch on with any real gusto in North America. PayWave uses NFC for mobile transactions.)

Apparently, Visa has found a workaround for the lack of NFC phones by embedding the computer chip needed into specially designed iPhone cases instead.

Is it Secure?

Considering that people often lose their mobile phones, the application has been designed so that it can be password-protected and uses "advanced security technology," says the release, to uniquely identify each transaction. If a phone was lost or stolen, the phone's owner would simply call their provider who could then immediately deactivate the account, the same as with lost or stolen credit cards.

The leaked release was accompanied by videos demonstrating the new technology, but sadly those are now unavailable. Here's what we gleaned from watching the footage: The video shows a two-part casing for the iPhone, into which a DeviceFidelity NFC microSD card is inserted. This casing then fits onto the iPhone, plugging into the device's dock connector. The product looks as neat and discreet as a protective shell can be, but it is unclear if the case needs to be removed to charge the iPhone. The video goes on to show a transaction being made, with the user selecting a payment application on the iPhone's screen and then waving the device over a terminal to pay.

You can also find more details on Apple's own plans for NFC, iTunes and the iPhone here.

Visa Mobile Payments Trial to Start Second Quarter 2010 for iPhone

NearFieldCommunicationsWorld.com
May 17, 2010

DeviceFidelity has confirmed that, as we reported on 4 May, its In2Pay NFC MicroSD solution is now available for the iPhone.

The solution, which has been certified by Apple, was developed in collaboration with Visa and uses a protective case which is designed to stay permanently attached to the iPhone and which provides a micro USB slot for users to sync and charge their devices. Users then simply insert a standard In2Pay MicroSD card into the case and can then use their iPhone to make payments at merchants equipped to accept contactless payments. Trials are scheduled to start during the second quarter of 2010.

"The more than 200,000 apps on the App Store are an integral part of iPhone users' lives,” says Amitaabh Malhotra, COO of DeviceFidelity. "With our In2Pay solution, we want to give both iPhone users and app developers the power to do even more, by putting the convenience of interactive secure mobile transactions, right at their fingertips, anywhere they are."

"Visa is working to bring the security and convenience of digital currency to mobile users around the world," adds Dave Wentker, head of mobile contactless payments at Visa. “Our collaboration with DeviceFidelity can extend the reach of Visa mobile payments to millions of iPhone users.”

Visa announced in February that it would be running a number of field trials using DeviceFidelity's MicroSD technology from the second quarter of this year.

U.S. Sues AmEx, Visa, MasterCard, Latter Two Settle

Reuters
October 7, 2010

The Justice Department sued American Express Co, Visa Inc and MasterCard Inc on Monday, accusing them of violating antitrust laws and citing rules that prevented merchants from encouraging consumers to use cheaper credit cards. Simultaneously, the Justice Department settled with Visa and MasterCard, which agreed to allow merchants to offer discounts to consumers who use less expensive types of credit or debit cards. American Express said the lawsuit would hurt consumers by limiting their ability to use their AmEx card. Attorney General Eric Holder said that credit card companies "put merchants and consumers in a no-win situation. Accept our card, pay our fees and don't even think about trying to get a discount."

Merchants pay fees to banks and processing networks like Visa and MasterCard every time a customer pays for something by using a credit or debit card. These so-called interchange fees usually amount to between 1 to 3 percent of each total bill. American Express, which lends directly to consumers and processes credit card transactions, charges merchants a higher percentage on average. AmEx said on the conference call that merchants get more business from American Express cardholders in exchange for the higher fees because its wealthy customers tend to spend more than the average credit card user.

Visa, MasterCard and American Express and their affiliated banks collected more than $35 billion in fees from U.S. merchants in 2009, according to the lawsuit. Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group, said in a statement that the lawsuit and settlement "will finally open competition in the card payment market, ultimately leading to lower prices to consumers." But in a statement late Monday afternoon, the American Bankers Association said it looked "forward to seeing whether (merchants') new-found pricing authority will actually result in consumer benefit or merely be used to pad their own bottom lines."

Visa said that as part of the settlement, it would allow merchants to offer discounts to consumers who use certain types of cards, such as non-rewards credit cards, which carry lower interchange fees.

Until this year, these fees have been relatively unregulated in the United States.

"Credit cards cost phenomenally more in the U.S. than abroad and the DOJ action will help open the market," said David Balto, a former policy director at the Federal Trade Commission's competition office.