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NFC: Banks optimistic despite challenges

SA's banks say NFC, which will effectively allow individuals to use their cellphones as wallets, is an inevitability for the country.

South African banks and retailers are likely to be slow to adopt near-field communication (NFC) technology for mobile payments, due to the high cost of enabling infrastructure.

This is the stance of Nashua Mobile's executive head of marketing, Tim Walter, who says there is scant appetite among institutions to drive the adoption of yet another new point-of-sale (POS) payment technology, just as the end of the protracted rollout of EMV credit card standards is in sight.

NFC, a short-range wireless technology that enables mobile devices to exchange data and will effectively allow the use of cellphones as wallets, has proven itself to be a viable technology in countries such as the US, and local banks are currently trialling NFC. But, says Walter, there are not enough NFC-enabled handsets in the local market. “Nor is there a compelling commercial model for the rollout of the technology in SA.

“Most of the major handset manufacturers are bringing NFC to market in the latest models of their mid- to high-end smartphones, yet we are still a long way off from the critical mass that would really justify massive investment in the technology by banks and retailers."

Overall optimism

SA's big four banks, however, remain optimistic regarding the future of mobile NFC in SA, despite incumbent challenges.

Herman Singh, CEO of Standard Bank's standalone division Beyond Payments, says it is important to recognise that the realisation of cellphone payments via NFC technology is a journey, and not a destination – unlike EMV, “where there was a clear start and a clear end point”.

Singh says, while “it will be many years before we see all individuals routinely paying with phones at all merchants on the high street”, it is inevitable.

Head of products, analytics and cards at First National Bank, Irlon Terblanche, says payment technology is advancing rapidly, with many different forms of person-to-person and person-to-business payments coming to the market. He says, however, some of these have the capacity to slow down the adoption of mobile NFC more than initially anticipated.

“Therefore, before we invest the considerable resources it takes in developing a full-blown NFC capability, we will provide our customers with other forms of payment methods and in parallel build the foundations to scale up our mobile NFC capability at a rate commensurate with consumer and retail adoption.”

Absa, which became the first bank in SA to trial NFC payments, in mid-December last year, says it is implementing the required infrastructure to make NFC payments a reality. While there are unanswered questions, says Absa, the bank is in the process of creating the future of mobile payments.

“We have a commitment to roll our over 4 000 contactless POS terminals in 2012, and a fully-functioning beta trial using NFC-enabled cellphones and contactless POS infrastructure involving a small number of users at the Absa and Vodacom campuses.”

Absa says while the date for a commercially-available NFC solution is “dependent on a number of variables”, the bank expects to be able to present its offering to the market during 2013, if not earlier.

Nedbank's head of corporate card services, Pamela White, says NFC is a global trend, and is no longer a future technology. “Seen in the context of the move to mobile payments and rapidly evolving interactive mobile shopping experiences, NFC has to play an important role in purchases in SA.”

World Wide Worx MD Arthur Goldstuck says, ultimately, the gap in readiness in SA is between the people and the devices they have. “It's not really about whether the technology is right for the country, but about having the ecosystem to support it.”

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