Tap and Go: Forget the credit card, swipe the smartphone
The country is trialling a mobile electronic payments system that may ultimately replace the humble credit card.
New smartphone apps under development promise to make an essential device even more useful within an ecosystem of retailers and financial institutions.
As 2014 unfolds, people will wave their smartphones near each other to exchange business cards, manage tasks and update calendars. These apps will even give brave singles instant compatibility scores using data from dating sites.
The catalyst for this wave of hyper smartphone activity is a set of short-range wireless technologies called Near Field Communications (NFC). Compatible devices transfer data over a distance of 10cm or less, and it’s feeding our appetite for tap and go payments.
Electronic payments are made possible by a device called an initiator that creates a radio frequency field. When a passive target such as a credit card, key chain, or an NFC-equipped smartphone enters the field, data is exchanged and the payment is recorded.
The technology is widely available on Android smartphones such as Samsung’s flagship Galaxy SIII.
In New Zealand, Android phones are everywhere and electronic payments are becoming more popular. It’s caught the attention of NFC backers.
“There needs to be a critical mass of people with NFC devices and of the readers needed for the devices,” said futurist Ross Dawson. “In places like New Zealand, Singapore and others, we are seeing that this is the case.”
Not only are New Zealanders big users of Android phones, they are also enthusiastically using their phones to access commercial services. Over the last 12 months access to online banking has increased by 40 per cent, and the number of New Zealanders accessing online shopping through their mobiles has increased by 55 per cent over the same period. Making it the ideal country for an NFC payment system to be rolled out.
The NFC-based payments system is the result of a partnership between New Zealand’s banks and telecommunications carriers, and as a result, there are already 10,000 compatible terminals at major retailers like Bunnings, BP and Kmart. This roll out will continue in 2014.
Customers participating in this trial are using NFC-equipped smartphones to make payments at retail locations using an electronic wallet developed by New Zealand mobile carrier 2degrees and GE Capital.
Trial participants can install an electronic wallet application from 2degrees on their Android phone and store personal details from their GE account – transforming an ordinary smartphone into a contactless credit card.
Paying for a coffee or groceries? Just swipe your smartphone.
“By the middle of the year any New Zealander with an NFC-equipped phone will be able to make payments this way,” said Scott Rasmussen, Customer and Product Manager, Cards, at GE Capital.