New Zealand’s National Mobile Wallet Approach

One of the main things holding back consumer uptake of mobile wallet solutions is the lack of a single, widely accepted service.  With Google, Apple, PayPal, Visa, MasterCard, Telcos and Banks all in the race, there’s no single standout mobile wallet.  Until an open standard is achievable, what consumers want is a wallet that is available on all devices, integrated with all the banks and accepted by enough retail and service providers to warrant adoption.  One country is taking a national approach to solving this problem and they’ve made more progress than most.

New Zealand’s Telcos and Banks Join Forces

Last year all three Telcos in New Zealand (Telecom, Vodafone and 2Degrees) joined forces with NZ’s leading payments provider, PayMark to develop common infrastructure to support contactless payments.  The  venture, announced over a year ago in April 2012 described itself as a ‘Trusted Services Manager ‘ solution, which will enable contactless transactions with NFC-enabled smartphones.

PayMark is NZ’s leading payments provider, similar to eftpos inAustralia, and is owned by NZ’s four major banks ASB, Westpac, ANZ and BNZ.   The joint venture  is unique in that  it involves not only the banks, but also the 3 major telco carriers in the country.

A few months ago Australian payment company eftpos announced its intention to begin trials of a mobile wallet and NFC widget.  This deal was a partnership with C-SAM, a mobile transactions technology provider. The efptos plan is to develop a mobile wallet and NFC widget as white label products which could potentially be used by retailers or financial institutions and rebranded to suit their own needs.

The NZ project is quite different.  The proposal for NZ’s TSM is to develop the infrastructure that sits between the service providers (e.g. banks, loyalty providers, merchants) and the mobile phone provider.   Once the TSM is built, the intention is that all businesses will be able to participate in the TSM from a supplier or customer perspective, with the ulimate goal of enabling users to tap their phone over contactless terminals, in place of EFTPOS or credit cards.

According to Telecom NZ the plan is to launch the venture in the middle of 2014, however there has already been plenty of action since then, with various in-market trials, commercial ventures and prototypes already developed by many of the joint venture partners.

Market Trials and Products Launches

One of the TSM venture partners, 2 Degrees launched a commercial application of the technology shortly after the TSM was announced last year.  2Degrees partnered with contactless payments provider Snapper to enable smartphone  payments for the Auckland and Wellington public transport system.  Snapper’s original business is in ‘snapper cards’ which can be topped up to pay for public transport and for goods and services at around 500 retail outlets in NZ.  The technology in the Snapper cards was replicated in various compatible Android devices by installing a customised SIM and the Snapper App on the device.  The Snapper enabled mobile phones were packaged and sold by 2Degrees.

In parallel, Paymark has entered into a separate arrangement with Westpac, Telecom and Auckland Transport to trial a mobile wallet which enables tap and go paymnents with a smartphone.  The promotion video features a customer tapping on and off public transport, paying for coffee and accessing a secure building all by ‘tapping’ her smartphone using NFC technology.  Given Paymark, Westpac and Telecom NZ are all partners of the initial TSM venture, one can only assume the learnings from the trial will go towards future infrastructure development.  Check out the promotional video below:

Recently two other partners of the TSM venture, Vodafone and Bank of New Zealand (BNZ) have been busy working with Visa to launch their global SmartPass service in New Zealand. SmartPass is Vodafone’s global brand for making contactless payments using an NFC enabled mobile phone.  According to Visa, SmartPass allows customers to communicate with 10,000 tap-and-go EFTPOS terminals in NZ.

Is There A Future for NFC Based Mobile Wallets?

The one thing all of these trials, ventures and commercial launches have in common is their reliance on NFC technology.  For some time it has appeared that NFC would be the obvious technology to proceed with.   Until recently it was assumed that iPhones would eventually support NFC technology. In fact it now seems certain iPhones will never incorporate NFC, with Apple’s recent operating system update including support for iBeacons. iBeacons is a wireless technology based on a low energy form of Bluetooth called Bluetooth Low Energy (BLE).  The latest version of Android also supports Bluetooth BLE , so Apple’s support of this new technology effectively closes the door on broad scale adoption of NFC.  See our recent article on BLE and iBeacons for more information.

One way iBeacon can be used to enable payments is demonstrated by Paypal’s new hands free payment device called PayPal Beacon, which plugs into a power point in store and enables alerts, offers or messages to be delivered to passing customers. Once a customer accepts an offer, their image appears in the retailer’s Point of Sale system, ready to complete a PayPal transaction with only verbal authorisation required.

It is not clear exactly how banks and payment services will engage with the relatively new BLE technology.  While it offers much potential, it is a very different type of technology to NFC and doesn’t necessarily replace it.  BLE makes it possible for retailers to know a customer is in store, but closing the the payment loop requires another step such as facial recognition, a personal ID or verbal authorisation to formally process a payment.  While some argue that BLE is the beginning of the end for traditional bank payment systems, others see it as one more step in the mobile payments journey that is far from complete .

What this all means for New Zealand’s ambitious joint venture is not clear, but now that Apple has closed the door on NFC, it seems unlikely that  early trials would be rolled out commercially. Certainly a national NFC-based mobile payments solution would fail to achieve widespread adoption unless Apple’s market share drops markedly.


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