Visa and DeviceFidelity have announced plans to launch an NFC-capable microSD memory card for use in mobile phones, effectively turning them into contactless payment devices. Although Visa's involvement makes this new device a much stronger proposition than previous offerings, perennial issues such as competing technologies, revenue models and consumer acceptance must still be tackled.
The proposed device will combine Visa's payWave and DeviceFidelity's In2Pay technologies, allowing consumers with mobile phones that have a microSD memory slot to turn their handset into a mobile contactless payment device, using near field communication (NFC) technology. The device will work at any designated payWave location, with trials due to begin in Q2 2010.
Both companies claim that this is a way to tap into the four billion mobiles in use globally, and bring electronic NFC payments to a wider range of consumers. In an official statement, Visa claimed that it is "helping to accelerate the adoption of mobile contactless payments and pave the way for the global deployment of NFC-enabled devices."
This is not the first NFC-enabled microSD card released on the market (the first was launched in 2006 by US-based Wireless Dynamics); however, this does mark the first instance of a major payments player being involved in this type of technology. To date, there are very few NFC-enabled phones on the market, and the lifecycle and mobile contracts of most consumers mean that a roll-out of integrated technology could take a considerably long time.
A Visa-enabled NFC SD card holds many potentially important ramifications for mobile payments as a whole. As outlined in Datamonitor's recent report 'Mobile Payments: Threat or Opportunity', many payment players view NFC as the starting point for the wider uptake of mobile payments, including mobile commerce and P2P payments. However, progress has been hampered by a plethora of competing parties, each vying to become the key payments provider. This is in addition to difficulties with both technology and, more importantly, business model integration.
With SD memory card slots common across many phone models, this proposed solution helps to leapfrog over the technological hurdle of chip integration. With a growing number of players squeezing into the mobile payments sector, wary of missing the next big thing as many feel they did with online payments and PayPal, this technology could, in theory, be used in conjunction with both banking and mobile network operator partners. The potential speed of an SD card roll-out is significantly faster than any hardware-based option currently available.
However, while technical partnerships with a wide range of players are now possible, the business and revenue distribution model remains unresolved. It is unclear how Visa will go about distributing the cards, and whether this will be in conjunction with issuers, banks, mobile network operators, and/or handset manufacturers. Unhappy mobile and payment players will likely prove problematic to any wide-scale consumer roll-out, while manufacturers are likely to soon integrate their own NFC chips anyway should the technology gain wider acceptance.
Contrary to wider market expectations, contactless payment card uptake has, to date, been mixed at best, with little sign of consumer demand for mobile NFC payments. Without an incentive, it is difficult to imagine many making the leap voluntarily, particularly as the acceptance infrastructure remains weak in most regions. While Visa's partnership suggests an important step forward, there is still a long way to go.