Visa, the iPhone & NFC: The Australian state of play

Renai LeMay
Monday, 23 May 2011 10:35

Your IT - Mobility

This article is by MacTalk founder Anthony Agius. It was originally published on his blog and is re-published here with his permission.

analysis You've probably heard the rumours that the next iPhone is getting a thing called NFC. You've also probably read about Visa doing some funky trials with 'PayWave' and iPhones. And you also probably have a credit card which supports PayWave.

Unfortunately, most of it is a bunch of hot air, but in the coming months, things are set to get much more serious. Aficionados of slim wallets will be pleased. Simply put, in the very near future, you'll be able to use your mobile phone to pay for small items, really quickly. But how does this work? Is it voodoo magic? Can someone get hold of my phone and buy really embarrassing things that puts me on an ASIO watch list?

Let's look at the first bit of the puzzle - credit cards, money transactions and financial institutions. Right now, if you want to buy something at the shops, you either have to use cash, or some sort of card, be it EFTPOS or a Visa-, Mastercard- or American Express-branded card. Despite the ease of using a traditional card (insert card into terminal, select account, enter PIN, press Enter), it's the slowest way of making a transaction, plus it unfortunately trips up some of the less technological savvy amongst us. I know I'm not the only one who becomes irrationally violent when someone (typically an old person or bogan mum) takes eons to swipe her credit card, inserting it the wrong way, unsure of which account to select and then entering the wrong PIN.

Using modern technology, the boffins at Visa and MasterCard have devised a 'contactless payment system', in order to simplify and speed up the process. Why did they do this? Surely what we have now is fine? Well Visa and MasterCard hope that if the barrier to entry of their product (i.e make it fast and easy) is low, it can replace the current product leader (cash) for the area of the market they don't own '” small and quick transactions. Paying for things like fast food, groceries or petrol are generally done with cash as they're small amounts and people are in a hurry.