Hopefully you read my earlier blog on NFC Contactless Stickers in which I outlined the reasons why a contactless sticker is a great way for an Issuer to begin to build their NFC strategy and experience. I think stickers are a good first step along the path to supporting full NFC capable devices.
In the last couple of months their have been a number of high profile announcements regarding NFC. One announcement which I found particularly interesting was from the Commonwealth Bank. They have launched a new mobile banking application for iPhone called “Kaching”. The Kaching application has the full range of mobile internet banking features; however the really interesting feature for me is that this application uses an NFC sleeve to conduct contactless payments. The application is free however to enjoy the NFC experience you will need to purchase a sleeve for your iPhone 4.
Mobile handsets that natively support NFC and contactless transactions have only recently become available. Some notable examples include the Google Nexus S, the Blackberry 9900 and Blackberry 9930. The vast majority of handsets do not support NFC, the iPhone 4 falls into this category. I like to use the term “Pathway Products” to describe the range of solutions that have been developed to add an NFC capability to non NFC handsets. The following is a short overview of the two types of pathway products we have used.
An NFC sleeve is a protective plastic sleeve that clips onto a handset and protects the body of the phone. We have used NFC sleeves from a number of manufacturers, the sleeves are all similar in design and construction and contain in the body of the sleeve, a contactless antenna, a secure element chip, an NFC controller chip and a connector to the phone. The connector enables the sleeve to be powered by the phone’s battery and an SDK enables allows the mobile banking application or “wallet” to communicate directly to the secure element and the NFC controller.
We have found that the iCarte 420 Sleeve and the Chungwha Telecom Sleeves to be excellent devices. On the plus side the sleeves all seem to perform well and are not intrusive to the consumer. On the minus side they can be costly and drain the phone’s battery if left on. Sleeves seem to be an ideal solution for the current iPhone 4 family.
NFC sleeves are not just for payment, they can be used in transit and in retail markets as well. A great way to think of a sleeve, it’s a giant clip-on contactless card!
A common feature of many mobile handsets is a MicroSD expansion slot. Typically a MicroSD slot contains a MicroSD memory card which is used to add extra storage space for pictures, music and applications. A number of manufactures have developed adaptors that replace the memory card and add contactless capability to a handset.
We have trialled adaptors from a few suppliers and have found the design and performance to vary considerably. Our experience is that these products generally contain a secure element chip, a contactless antenna and closely resemble the components contained in contactless card. In fact, some adaptors operate without any power required from the phone’s battery. In this respect they are identical to a contactless card and rely on the contactless reader to power the chip.
We found that the read performance of MicroSD adaptors varies from excellent to very poor. The performance depends on a number of factors but is strongly influenced by the manufacturers antenna design and the materials used in the body of the handset.
The adaptors come with an SDK which allows them to be accessed and integrated into your mobile banking application or mobile wallet. SDK’s are available that support the major phone operating systems including Android, Blackberry and Windows Mobile.
One adaptor we have found to be very good is the Watchdata SDpass; we have used this in a recent NFC payment pilot with great success.
On the plus side, MicroSD adaptors are small, less expensive than NFC sleeves and don’t require power, on the minus side they can be difficult to install due to their small size and their performance can vary.
Appeal of Pathway Products
Pathway Products have a strong appeal to issuers.
Firstly, they address the growing demand from issuers who wish to support NFC and mobile transactions with current handsets.
Secondly, Pathway products work independently of the telecommunications provider and provide the issuer with a high degree of control and allow the issuer to retain a direct relationship with their customers.
Finally, by the very nature of their design and operation only a single pathway product can be used with a handset at any one time. Only one sleeve can be placed around your customer’s iPhone and only one MicrosSD adaptor can be placed in your customer’s Android or Blackberry handset. This puts your mobile banking application in your customer’s hand everyday and makes you “top of the mobile wallet”.
Future of Pathway Products
Pathway products do have role to play and will have a life in my view; Telecommunications providers are putting their support behind NFC as demonstrated by initiatives such as ISIS. Handset manufacturers are releasing by new phones that have NFC capability built into the handset. However there is still substantial work that needs to be completed before consumers will be able enjoy the benefits of NFC within in a seamless NFC ecosystem.
Until this happens what are you doing to today to prepare for this new payment and contactless transaction environment?
If you would like to discuss your NFC strategy or receive further details on ABnote’s experience with pathway products please email me.