Orange and Barclaycard set date for UK’s first commercial NFC service

British consumers will be able to use NFC phones to make payments at stores across the country from the second quarter of this year, Barclaycard and Everything Everywhere have announced.

Everything Everywhere and Barclaycard
BARCLAYCARD & EE: “Key partners in the development of the proposition”

Barclaycard and Everything Everywhere, the recently created merger between the UK arms of mobile network operators Orange and T-Mobile, have announced that the UK’s first commercial NFC service will go live during the second quarter of 2011.

The long-awaited launch will see consumers able to purchase NFC phones from Orange and then use them to make payments from a new MasterCard PayPass prepaid account stored on their mobile phone.

“When you get your new handset, you need to activate it and link it to your existing Barclaycard, Barclays debit or Orange Credit Card,” Orange has told NFC World. “Using your handset, you then simply download (or transfer) funds from your card, to your phone… Loading your account could not be easier and it can also be done online via MyBarclaycard. The mobile phone can then be used to make payments of £15 or less wherever contactless payments are accepted, by simply tapping the phone itself against a contactless reader.”

Orange and Barclaycard first formed a long-term strategic partnership to bring mobile payments to British consumers in March 2009 and a commercial launch was originally expected to take place in late 2010. Last month, Orange revealed it would begin introducing NFC services in the majority of countries in which it has a presence in 2011.

No brand name for the new service has yet been agreed upon, according to Orange, but the official announcement does mention a “forthcoming contactless Orange Cash prepaid payment card” and explains that “contactless mobile phone payments will feature as part of the wider Orange portfolio of products, developed in conjunction with Barclaycard,” indicating that the new service will see Orange rather than Barclaycard as the lead brand.

Currently, there are 42,500 points-of-sale equipped to handle contactless payments in the UK but contactless transaction volumes have been very low to date. In September 2010, for instance, a total of 150,000 contactless Barclaycard transactions were conducted — an average of just over three transactions per point of sale.

“We’re making something that’s been talked about for many years a reality”

London’s commuters, however, are likely to provide the key to driving adoption of the new service. Transport for London (TfL) is committed to converting the city’s buses as well as the London Underground to accepting payments via contactless payment cards and NFC, with work due to begin from the middle of this year. And, last week, MasterCard signed a multi-million pound deal with TfL that will see MasterCard branding appear on turnstiles on the underground as well as some six million of the plastic wallets issued to new Oyster cardholders this year.

Rival mobile network operator O2 is also expected to announce a commercial NFC launch in the near future. O2 Money, the operator’s financial services arm, is currently on the hunt for a number of NFC, card and payments specialists to “help establish the newest name in financial services.”

“This is the beginning of a revolution in how we pay for things on the high street,” says Gerry McQuade, Everything Everywhere’s chief development officer. “It’s a cultural shift that is as important as the launch of the personal credit card or ATMs. We’re making something that’s been talked about for many years a reality and very soon using your mobile to buy a sandwich, a cinema ticket or, in time, even something bigger like a computer will simply be the norm.”

“I believe that future generations will find it surprising that early this century we were still carrying separate items to buy goods and to communicate with each other,” added David Chan, CEO of Barclaycard Consumer Europe. “As payment experts, our role is to make it easier, more convenient and incredibly secure for people to make purchases and manage their money while on the move.”

Both Orange and Barclaycard have called on the services of Gemalto for the technology underlying the new service. The company is providing Orange with the NFC SIMs that will be issued to subscribers and is supplying Barclays with trusted service management (TSM) services, enabling the secure deployment and management of the mobile contactless payments.

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4 comments on this article

  1. Hopefully, this excellent news will be the first of many mobile and financial service provider announcements on the commercial availability of true contactless payment, NFC services. As stated by Gerry McQuade, this really is the start of a revolution on how consumers pay for micro goods, and in the long term more expensive purchases. In Europe and the UK, the mobile phone is the channel of choice for communication; most people have their mobile phones on them at all times so to be able to make payments through it is as practical as it is innovative.

    The biggest concern is adoption levels, as Orange and Barclaycard cite; it is banking on Londoners who are avid users of the contactless payment ‘Oyster’ travel card, to pioneer the use of this payment method. However, it is unlikely that the concept will put people off as it’s an integrated solution to make everyone’s lives easier; the masses will just need educating on how it works and what the benefits are.

    Surely, the biggest challenge the providers will have is convincing consumers that this is a safe and secure payment method? Contactless card payments will leave them open to ‘tap and go’ fraud as Chip and PIN verification is not required on items under £15, although a PIN will be needed to reset the contactless card once a £50 limit is reached.

    Therefore, the providers will need to assure consumers that they have secured the solution at three levels. Firstly, that the devices being used to exchange the information are secure and have biometric authentication built into them. Secondly, the applications running on the device have sufficient levels of authentication and authorisation. Finally, the channel for the transmission of data is 100 per cent secure.

    Comment from Hemant Lamba, Banking and Capital Markets Practice, Infosys, and posted by Infosys Press Team

  2. @Infosys Press Team: Just so you know, TfL has used economic coercion to increase Oyster adoption. To buy a single bus or tube journey, it costs double if you don’t have an Oyster card. So Londoners are avid users of Oyster because they have very little choice.
    @anyoneWhoCares: how will I use my mobile ‘phone to get home if it runs out of battery? How will I use my mobile ‘phone to buy anything if it runs out of battery? This is the biggest barrier to adoption in my opinion.

  3. Another load of utter twaddle from the NFC brigade. There have been regular announcements every year for the last decade telling us how “this is the year of NFC!”

    And yet, after all the announcements and all the trials and all the vast amounts of marketing money thrown at a solution looking for a non-existant problem, nobody has ever defined a viable business case outside of possibly public transport. After a decade of trying, very few retailers even have suitable terminals and most of the staff don’t know how to use them.

    Mobile operators cannot break into this area as there is simply no skin in the game left for them between the banks, retailers and the card processors. MasterCrad and Visa are already losing out to the rise in debit card usage over credit cards as the economic situation continues to bite and so the only way these trials work is when the card companies throw money at them in the vain hope then can generate some traffic….

    Simon Cavill

  4. I once remember an Oil company saying to me Unleaded petrol would never catch on and it wasnt needed. Hmm. If the vehicle is pre paid cards and the transfer mechanism is easy it might help with the “i forgot my wallet brigade” who never leave home without their communicaiton device. Acceptance values would need upgrading but I know one industry who have several Millions of reasons to expand the ability for people to pay without a card in their left at home wallet.

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