Contactless payments - has the time arrived?

Orange plans to launch a commercial mobile payments service in Nice, France, during the early part of next year. The deployment will enable resident of Nice to use their NFC-enabled handsets as etickets on local transport systems as well as making other mobile payments.

This move, which comes after the operator has carried out extensive trials, might be the breakthrough that has been talked about (hyped?) for many years regarding NFC-based contactless payments.

Orange maintains it has put together the necessary eco-system to support its mobile payment service--namely the bus and train companies, and local merchants--and also claims those involved with the earlier trials liked the features NFC handsets provided so much they couldn't understand why Orange wouldn't deploy the service earlier than in 2010.

Interestingly, Sony Ericsson's VP of systems architecture, Håkan Djuphammar, said last week that NFC could appear in every handset as early as 2010, claiming the two-way technology would transform the handset into being a readable RFID as well as a tag reading device. "A year from now basically every new phone that's sold will have NFC," was Djuphammar bold prediction.

However, mobile payment industry watchers have cautioned operators over attempting to persuade consumers to switch from using cash to some other payment instrument. These gurus believe that any new payment service must provide significant and obvious benefits to the user to convince them away from using cash.

While the NFC technology might be reaching maturity and is set to appear in handsets, Orange stresses that there must be a positive business case for operators to venture into contactless payments. The company's VP responsible for this sector openly states it will charge banks and transport providers for making this service available, and says discussions with these parties are progressing well.

This concept of charging your partners for providing a mobile payment has been the Achilles heel to delaying commercial deployment. If Orange has been able to crack this long-standing issue, then the future for contactless payments has taken a huge step forward. -Paul