Interview • 31.01.2012

NFC cell phone: paying without giving bank details

Interview with Martin Schurig, Head of Financial Services Products, Telefónica Germany

Martin Schurig: 90 percent of all customers at this point choose a Smartphone....
Martin Schurig: 90 percent of all customers at this point choose a Smartphone. © Telefonica

Many consumers carry their cell phone in their pockets just like they carry their wallet. If it’s up to cellular phone companies, the cell phone is even meant to replace the wallet. The Deutsche Telekom, Vodafone from Great Britain and Spain’s Telefónica with its O2 brand already offer a joint payment procedure for online retailers. It is called “mpass“ and is now also meant to hit local businesses around the corner.

Up to now, text messages (SMS) are sent when you make cell phone payments. This incurs fees if you don’t have a flat rate. How is this going to continue?

Still during this year, the SMS confirmation will be replaced by mTAN. The customer then receives a SMS with a TAN, which he enters on the Internet to authorize payment. This use of “mpass“ is free of charge for the customer.

Now you also want to hit stores with “mpass“. You are counting on NFC. Why not a barcode which the retailer simply scans from the cell phone display?

From our point of view, NFC technology is a better solution. It clearly represents an easier, less complicated, more convenient and less error-prone method.

What potential do you see for contactless payment with NFC cell phones?

We see a huge potential for payment with NFC equipment. Since the introduction of the “mpass“ payment service, the number of users who appreciate mobile payment continuously increases. In this case it’s not just our Smartphone savvy customers – 90 percent of our marketed devices are Smartphones – who count on the mobile way of paying. In 2012 mobile payment will also be possible in local businesses around the corner. Currently there are still only a few cell phones from providers on the market that are NFC compatible. That’s why we have worked out an interim solution which enables our customers to already use “mpass“ in retail today. We developed a NFC sticker which can be affixed to any cell phone. This sticker that’s free of charge for our customers makes cell phones NFC-capable.

NFC cell phones won’t hit the market until 2012. Should retailers already invest in NFC readers at this point?

Many of the payment terminals on the market today are already equipped with NFC technology. This means that these devices can be directly used for mobile payment with your cell phone via NFC. All other devices that normally are being replaced in regular intervals will include the NFC technology.

Customers fear for their payment data. How safe is paying with your cell phone?

Paying with your cell phone is a very safe payment procedure, since no bank or credit card information is passed on to the retailer. This also makes “mpass“ safe against “data fishing“. Payment confirmation via SMS also adds to the safety of this procedure, since the customer doesn’t just need to have his access data available, but also needs to have access to his/her cell phone.

How large are sales volumes for cell phone payments in Germany?

Unfortunately, we are not able to provide any concrete numbers.

NFC cell phones can display all features of credit and bonus cards. Do retailers want this?

Our conversations with retailers show very clearly that the market is very open-minded about innovative payment solutions that strongly optimize and speed up processes. The interest in introducing this payment system is very high. Our customers are very open-minded about the new, convenient and safe method of mobile payment. This also includes functions like they are already known for today for paying with credit or bonus cards.

What happens in case of loss?

The customer can immediately freeze his/her cell phone number in case of loss. Blocking his/her bank and/or “mpass“ account provides additional protection. Since you also need to specify a PIN to make a payment, misuse is rather unlikely.

Can you also pay with a German cell phone abroad and how much does it cost?

Currently we offer the mobile payment option to our customers in Germany.

Transaction fees are a decisive factor for retailers. How high are they for cell phones?

The transaction fees are on a competitive basis compared to other payment methods.

Is it worthwhile for instance for bakeries and convenience stores to offer cell phone payment for their small amounts?

Especially those businesses that are not offering cashless payment today, “mpass“ is an exciting payment method. Aside from factors such as hygiene and shorter check-out times, “mpass“ reduces costs for cash handling and therefore also reduces transaction costs.

Interview by René Schellbach, First Publication:


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