Using your smartphone to make payments in shops or on public transport should become more widespread this year, but its supremacy is likely to depend on how successful retailers are in enticing people to keep their cards or cash in their pockets.
The stakes are high for phone manufacturers and operators, not to mention banks, as the success of contactless systems where consumers sweep their smartphone over a reader could restructure the lucrative retail payments market.
However, Philippe Lazare, chief executive officer of Ingenico, a leading manufacturer of payment card terminals as well as new contactless systems, does not see people as ready to give up their debit cards just yet.
“Smartphones will be a small part of the market, but the main payment mechanism will remain the traditional [card] terminal which will continue to see growth,” said Lazare, whose company manufactures more than one in three payment terminals in use worldwide.
That view did not stop Ingenico last week from announcing a contactless payments system compatible with Apple Pay at the Mobile World Congress trade show in Barcelona.
Apple Inc’s adoption last year of Near Field Communication (NFC) was a major step toward this becoming the dominant technology. Google Inc has had a similar service, Google Wallet, available for a couple years.
NFC allows smartphones or other devices to communicate with one another within a distance of several centimeters.
This means consumers can quickly sweep their phones over readers rather than having to pull out a card, insert it into a terminal and wait to punch in a code.
“It was a decisive step toward the creation of an ecosystem, but that may not be sufficient as several solutions are available,” said Anne Bouverot, head of the GSMA trade association for mobile operators that organizes the Barcelona event.
She said that it is also important to get people accustomed to using their phones for making payments by using them elsewhere, such as within public transportation systems that have adopted contactless technology like in London or Paris.
In launching Apple Pay, the US tech giant was again demonstrating its long-standing role as a trendsetter, rather than responding to consumer demand. It has yet to be rolled out anywhere except in the US.
However, Apple’s initiative has pushed its competitors to also move forward.
All high-end smartphones are now coming equipped with NFC. Some are coming with added security features, like the new Samsung Galaxy S6 unveiled at Barcelona that has a fingerprint scanner.
Google last month bought Softcard, a rival to its Google Wallet co-founded by US mobile operators AT&T Inc, T-Mobile USA Inc and Verizon Communications Inc in 2011.
Samsung Electronics Co recently acquired LoopPay Inc, whose technology links up with the magnetic strip readers in existing payment terminals instead of NFC.
This system transmits card details via secure magnetic signals to the reader when held up against it.
It has the advantage over the Apple and Google systems of being immediately compatible with more than 30 million payment terminals in use in the US.
US banks might be watching nervously as the emergence of contactless payment systems comes just as they are investing to upgrade payment cards and terminals from magnetic strips to chip cards.
US banks lost out in the Internet payments market to Paypal, which announced during the Mobile World Congress that it was getting into the contactless payments game with the purchase of Paydiant.
Paydiant works with merchants to develop loyalty and incentive programs as part of mobile payment systems to help them boost sales.
Many experts see retailers offering discounts and promotions tailored to each client as an important element in encouraging consumers to make the switch to contactless payments with their smartphones.
Not everyone is expecting a boom in the use of smartphones for making payments.
“For several years now an explosion of that of kind of payment has been expected, but one should not forget that 85 percent of all the transactions in the world are still made via cash,” MasterCard Inc chief executive officer Ajay Banga said.
Banga expects adoption of contactless payment systems to instead grow steadily over several years.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,
‘SWARM TECH’: Joint venture FARobot is to develop autonomous mobile robots that would first be deployed in Hon Hai’s factories to optimize production efficiency Hon Hai Precision Industry Co (鴻海精密) and Adlink Technology Inc (凌華科技) have formed a robotic venture that aims to use “swarm technology” to create robots that can communicate with one another on the factory floor to optimize production efficiency. Hon Hai is Apple Inc’s leading iPhone assembler and the world’s largest contract electronics maker, while Adlink supplies industrial computers and Internet of Things solutions. Through a subsidiary, Hyield Venture Capital Co (鴻揚創投), Hon Hai holds a 51 percent stake in autonomous mobile robot (AMR) developer FARobot (法博智能移動), while Adlink owns the remaining 49 percent. Together, the two companies put up NT$200