The trial, announced earlier this year, is in collaboration with Gemalto, Thales and Paymark. The six organisations have worked together to develop a virtual mobile wallet that can hold multiple cards – including a credit card and transport card.

The three partners say that the “proof of concept‟, revealed at the Thales test laboratory in central Auckland today, is further evidence that mobile wallet technology will soon be a reality in New Zealand. They emphasised today’s demonstration is simply the first stage of a much bigger vision, which will see mobile payments and other mobile wallet services rolled out nationally, involving multiple vendors and service providers.

Speaking about the progress they have made in the trial, Telecom’s Chief Product Officer Rod Snodgrass said “Telecom built the Smartphone Network with smartphones in mind, as people are doing more than ever on these devices. This trial takes the use of mobile payment technology to a whole new level. We are all accustomed to storing our address books and diaries in our phones. Well, now we can store our wallet there as well. This is not simply another application – it truly is a “mobile wallet‟, which will hold multiple cards and secure applications, providing a fast, convenient and safe way to purchase goods and services.”

Westpac Chief Information Officer Peter Fletcher, said “over the next 3-5 years, mobiles will become our customers‟ key banking tool for transactions, product research and other banking needs. Westpac is committed to delivering a market leading mobile proposition and the mobile wallet trial is an important step as we help Kiwis move towards a mobile banking future.”

Auckland Transport Chief Operations Officer, Greg Edmonds, said “mobile phone technology will form an important part of the mix of payment options for transport services in the future. We look forward to the introduction of this technology providing further choice for commuters in the way they pay for transport.”
The next phase of the trial will see 30 plus participants test the new mobile wallet technology at contactless Point of Sale terminals, across Auckland Transport’s network and top up their Telecom Mobile Accounts on their mobile. The technology is expected to be available near the end of 2013.

Learnings from this next trial phase are expected to enable the collaboration partners to further build on the proof of concept and develop an even wider and more valuable mobile wallet proposition for consumers.

This mobile wallet trial is another step towards a full rollout of NFC technology within New Zealand. It comes off the back of Paymark, Telecom New Zealand, 2Degrees and Vodafone New Zealand’s announcement in April 2012 of their intention to form a Trusted Services Manager (TSM), which will establish a robust, open ecosystem for NFC-enabled New Zealand.

See Roxanne Salton, Snr. Product Manager – mCommerce and Advertising, Telecom NZ, at the Future of Payments Conference in Sydney on 16 – 17 October 2012.

Somehow, we all came to accept that rapid innovation and payments simply did not go hand in hand.

Payments businesses tolerated a fundamental disconnect between the IT infrastructure demanded by their emerging business needs and the legacy infrastructure built up over generations. These legacy systems are exactly what is delaying banks to keep up with today’s requirements to build richer and more robust web applications, ones that align with emerging technologies such as mobile and social, or to simply to reduce long-term costs by modernizing applications and approaches

According to a study by Business Technographics, 75% of North American and European enterprise IT budgets are spend on ongoing operations and maintenance, leaving a mere 25% for new investments.

Well no more.

According to Oliver Rajic, GPC’s CEO, we are about to enter a new era of payments that will redefine the entire payments space for good and will see many large traditional providers see the same fate other former IT giants who did not adapt.

Organizations will either focus too much attention on the dated notion of  needing to own, maintain and invest into hardware platforms than rather than deploy resources primarily focus on sales, marketing and making money on transactions running through their solution.

The concept of  consumers and enterprises buying  licensed software packages into perpetuity coupled with large, bulk-based costs for hardware and software, resulting in inefficient spend and overspending, the “ better to have it and not need it than need it and not have it” philosophy,  is not current anymore.

GPC maintains that the term proprietary is becoming a thing of the past, and the embrace of open source as universal connectivity and SAAS will be the key to survival and true growth.

“The provider with more products and better service will always beat out the providers whose primary lead in a pitch is the term proprietary. It is almost as if merchants have started to tune that word out altogether. Service quality, product depth, being current and customizable is what should solely matter to banks creating a new strategy.” According to Mr. Rajic.

Further on “The payments cloud introduces new flexibility, product depth, scalability and finally brings the software as a service concepts to payments. Resistance will be there, as there always is with such a change, but ultimately it is futile because this is the future. The cloud also liberates us from the hardware restrictions, whereby only the supplier can make changes, but allows for input and changes from multiple sides, including the merchant.”

While GPC understand that legacy providers will not and cannot simply make the shift overnight, GPC’s unique approach and solution goes beyond IT’s two traditional options:

• Let it be: Leaving merchants, product managers and sales crying about the lack of speed and functionality to work with
• Replace it:  Occupying IT and budgets for years

As neither option is ideal and carries its own fears and risks, GPC aims to simplify the first step into the evolution of cloud by enabling firms with this legacy burden to:

• Modernize it – Ranging from noninvasive changes enabling web functionality to full-bore migration to other languages and platforms.
• Simplify the transition via low-cost intuitive, quick to deploy technology to complete your project more quickly, that still utilizes data from these systems before making the ultimate leap to the cloud

The end-result are still more flexible products, interconnectivity, cheaper capital expenditure, and significantly faster transactions allowing for new and improved ways of fraud prevention and data analytics.

Additionally, and maybe most importantly, what the consumer app industry has experienced and benefited from for years now, namely the possibility of small organizations and clusters of people to exchange value around the world, will finally become available to payments.

Removing typical barriers of entry (upfront costs, distribution channels, integration) will result in a flood of new players, faster deployment of solutions, more customizable product offerings and unprecedented innovation.  This interconnectivity, open source, software rather than platform and cloud centric philosophies are what GPC aims to provide to banks, product providers and merchants.

GPC’s approach allows merchants to just add on these extra features from various providers, versus shifting to entirely new platforms to get that one extra “gimmick”.  Via a centralized software platform in the cloud, GPC connects the multitude of providers into one central spot.  The platforms focus is to simplify for solution providers and entrepreneurs to integrate to each other.

Merchants will have access to a highly-integrated, customizable and simplified solution portfolio with an increased focus on services. While sales channels will be introduced with a simple concept;  More products = more customers =more opportunities to sell =more revenue.

According to Mr. Rajic, it will be the nimble who will be able to recognize, adjust to and capture, this opportunity quickly.

“ The change is inevitable, the only question will be which organizations will be part of making it happen and which will ask what just happened.”

The value of worldwide mobile payment transactions will quadruple over the next five years to more than $US1.3 trillion (A$1.25 trillion), driven in part by the growth of near field communications-capable (NFC) devices, according to a Juniper Research report.

The report predicts that the growth in mobile payments would be driven primarily by sales of physical goods by both remote and NFC transactions. These transactions will account for 54 per cent of the total value of mobile payments by 2017.

Juniper says the growth in mobile transactions had been bolstered by the steady roll-out of NFC infrastructure, and the better engagement of mCommerce operators.

But for all that growth, physical good sales that are conducted through mobile phones will still only make up 4 per cent of global retail transactions in 2017.

Australia remains a relatively mature market for mobile payments, and despite the infant stages of the NFC market, continues to see strong roll-out of NFC infrastructure.

Telstra has eyed the possibilities of NFC for years, and conducted a trial with National Australia Bank and Visa. And earlier this month, it was revealed that Westpac had teamed with Mastercard to pilot and Android application that uses NFC technology. And the Commonwealth Bank earlier this year announced the release of NFC-capable merchant terminals as part of its next generation payments roll-out.

The Juniper report’s author, Dr Windsor Holden, said that while the roll-out of NFC infrastructure had gathered pace, there remained a lack of engagement between the NFC payment eco-system and consumers. People still don’t know enough about it.

“While we are now seeing significant deployments of contactless infrastructure, consumer awareness is extremely low. Thus, it is imperative for all members of the NFC value chain to engage with the public to heighten its profile as a simple, intuitive payment mechanism.”

According to the report, the recent spate of activity across the NFC value chain has marked a tipping point; it cited Google Wallet, VeriFone’s POS terminals and the operator-led ISIS and Project Oscar consortia as key developments in this regard.

However, it cautioned that for NFC to fulfill its potential, marketing behind the mechanism would need to be scaled up dramatically.

There will be 200 million NFC-enabled phone handsets by the end of 2012, and the NFC smartphone market will approach 300 million devices in 2014, with nearly 15 billion NFC tickets delivered to mobile devices worldwide, compared to just two billion in 2011.

A swag of new customer payment systems – including customer facing retail offerings and a flexible new merchant platform – have been unveiled in the past couple of months that leverage the Commonwealth Bank’s $1.3 billion core systems revamp.

These payment systems, which include the Kaching mobile payment platform as well as a brand-new EFTPOS platform, represent the largest block of changes to electronic payments since the original introduction of eftpos in this country.

In addition to the smartphone-based contactless systems like Kaching, the bank has also outlined plans for an application that will let customers perform secure banking tasks through Facebook.

The CBA’s Merchant Solutions General Manager Andrew Cheesman will provide an in-depth overview of the Commonwealth’s payments strategy as keynote speaker at the Future of Payments conference in Sydney on October 16 -17. The Future of Payments conference is presented by CeBIT Global Conferences.

Mr Cheesman has been responsible for the CBA’s merchant solutions since early 2010. The bank has about 200,000 terminals in the Australian market, accounting for about 30 per cent of credit and debit volumes. He is expected to use the conference as a platform for an industry briefing on the bank’s new point-of-sale platform – CommBank Pi – and the terminal products launched with it.

Mr Cheesman is also expected to discuss Kaching developments and some future developments in smartphone based payments systems and other near field communications developments.

In announcing the Commonwealth’s $7.1 billion full-year profit last week, the bank’s Chief Executive Ian Narev said the cost reductions and productivity developments could be sheeted directly to its technology investments.

“We are starting to see the benefits of core banking show up in the business,” Mr Narev said in announcing the full-year results. He said improvements in the bank’s cost to income ratios were a direct result of new systems – just as it had been intended.

The retail bank side of the business grew by 3 per cent during the year, while expenses grew at the slower rate of 2 per cent. The business bank grew 4 per cent, while growth in expenses were restricted to 1 per cent.

“We have worked hard at tailoring our cost base to this new lower growth environment. The significant investment we have made in technology over the last five years has helped us meet this challenge to improve our productivity,” Mr Narev said. “Two businesses which benefit most from our Core Banking Modernisation program, Retail Banking Services and Business and Private Banking, have again reduced their respective cost to income ratios.”

Last month, the Commonwealth Bank unveiled a suite of new point-of-sale payments platform call CommBank Pi, as well as applications and products that the bank says will redefine the POS experience for both businesses and retail consumers.

The announcements were the result of a large design and engineering investments that addressed the complex security needs of POS while tapping new opportunities presented by tablets and industry-standard platforms like Android.

“Every aspect of the customer interaction is being transformed by social, mobile and online technologies,” the Commonwealth’s Corporate Banking Solutions executive general manager Kelly Bayer Rosmarin said.
“Today we are leveraging our multi-year investment in core banking and ongoing innovation at the edge to transform point-of-sale forever,” she said.

“With CommBank Pi, Australia is positioned to lead the retail revolution globally and deliver outstanding experiences to consumers that are as secure as they are simple.”

“Every aspect of the customer interaction is being transformed by social, mobile and online technologies,” said Kelly Bayer Rosmarin, Executive General Manager of Corporate Banking Solutions, Commonwealth Bank.

She told the media that “we are leveraging our multi-year investment in core banking and ongoing innovation at the edge to transform point-of-sale forever. With CommBank Pi, Australia is positioned to lead the retail revolution globally and deliver outstanding experiences to consumers that are as secure as they are simple.”

CommBank pi

The new Commonwealth Bank POS offering will consist of:

• Pi – a software platform built on industry-standard technologies and integrated to create the next generation of merchant POS solutions. This platform enables application developers and businesses to easily create applications for business use and distribute them through CommBank Pi’s AppBank to merchants.

• Albert – a brand new omni-commerce device which combines a range of industry firsts into a multi-functional hardware platform featuring an interactive touchscreen experience, Android based platform, secure EMV pin interface, printer, and merchant terminal functionality.

• Leo – attaches to Apple iPod Touch or iPhone4 and iPhone4S devices to enable Pi to transform them into a fully functioning merchant terminal and move beyond unsecure card reader alternatives. Both Leo and Albert represent the future of merchant terminals and open a new innovation ecosystem to developers and businesses alike.

• CommBank Pi Applications – which have been designed specifically to improve businesses’ interactions with their customers and improve their operating effectiveness. For example, the intuitive Split the Bill application will make it simple for a bill to be divided between multiple people and payment methods.

Since the unveiling in late July, an estimated 200 third party developers have signed up to show their interest in developing applications for the Pi ecosystem, which is a big vote of confidence that they believe it will be successful.

Andrew Cheesman, General Manager Merchant Solutions at the Commonwealth Bank will be a keynote speaker at the Future of Payments Conference explaining “What will the Pi Platform mean for Payments Innovation In Australia?”

“Consumers use mobile and wireless devices as part of their day-to-day life. The technology that is now available to owners of these devices has paved the way for unique brand experiences when utilised appropriately by organisations,” said Ms. Taranto.

Photo Credit: Neerav Bhatt (Creative Commons)

Despite the hype surrounding the m-commerce revolution, some consumers have concerns about the regulation of these devices and what it means for the protection of their identity and finances.

“Converging media always poses new threats and challenges for providers and consumers. The difficulty will be maintaining the proper degree of regulation as the technology continues to improve” said Ms. Taranto.

“Customers now demand 24/7 marketplaces and the next 12 months will see more and more retailers using m-commerce to ensure customers can buy, whenever, wherever.”

Near Field Communications (NFC)

While there are many new technologies which can help make mCommerce easier, Near Field Communications (NFC) is one technology that has attracted a lot of attention.

According to Mobileburn:

“NFC is a short range wireless RFID technology that makes use of interacting electromagnetic radio fields instead of the typical direct radio transmissions used by technologies such as Bluetooth. It is meant for applications where a physical touch, or close to it, is required in order to maintain security. NFC is planned for use in mobile phones for, among other things, payment, in conjunction with an electronic wallet, and for setting up connections between Bluetooth devices (rendering the current manual Bluetooth pairing process obsolete). The technology is promoted by the NFC-Forum.”

The NFC Forum says that their technology has the power to bring new simplicity and convenience to many aspects of a typical person’s daily life, as this example illustrates:

At present according to Tapit these are the mobile phones currently sold in the Australian market which support NFC: Samsung Galaxy Nexus S, Samsung Galaxy Nexus, Samsung Galaxy SII 4G, Sony Xperia S, HTC One X 4G, Prada Phone by LG 3.0, Nokia N9, Nokia C7, Blackberry Bold 9900, Blackberry Curve 9360.

For NFC mobile phone payment systems to be adopted by Australian retailers there will have to be a more critical mass of smartphones being used by the public that all reliably support NFC to the same extent