June 12, 2006, 10:45 AM — Credit card customers in Amsterdam will be able to simply wave their mobile phones in front of a terminal in shops to make small payments as part of a pilot project that will launch later this year, the companies sponsoring the trial announced on Monday.
The 100 credit card customers of JCB International Co. Ltd., an international credit card company, will use Nokia mobile phones that include Koninklijke Philips Electronics NV chips supporting NFC (Near Field Communication), a wireless technology that can be used for transactions. By waving their phones close to a payment terminal in a shop, they can pay for items such as food, movie tickets or parking garage tickets.
Part of the goal of the project is to try to encourage people to use their credit cards for small purchases, said Michel van Bommel, operations and new business manager for JCB.
NFC has been used in other trials and commercial offerings in Europe but the way that this one handles payments is slightly different, said Van Bommel. The transactions in the Amsterdam pilot will happen instantaneously because the transaction is then stored in the terminal and sent out later for processing. That compares to other NFC trials, where users must wait for the transaction to clear before the payment is made. NFC has also been used in connection with prepaid accounts that are debited when a user makes a payment.
The Amsterdam testers are existing JCB customers and will be billed for the purchases on their regular credit card bills, he said.
The trial won't include other services that integrate the NFC chip with the phone. The main advantage of including NFC in mobile phones for this pilot is that users don't have to carry a credit card in addition to their phones, said Van Bommel.
Initially, merchants in a small area in Amsterdam will have the terminals necessary to support the payments. The companies hope to expand both the number of customers and merchants participating as the trial progresses.
Other companies involved in creating and supporting the project include CCV Holland B.V., Gemplus International SA, Royal KPN NV, PaySquare BV and Vivotech Inc.
NFC was developed by Philips and Sony Corp. and is supported by companies including Microsoft Corp., MasterCard International Inc., Visa International Inc, NEC Corp., Samsung Electronics Co. and Texas Instruments Inc. The user device and the reader terminal must be within a few centimeters of each other to communicate. The technology was designed mainly for payment and ticketing applications.