{"id":21713,"date":"2011-06-14T10:55:31","date_gmt":"2011-06-14T14:55:31","guid":{"rendered":"http:\/\/www.investmentu.com\/?p=20250"},"modified":"2011-06-14T10:55:31","modified_gmt":"2011-06-14T14:55:31","slug":"let-nfc-smartphone-technology-give-your-wallet-the-boot","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/06\/14\/let-nfc-smartphone-technology-give-your-wallet-the-boot\/","title":{"rendered":"Let NFC Smartphone Technology Give Your Wallet the Boot"},"content":{"rendered":"<p><a class=\"post_title\" href=\"http:\/\/www.investmentu.com\/2011\/June\/near-field-communication-smartphone-technology.html\">Let NFC Smartphone Technology Give Your Wallet the Boot<\/a><\/p>\n<p>by <a href=\"http:\/\/www.investmentu.com\/investment-experts\/david-fessler.html\" >David Fessler<\/a>, <em>Investment U&#8217;s<\/em> Senior Analyst<br \/>\nTuesday, June 14, 2011: Issue #1534<\/p>\n<p>How often have you left home and forgotten your wallet? Or  had to get a credit card replaced because a stranger lifted your number at a restaurant?  As a frequent traveler, I&#8217;ve had both happen to me on numerous occasions.<\/p>\n<p>With plastic credit cards  fast becoming as obsolete as paper  money &#8211; Visa, the giant credit card issuer, has created an amazing new technology it calls &#8220;payWave&#8221;  that enables you to leave your  wallet, cash and credit cards home. Easily allowing consumers to turn their smartphones into  electronic wallets.<\/p>\n<p>PayWave uses something called near field communication  (NFC). NFC is a short-range, wireless technology that allows secure  communications between two proximate devices. You simply bring your smartphone  within a couple of inches of the transaction terminal, and voila, a transaction  is complete.<\/p>\n<p>Despite the obvious benefits, the e-wallet industry has had  a slow, rocky start.<\/p>\n<ul>\n<li>One one side, the  mobilephone users saw no need to incorporate NFC into their devices.<\/li>\n<\/ul>\n<ul>\n<li>On the  other side, retailers wouldn&#8217;t install mobile payment readers if consumers  didn&#8217;t own phones that could use the technology.<\/li>\n<\/ul>\n<p>It&#8217;s been a bit of a chicken-and-egg thing&#8230;<span id=\"more-20250\"><\/span><\/p>\n<p><strong>GSMA Issues Call to Arms to Encourage NFC Devices<\/strong><\/p>\n<p>Back in 2008, GSMA challenged device manufacturers to begin  embedding NFC technology into their devices. Fast-forward to 2011, and the <a href=\"http:\/\/www.investmentu.com\/2011\/March\/4g-smartphone-technology.html\" >next  generation smartphones<\/a> (still a year or two away) will all have NFC capability.<\/p>\n<p>But Visa didn&#8217;t wait. It provided a way to use today&#8217;s  smartphones to take advantage of NFC-enabled vendors. It involves inserting a  special micro-SD (secure digital) card into the slots on some phones. For the  iPhone 3 and 4, Apple developed a special plastic skin to hold the chip.<\/p>\n<p>Now, users simply download Visa&#8217;s special app, and they can  begin NFC transactions. So far, 11  banks, including Wells Fargo, Bank of America, Chase and U.S. Bank, all offer  the payWave technology.<\/p>\n<p>MasterCard&#8217;s PayPass and Amex&#8217;s Express Pay are similar  e-wallet systems using NFC technology, and all three are compatible with the  terminal readers.<\/p>\n<p>Bill Gajda, global head of Visa Mobile, spoke to CNET at the  Mobile World Congress earlier this year in Barcelona, Spain. He believes the  transition to cardless transactions is well underway. &#8220;NFC technology  will take off in 2011,&#8221; said Gajda. &#8220;The move from leather wallets to mobile  wallets will come this year.&#8221;<\/p>\n<p>So far, vendors include CVS stores, McDonalds and 10,000  taxicabs in New York City. In San Francisco, you can use your e-wallet to buy  your groceries at Whole Foods, and pay for public transit in Los Angeles and  New York.<\/p>\n<p>(If you&#8217;ve already plugged into this technology, or want to  see merchants who are participating in your area, you can visit <a href=\"http:\/\/usa.visa.com\/locators\/visa-paywave-locator.jsp\" >Visa&#8217;s payWave  merchant locator<\/a>.)<\/p>\n<p><strong>The 800-Pound Apple  in the Room&#8230;<\/strong><\/p>\n<p>Gajda said customers are already installing the chips and  skins in their existing smartphones: &#8220;People don&#8217;t want to wait two years  for new NFC-enabled phones to come out or to switch phones. You can make  payments today on the iPhone 3 and 4.&#8221;<\/p>\n<p>So far, iPhones, certain Blackberry models and Samsung&#8217;s  Android-based Galaxy S II are sure bets for NFC-based payments.<\/p>\n<p>According to an  <a href=\"http:\/\/www.eetimes.com\/electronics-news\/4212506\/Apple-eyes-mobile-payments-over-NFC\" ><em>EE Times<\/em> article<\/a>, that appeared back in January, <strong>Apple, Inc.<\/strong> (Nasdaq: <a href=\"http:\/\/www.google.com\/finance?q=NASDAQ:AAPL\" >AAPL<\/a>) has been in  discussions with both retailers and its contract manufacturers about supporting  mobile payments.<\/p>\n<p>Quoted in the article, Richard Doherty, Principal at  consulting firm Envisioneering, says NFC could be a game-changer for both Apple  and retailers.<\/p>\n<p>&#8220;Apple could significantly lower the costs credit card  companies charge retailers to verify and complete transactions, a major source  of irritation for retailers. Tens of billions of dollars [would] flow through  Apple in the next several years.&#8221;<\/p>\n<p>While no one knows Apple&#8217;s plans for sure, it&#8217;s a safe bet  that the iPhone 5 will be NFC-enabled.<\/p>\n<p>Taking a little piece of every transaction would represent a <em>huge<\/em>, new incremental revenue stream for Apple. And one thing&#8217;s for  sure&#8230; As the company has with <a href=\"http:\/\/www.investmentu.com\/2011\/apple-revamps-icloud.html\" >just about everything else<\/a>, Apple will set the  NFC mobile payment device standard that all other manufacturers will be  scrambling to copy.<\/p>\n<ul>\n<li>With its tightly integrated handsets, operating systems and  online payment systems already in place, Apple&#8217;s in an envious position to be  able to leapfrog the competition in the mobile payment space.<\/li>\n<\/ul>\n<ul>\n<li>It owns several  key patents that have to do with implementing NFC, and it hired an NFC  specialist over a year ago.<\/li>\n<\/ul>\n<ul>\n<li>Analysts expect most other manufacturers will soon follow,  as NFC becomes a standard feature on new phones.<\/li>\n<\/ul>\n<p>This isn&#8217;t just a U.S.  phenomenon, either. Consumers in Japan and Korea are adopting NFC-enabled  mobile payment systems, with Brazil, India and other countries hot on their  heels. Visa has been developing its payWave system for its European customers,  as well as Turkish iPhone users.<\/p>\n<p>So how easy is it to use? You simply open the app, unlock it  with a swipe of your finger and place your phone near the terminal to complete  the purchase.<\/p>\n<p>The payment is immediately charged to your credit card or debited  from your bank account depending on your preference. Banks and retailers can  also present the user with discounts, specials and coupons through the payWave  system.<\/p>\n<p><strong>That&#8217;s Great, But How Safe is NFC Technology? <\/strong><\/p>\n<p>That was my question when I first heard of NFC technology.  Criminals can clone existing plastic cards with ease. Cards can also be easily  swiped a second time on a separate reader connected to a computer that lifts  all of your card information that can later be sold.<\/p>\n<p>With all the <a href=\"http:\/\/www.investmentu.com\/2011\/May\/cyber-crime-gains-momentum.html\" >cyber criminals<\/a> out there, are we just one hack  away from having our credit cards stolen electronically?<\/p>\n<p>In actuality, it&#8217;s virtually impossible for someone to steal  a credit card number with the new systems.<\/p>\n<ul>\n<li>First, the phone has to be two to  four centimeters away from the transaction device to work, making it extremely  difficult for someone else to intercept the transaction.<\/li>\n<\/ul>\n<ul>\n<li>Second, NFC software generates a new authentication code for  each transaction. That differs from current credit card technology where the  security code is always the same. Once thieves have the credit card code,  they&#8217;re off to the races (or in my case, they were off to JCPenney&#8217;s).<\/li>\n<\/ul>\n<ul>\n<li>Third, most phones have the capability of being  password-protected by the user, adding another level of security.<\/li>\n<\/ul>\n<p>Visa&#8217;s payWave system monitors credit card use in real time,  and can instantly alert a customer within minutes of a suspicious transaction.  Compare that to current credit card technology, which can take days to notify  you of a bogus purchase.<\/p>\n<p>In a paper written three years ago, mobile security expert <a href=\"http:\/\/www.mulliner.org\/\" >Collin Mulliner<\/a> performed a detailed study on ways to attack mobile phones  equipped with NFC technology.<\/p>\n<p>After talking to Visa, he admitted their system was safe  from the types of attacks he envisioned. He plans further tests on a  payWave-enabled phone, but for now, his feeling is that it&#8217;s a far more secure  system than plastic.<\/p>\n<p>Deepak Jain, CEO of Visa technology partner DeviceFidelity,  said attacks would be nearly impossible. Multiple electronic barriers are in  place to prevent them.<\/p>\n<p>Digital keys, the heart of the authentication process, are  encrypted on the chip itself. The Visa app is the only app recognized by the device, and  the digital keys aren&#8217;t stored locally. They all come from the Visa network.<\/p>\n<p>NFC transactions will eventually become the norm rather than  the exception. By the end of this year, Apple could be driving a completely new  NFC-enabled bus&#8230; all the way to the bank. Its competition will once again be  scrambling to catch up, and fighting over 10 to 15 percent of the market that  Apple leave for them.<\/p>\n<p>Good investing,<\/p>\n<p>Dave Fessler<\/p>\n<div class=\"feedflare\">\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=9-Ko33MiGjA:Ub5zltfmbkw:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=9-Ko33MiGjA:Ub5zltfmbkw:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=9-Ko33MiGjA:Ub5zltfmbkw:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=9-Ko33MiGjA:Ub5zltfmbkw:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=9-Ko33MiGjA:Ub5zltfmbkw:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=9-Ko33MiGjA:Ub5zltfmbkw:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=9-Ko33MiGjA:Ub5zltfmbkw:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=9-Ko33MiGjA:Ub5zltfmbkw:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/9-Ko33MiGjA\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p><a href=\"http:\/\/www.investmentu.com\/2011\/June\/near-field-communication-smartphone-technology.html\">Let NFC Smartphone Technology Give Your Wallet the Boot<\/a><\/p>\n<p>by <a href=\"http:\/\/www.investmentu.com\/investment-experts\/david-fessler.html\" target=\"_blank\">David Fessler<\/a>, <em>Investment U&#8217;s<\/em> Senior Analyst<br \/>\nTuesday, June 14, 2011: Issue #1534<\/p>\n<p>How often have you left home and forgotten your wallet? Or  had to get a&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-21713","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=21713"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21713\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=21713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=21713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=21713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}