Banks prepare the way for NFC, mobile to follow

Thursday 1 November 2012 | 13:09 CET | Background

The market for NFC-based payment services should get a big boost next year, as ABN Amro and ING make the switch to dual-mode bank cards, supporting both chip and NFC payments. This should also stimulate upgrades in point-of-sale terminals. Rabobank is also investing in its own way in the NFC value chain, by switching directly to NGC mobile payments. At the same time, mobile operators Vodafone and T-Mobile have selected an end-to-end NFC platform from Gemalto to support their m-payment plans. KPN has yet to show its cards.

Dutch banks ING and ABN Amro are moving to bank cards with integrated NFC. From mid-2013, the two banks will start distributing debit cards with two possibilities for payment: either inserting the card in a reader or holding the card up to a reader. The POS then makes contact with the NFC chip in the card. 

The platform offers the possibility of making small payments without using a PIN code, up to a daily or purchase-based limit of for example EUR 25. Larger amounts will require a PIN.

The first POS to accept contactless payments are expected to be available in the Netherlands early next year. ABN Amro and ING are using the Maestro PayPass, a method developed by MasterCard which has already deployed in other countries. The contactless cards are already in use in Australia, Canada, France, Poland, Turkey, the UK and the US.

For ING, the switch to new cards comes at a good moment. When it merged the ING and Postbank brands in 2009, it issued new cards to all its customers. As the cards are valid five years, some 9 million cards will be up for replacement in a year and a half. ABN Amro will follow its own, more gradual replacement cycle. 

Banks are adopting contactless payments as part of efforts to reduce cash payments, which are more expensive to process. Despite a strong increase in debit card use, 63 percent of all cash register payments (retail outlets, horeca, petrol stations) are still in cash, according to the banks. Banks may further discourage cash payments based on the fees they charge retailers. 

ING and ABN Amro expect that the first mobile payment services will hit the market "later in 2013". ING said it has also yet to take any decisions on the technical parameters or agree partnerships to implement the technology and services. This appears to rule out a launch in 2013. 

All the banks are working together on a platform that accepts payments via smartphones, using international standards.


Rabobank is not planning to implement dual-mode bank cards. The bank is benefiting from investments by other payers in the value chain, but is investing differently on its own. Rabobank sees dual-mode passes merely as a stepping stone to the ultimate goal, NFC mobile payments. According to a spokeswoman for the bank, this step can be skipped. 

Rabobank can move quicker as it has already been working for a few years on mobile channels and payments. Rabobank has its own MVNO, set up as an independent organisation with its own technical infrastructure. Rabobank also has the Minitix mobile wallet via SMS and passive NFC stickers. Earlier this year the bank acquired MyOrder, a Dutch company developing payment services based on Minitix. However, the possibilities for this are limited, given that the user has to sign up for a separate agreement. 

Rabobank is developing mobile payment services, but is not divulging the details. Combining the Secure Element with the Sim card appears to be the most promising option, according to its spokesperson. The bank has yet to choose a TSM though.


If NFC payment services via smartphones do emerge in 2013, they could come from the mobile operators. Gemalto announced this week that both Vodafone Group and Deutsche Telekom/T-Mobile have chosen its end-to-end solution. 

The French-Dutch company is supplying the Upteq Sim card with Secure Element. The Allynis TSM platform will provide the bridge between the mobile and banking infrastructure. Gemalto manages the Sim card through the Linqus managed services.

Deutsche Telekom is introducing the services first at T-Mobile Poland, which plans to quickly roll out the Sim cards. In Poland already some 10 million contactless bank cards are in circulation, and 20 percent of the around 90,000 debit POS are ready for NFC. This should overtake the gradual adoption of PIN cards in Poland.

Deutsche Telekom has also announced an agreement with iZettle. This company provides an accessory for the iPhone and iPad with the necessary NFC hardware not yet included in the Apple devices.

Among the six big Dutch players (three banks, three mobile operators), KPN is the only one to yet announce its plans. The operator was one of the leaders in Sixpack, an earlier project to develop a Dutch TSM. In late 2011 T-Mobile quit the project, and in mid-2012, Vodafone and the banks followed. 

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