Czech Rep and Slovakia are opportunities for xPay

Monday 25 July 2016 | 09:33 CET | Background

The Czech Republic and Slovakia could see the launch of xPay soon. Android Pay, Apple Pay and Samsung Pay have not been confirmed, but both markets are suited to the next wave of OEM-driven mobile payment solutions. Since the launch of contactless technology several years ago, banks and card networks have turned NFC-payments into the mainstream. 

In 2015, the Czech market passed the point where more than half of all card payments are handled over NFC. In June this year, Visa and MasterCard put the adoption rate at 77 percent, the highest share of contactless payments at retailers in Europe. Contactless payment can also be used in public transport.

Mobile operators started with NFC in Czech Republic

Mobile operators launched NFC payment services several years ago. O2 and Vodafone worked with retail bank GE Money to offer SIM bases card payments. Most banks however have held off. Currently the first HCE deployments are underway, preparing he market for NFC payment without direct involvement from mobile operators. 

Czech bank CSOB is pioneering full-fledged NFC payments of its own, without the need for mobile operators. The CSOB's product is based on HCE technology. The mobile wallet was developed in cooperation with SIA, Visa and MasterCard. The application NaNakupy (For Shopping) can be used in stores, in public transport and abroad.

The bank is attracting clients with a 25-percent discount on selected models of Samsung phones: the MY2016 versions of Galaxy J3, A3, A5 and the S6 or S7 Edge. The condition is that after registration on the website www.nanakupy.cz, the customer uses the application at least ten times over four months.

CSOB uses Samsung phones, but does not use the Samsung Pay application, which is not officially available as yet, but may be underway.

In February this year, Samsung gave Samsung Pay a prominent role during the launch of the Galaxy S7 flagship smartphones. Following on the S7, more handsets will be equipped with the necessary hardware and software for Samsung Pay, such as the successor to the Note 5, likely to be called Note 7.

Apple has built NFC capability into the iPhone 6 in 2014 and every new model since. That means that the installed base is growing there as well. Android Pay can be made to work on a wide variety of Android smartphones, but unlike Samsung Pay or Apple Pay, Android Pay is not designed to increase smartphone sales or brand loyalty. Google appears to be aiming for mobile commerce and not just contactless payment as such.

These smartphone OEM m-payment services have been rolled out or announced in key European markets, notably the UK and France. MasterCard and Visa have rolled out their respective enablement services, offering banks an easy sign up and activation. The market conditions mean that Apple, Google and Samsung can offer a compelling option.

Slovakia still behind Czech Republic in terms of NFC adoption

Slovakia has lower adoption rates for NFC than neighbouring Czech Republic. A year ago, 61 percent of MasterCard and Maestro in-store transactions were contactless in the Czech Republic, as opposed to 27 percent in Slovakia. Growth trends in Slovakia are similar though, so the country will catch up eventually as the growth in the Czech Republic will inevitably level out. The infrastructure in Slovakia is growing nonetheless: in the first quarter of 2016 just over 80 percent of retail terminals were capable of handling contactless payments.

As NFC-capable cash registers become wide-spread, card payments shift from PIN to contactless without PIN. Contactless card payments will also replace cash payments, especially for low value purchase. The transaction limit for contactless payments however limits the adoption, while cash will not be completely replaced.  

The banks VUB and and Tatra banka offer payments by mobile phone. Tatra banka requires a special SIM card from either O2 Slovakia or Orange Slovakia. The prospect of HCE bodes ill for competing technologies, running on a Secure Element in the SIM Card. Slovak Telekom (ST) has shut down its MyWallet service and related pre-payment card this year. The operator introduced the product in 2014 and encouraged uptake by offering a financial bonus. It has now informed users by email of the termination of the service from the middle of the year. Until that time, users can transfer any unused amounts from the wallet to their bank accounts. ST does not exclude the development of the service with new technologies and new partners at a later stage, including services other than electronic payment services.

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