UK mobile operators partner MasterCard for NFC m-payments drive

UK mobile operators partner MasterCard for NFC m-payments drive

UK telco joint venture Weve has teamed up with MasterCard, promising to clean up the "mess" of mobile commerce and bring NFC-based m-payments to the masses.

Despite the hype, in-store mobile payments have yet to take off in the UK, with a host of contenders targeting various parts of a fragmented market, using different technologies.

Weve says that, unlike its rivals, it is not trying to reinvent the wheel, instead using the contactless payments infrastructure that MasterCard has helped to roll out over the last few years.

Tapping into the relationships that MasterCard has with banks, Weve plans to let customers link their MasterCard accounts to their handsets through their bank apps.

Once this is done, users will be able to wave their phone against the UK's 300,000 contactless readers to make payments of under £20. Because the system is SIM-based, it will work even if the handset is turned off. For payments of over £20 customers will enter a PIN on their handset - something they can do while waiting in line to pay.

Weve CEO David Sear and MasterCard's president for UK and Ireland, Marion King, spoke to Finextra about their partnership

Weve says that it hopes to go live sometime in the first half of next year and is talking to banks but it has yet to go public with any names.

Several potential partners - including HSBC and Santander - have already committed to Zapp, a VocaLink-owned m-payments rival which bypasses MasterCard and instead uses the Faster Payments rails.

However, Weve hopes that its ubiquity - between them, the operators behind the JV, Everything Everywhere, O2 and Vodafone, count around 80% of the UK's mobile phone users as customers - will help it come out on top.

MasterCard's Marion King and Weve's David Sear

The venture is also pitching marketing and loyalty services as an important part of its appeal. It is already sending customers offers and incentives. The plan is to let users redeem these in-store through the tap of a handset and then get a prompt telling them that they can make the purchase using Weve.

Although rival technologies such as Bluetooth Low Energy are being investigated by the likes of Apple and PayPal, Marion King, president UK and Ireland at MasterCard says that NFC has reached a tipping point, with 220% growth in the number of contactless transactions in Europe over the last year.

David Sear, CEO, Weve, says the venture is "building a payments system that takes existing industry contactless standards and builds mobile around them, rather than implementing new technologies and protocols that require everyone in the chain to learn something new".

While security concerns persist among many customers when it comes to contactless payments, the telcos are hoping that these will subside as the technology becomes more familiar.

Both EE and VodaFone are introducing their own pre-paid contactless m-payments services. Weve product development director Sean O'Connell says that this could act as stepping stone - acclimatising users to the technology with little financial risk so that they are eventually more willing to link their main debit or credit accounts to their phones.

Comments: (8)

Dean Wallace
Dean Wallace - ACI - Global 07 February, 2014, 09:28Be the first to give this comment the thumbs up 0 likes

Sounds simple and I can see how this could work for small value payments, integrating with an app for value adding services such as configuring the NFC defaults, or integrated loyalty accrual and coupon clipping, so adding some value back into the mix for the merchant. Reusing existing rails and all that entails clearly going to make things easier. International ramifications too. 

The big challenges will be (a) what do do for payments above £20 - PIN auth not a simple solution so interesting to see what comes out there; and (b) what the commercials will look like to cover costs for the MNOs which is a new party in essence to what is already in place for contactless. 

A Finextra member
A Finextra member 07 February, 2014, 09:491 like 1 like

High value transactions are already supported for contactless payments. The cardholder is prompted to enter their PIN at the POS terminal, not the mobile phone.

Having said that, I'd imagine that customers at least initially will only use this for low value (<£20) transactions. Contactless cards in the UK seemto be very popular with low value / high turnover retailers and customers are happy with it. Nice to see an initiative where the golden triangle of retailer / customer / card scheme are all happy!

Matt White
Matt White - Finextra - Toronto 07 February, 2014, 10:45Be the first to give this comment the thumbs up 0 likes

On payments of more than £20, Weve tells us that customers will be asked to enter a PIN on their handset, not the terminal. Customers can do this before tapping their handset against the reader, i.e. while they wait in line.

Dean Wallace
Dean Wallace - ACI - Global 07 February, 2014, 10:51Be the first to give this comment the thumbs up 0 likes

Hi Murray - I agree it is nice to see this "golden triangle" type of initiative as you put it. 

With reference to high value transactions and contactless, you are of course correct. For high value contactless NFC transactions though, I wonder how the PIN could be captured by the POS terminal (would it be secure enough to capture on the handset?? What if the handset if flat etc) without a card being available to just dip into the chip reader.

A Finextra member
A Finextra member 07 February, 2014, 11:561 like 1 like

If the PIN is captured by the POS, where is it going to be authenticated?  In the UK, we don't support (yet) online PIN at POS.  I think maybe we should be looking at alternative CVMs; isn't the PIN a bit old hat in the days of the smartphone?

Dean Wallace
Dean Wallace - ACI - Global 07 February, 2014, 12:29Be the first to give this comment the thumbs up 0 likes

Hi David - I think that Matt cleared it up with his post on what Weve tend on doing, which matches your view of the PIN being a bit "old hat". Will be interesting to see what sort of traction PIN on handsets get in the cards world, I don't believe all card schemes are for it.

Raymond Lee
Raymond Lee - PHOS - London 07 February, 2014, 12:33Be the first to give this comment the thumbs up 0 likes

The key to the High Value Contactless transaction here is who they have partnered with. Mastercard have, in my view, a very elegant solution allowing the device to be authenticated to allow the HV transaction. 

This has been part of Contactless specs for some time now, as previously mentioned and has, in user trials, gained a lot of acceptance.

What is more interesting of course, is the partner. With Visa being the dominant issuer of contactless cards in the UK, it's a real coup for Mastercard.

But, of course, there is no date mentioned as to when this will actually be available and live. We'll have to wait (a long time?) and see.

Finally.. it looks like a decoupled debit product being used, with a Prepaid Mastercard sitting behind the actual payment card. 

A Finextra member
A Finextra member 08 February, 2014, 12:30Be the first to give this comment the thumbs up 0 likes

There are three options (at least in the Visa world) for high value contactless:

1) Online PIN - not appropriate for the UK as the UK uses offline PIN

2) Passcode entered on a device - most appropriate to the UK

3) Signature (!) - appropriate for markets where credit cards are chip and signature to keep the customer experience consistent.

I don't agree that PIN is old fashioned - customers are used to them and we need customer support for any initiative.