Wireless

Inside Contactless offers a MicroPass technology that can be embedded in stickers that are affixed to mobile phones so they can be used to make payments or access transit systems and buildings.

(Credit: Inside Contactless)

I admit it; I've been put off by the term "contactless payments." But it's an emerging area that deserves some attention.

If you are in Asia, you know what I'm talking about. People there have been making payments with their mobile phones using what's called "near-field communications." Just wave the handset in front of a reader and voila, the transaction is done.

In the U.S., we've had RFID technology embedded in cards. But the long-term goal is to eliminate the need to carry credit cards, building access badges and transit cards and just turn the phone into an all-in-one device.

Well, while the mobile phone has turned into an entertainment device over the last few years, it hasn't become the payment and access device in the U.S. that was envisioned when contactless payment strategies were born back in 2005 and earlier.

And now, with the economic downturn, the near-field communications industry is likely to take even longer to take off. Broad adoption of near-field communications will take longer than expected now, as long as three to four years, predicts Shyam Krishnan, an industry analyst at Frost & Sullivan.

So, a French company called Inside Contactless has come up with an interim solution that will let people turn their phones into credit cards and transit cards. Inside's MicroPass technology will be embedded into a sticker that can then be affixed to a phone, wallet, or anything else.

The company, which entered the U.S. bank card market with a microprocessor-based chip in 2005 and is backed by Nokia, Motorola and Samsung, recently announced that Colorado Plastics will be producing stickers using the MicroPass technology.

Soon, we may see people waving their mobile phones, iPods, ID badges, or wallets in front of readers to get on the subway or buy coffee at Starbucks.

"It's a cool way to pay; convenient," said Charles Walton, executive vice president of the payments business at Inside. "It turns the phone into a super wallet."

"It's a card in a different format," said Jonathan Collins, principal analyst in ABI Research's RFID and contactless group. "We've had American Express fobs, but they didn't prove to be overly popular. Stickers are more useful."

The MicroPass technology should fare better with regard to security scrutiny than the much-maligned NXP Mifare Classic RFID chip, which has been found to have severe flaws and can be cloned.

"We're using a microprocessor with open-standard security techniques, not a fixed memory, proprietary security scheme" like Mifare Classic, Walton said. The applications implemented using MicroPass "cannot be cloned in that way."

Adoption will depend on how quickly banks, retailers and phone companies can agree on standards and implementation, as well as on whether people are ready to merge their phone and their wallet.

"There has to be a benefit for the end user," Krishnan said. "It all boils down to its convenience, at the end of the day."

I'd be interested in hearing reader thoughts on whether this technology would be useful.

NEW YORK--Verizon Communications CEO Ivan Seidenberg is confident that his company and much of the communications industry will make it out of the current economic crisis unscathed.

Verizon Chairman and CEO Ivan Seidenberg

(Credit: Marguerite Reardon/CNET News)

Speaking Tuesday at the Media & Money Conference, a joint production of Dow Jones and Nielsen, Seidenberg brushed aside concerns that the credit crisis and an impending recession will have a big effect on Verizon's bottom line. So far, the company hasn't seen a significant drop in subscriptions or revenue, he said.

"We expect some impact," he said. "But our view is that we will weather this."

Seidenberg's confidence is bold considering that most technology companies, even his own, have taken a beating in the stock market over the past few weeks as banks hoard cash and refuse lending to each other. But he said that the credit issues happening today will have little effect on his company or the communications industry in general. As for the broader economy, which also looks to be heading toward a recession, he is also optimistic.

The reason is simple. He believes that Verizon is in two core businesses that people will spend money on regardless of whether they are down and out financially: wireless and broadband services.

With more than 84 percent of Americans already owning a cell phone today, Verizon is still managing to sign up new customers. During the second quarter of 2008, Verizon Wireless, which is jointly owned by Vodafone and Verizon Communications, the company added 1.5 million new wireless customers for a total of 68.7 million subscribers. And because most of these customers are under a contract, Seidenberg said he doesn't anticipate heavy losses due to economic hard times. That said, he admitted that Verizon and other wireless carriers could see a slowdown in the adoption of new data services.

"(Consumers) may pull back and not buy as many premium services," he said. "But the question is will they pull back their spending on what we sell? Our view is that we will weather this. We sell the most indispensible device that consumers have, the mobile phone."

Seidenberg's upbeat outlook in the telecom market is shared by other phone company CEOs. Last week at an event in Baltimore, Sprint Nextel's CEO Dan Hesse said he also expected his company and the wireless industry in general to weather the economic storm.

"On the consumer side, wireless has become a staple," he said. "People would rather give up their TV or Internet access before they give up their cell phone. We believe we are more insulated."

Hesse said if anyone in the telecommunications market should be worried, it should be traditional phone companies like Verizon and AT&T which also sell landline phone service. He explained that as customers look at their bills, they're more likely to cut the phone cord than cancel wireless service.

But Seidenberg argued that the trend toward eliminating traditional phone lines has been occurring for the past 10 years. And because Verizon has other services that replace landlines, the company will continue to grow.

"We're already losing landlines," he said. "But as we do, we pick up wireless and broadband customers."

In fact, Seidenberg is also bullish about the prospects for Verizon's broadband business even as the economy takes a hit. He pointed out that people actually spend more time at home using their computers and watching TV during economic hard times than they do in prosperous times, which should work to Verizon's advantage.

"If people travel less, they are home more," he said. "And if they are going out to eat less, they are home more. And that's likely to mean they will spend more time on their computers or using other applications."

This reasoning makes sense in terms of helping Verizon retain the customers it has. But what about the company's future? Will customers be willing to upgrade to faster broadband speeds or more high-definition TV channels when they're losing their jobs? Or will they cut back on those services to conserve cash? Seidenberg seemed to realize the challenge.

"If the economy takes a big dip, we will see slightly lower level of growth." he said. "We don't want to be naïve about this. We think there will be some impact. But we will be OK."

But he said even in the deepest of economic downturns, American industry will be turning to companies such as his to get the economy back on track. Companies will need to retool workers and create jobs. And he believes that Verizon could play an important role in providing the communications infrastructure to get the economy started again.

"This credit crisis will create some dislocation," he said. "But the fundamental issue for American industry is to create new jobs. If we do that, I can't imagine a company like ours won't have a role in that process."

Visa is adding a wireless twist to the old phrase "Charge It."

The credit card processing giant announced Thursday several initiatives to allow its credit card toting customers the ability to transfer money, make payments, and receive real-time account notification alerts on their Nokia and Android cellular phones. Visa also struck a mobile deal with U.S. Bank.

Under a pilot program with U.S. Bank, which is scheduled to begin by the end of the year, Visa will offer mobile money transfers from one Visa cardholder's account to another. A U.S. Bank Visa cardholder would use a Web browser on their phone to access funds and transfer it directly to the recipient's account. The recipient could then withdraw the funds from an ATM machine, or use the money to make purchases.

Visa is also working with cell phone giant Nokia and new entrant Google's Android to offer mobility to its service.

The Visa-Android deal calls for Chase Visa cardholders to use their Android phone for not only transferring money, but also to receive real-time email alerts when transactions happen on their Visa account, receive offers from merchants, and view images on Google maps to find the location of those merchants who are offering the specials. The Google-Visa deal is expected to begin sometime by the end of the year.

Visa has also struck a similar deal with Nokia for its Nokia 6212 Classic phone. That service is expected to beginning next month.