Visa Europe, is planning to launch an iPhone based contactless mobile payment service for its customers across Europe and has partnered with Wireless Dynamics to develop the system.
Before making the decision, Visa carried out extensive customer demand assessment across Italy, Poland, Turkey and UK. The results of the survey showed that 41% of the users would start using such a service, if and when it is offered. The results were even better with iPhone users, as 51% of the users having an iPhone devices showed their willingness to use a mobile financial service.
Visa currently plans to use iCarte, an iPhone accessory with NFC (near field communication) capability. Users of the service will have to buy iCarte and attach it to their iPhone devices in order to make payments. NFC allows devices to communicate with each other when they are in certain proximity i.e. users of Visa’s mobile payment service could just wave their NFC enabled iPhones over sale terminals to make payments.
The reason Visa has to use iCarte for its payment service is because, iPhone’s currently do not support NFC technology. However, reports are now surfacing that Apple plans to include NFC technology in the upcoming release of iPad 2 and iPhone 5. This will enable iPhone users to use their mobile devices as electronic wallets or virtual credit cards, without any additional accessory.
So in future iPhone users wont have to buy the iCarte accessory to make credit card payments. But it is highly likely that in the future, iPhone users wont even have to use credit cards. Currently Apple users buy songs and movies from iTunes via credit cards, and Apple has to pay a small transaction fee to credit card companies like Visa to process these transactions.
Apple’s rationale for including NFC into iPhones is to let its users tap directly into their bank accounts when they make purchases on iTunes and iPhone AppStore. This will eliminate credit card companies like Visa, MasterCard and other financial institutions from the loop and will allow Apple to save millions of dollars on billions of iTunes and AppStore transactions.