San Francisco NFC Pilot Tests Rewards As Well As Payments

A test of contactless payment via mobile phones, launched this week in San Francisco, relies on near-field communication (NFC) technology not only to handle transactions but also to manage consumer rewards. It differs from past NFC pilots in the U.S. in another way: It doesn't rely on either the MasterCard PayPass or Visa payWave contactless payments platform, since users will instead debit proprietary prepaid accounts. In the four-month pilot, some 230 commuters who use the Bay Area Rapid Transit rail system will use Samsung SPH-A920M cell phones equipped with NFC chips to tap readers mounted on any of 500 turnstiles to pay their fares in all 43 BART stations. Although BART ridership data wasn't immediately available, on an average week day, the transit system records more than 356,000 exits from its stations. The handsets can also be used to pay for meals at San Francisco-area Jack in the Box Inc. fast-food outlets. So-called smart posters hung in train stations let users download directions to five area Jack in the Box locations as well as digital content from Sprint Nextel Corp. Reston, Va.-based Sprint is handling over-the-air (OTA) downloads for the pilot. Smart posters are signs embedded with NFC chips that interact automatically with NFC handsets to download content from marketers. Users are being issued the Samsung handsets along with access to a BART account in the phone's mobile wallet loaded with $48 in value. Once the value drops below $10, BART charges another $48 to a credit card designated by the participant. Jack in the Box transactions are funded from a separate account in the wallet linked to a Jack's Cash proprietary prepaid card. First Data Corp.'s Mobile Solutions unit is processing transactions. To entice users to reload their accounts, BART is offering a 6.25% discount it normally extends only to high-value ticket holders, so a $48 reload costs $45. The inclusion of discounts and rewards is a relatively new element in NFC tests in the U.S., and an important one for building the business case for NFC, says Mohammad Khan, president and founder of ViVOtech Inc., the Santa Clara, Calif.-based software company providing the mobile wallets, the OTA software for Sprint, and the contactless readers at Jack in the Box. “[NFC] is much broader than payments,” he says. “If I'm able to allow merchants and banks to influence me two or three times a week [with rewards], that's much more of a money machine” than processing payments alone. The San Francisco pilot is the second NFC test launched this week. MasterCard Worldwide and U.S. Bancorp on Monday announced a pilot in Spokane, Wash., involving the wireless carriers AT&T Mobility and T-Mobile and an undisclosed number of users (Digital Transactions News, Jan. 28). NFC is an extremely short-range transmission technology that enables mobile phones to establish two-way links with point-of-sale readers and other media, such as smart posters. Pilots for the technology have been conducted around the world over the past three years, though a commercial rollout has been hampered so far by a paucity of NFC-capable handsets and an inability among banks and carriers to agree on a sustainable business model.