ViVOtech Boss Predicts NFC Will Soon Enable Payments for E-Retailers

The chief executive of the company holding the largest market share of installed readers for contactless payments predicts the technology, assisted by near-field communication (NFC) capability, will move rapidly from the physical point of sale to e-commerce. Mohammad Khan, president and founder of ViVOtech Inc., which makes electronic wallets for NFC applications as well as point-of-sale scanners, tells Digital Transactions News laptop and desktop computers will become available within a year with NFC chips capable of enabling payment transactions. Consumers shopping online will be able to wave an NFC-enabled cell phone near the embedded chip in their computer to complete a transaction much as they can at a scanner-equipped point of sale in NFC pilots now. Within the consumer's shopping session, the chip will pick up account data from the phone, encrypt it, and send the data to a merchant server for processing. What could help drive these payments is their potential economic appeal to Web retailers. According to Khan, these NFC transactions will be considered card-present payments for interchange pricing. Currently, online merchants must pay so-called card-not-present rates for payments, which are routinely higher than the rates that apply when the consumer's card is physically presented to complete transactions. This has been a sore point with Internet merchants already confronted with rising interchange rates for card transactions along with rising costs for back-office review of orders to control fraud. Santa Clara, Calif.-based ViVOtech claims an 80% market share of point-of-sale readers for contactless payments, with 155,000 devices deployed worldwide. The company is also supplying the electronic-wallet software for Nokia 3220 phones being used in an NFC pilot now underway at Philips Arena in Atlanta and involving 250 cell-phone subscribers. More such pilots are planned this year for the U.S. NFC chips allow consumers to use their cell phones as contactless payment devices, waving them near a point-of-sale reader equipped with NFC to pay for items. The phones are equipped with electronic wallet software that stores and manages payment card and other account data.