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RIM, Spain's Telefonica to test electronic wallet

Wed, 11/23/2011 - 9:47am
Alastair Sharp, Reuters
BlackBerry maker Research In Motion and Spanish telecom Telefonica are teaming up to test a payment system that turns a mobile phone into an electronic wallet and identity card, the companies said on Wednesday.

While the decade-old technology, called near-field communications (NFC), is well-established in Japan and South Korea, its use has been stymied in Europe and North America by the competing interests of banks, merchants, device makers and wireless carriers.

This year, however, the logjam started to break after Google included NFC support in its Android operating system, the world's most popular smartphone software, and Nokia said all its phones will be NFC-enabled by the end of 2011.

RIM moved to stake its claim in September, saying NFC chips embedded in several of its newest phones would allow users to gain access to office buildings.

But analysts say consumers have yet to be convinced they should discard their credit cards and embrace the NFC trend.

"The big watershed moment would be if Apple decided to put it into the next iPhone," said Atlantic Equities analyst James Cordwell. "It probably needs that catalyst to get consumer interest in the technology."

In the Telefonica Wallet for BlackBerry trial announced on Wednesday, 350 Telefonica employees will be able to make purchases, receive account balances and confirmations from their bank, as well as gain access to their offices by using their Blackberrys.

Banks, retailers, gas stations and other services near Telefonica's Madrid headquarters are also involved in the trial.

By using SIM-based capabilities, Telefonica maintains some control over transactions conducted via phones on its network, a key issue for carriers concerned about being shut out.

In a survey earlier this year of companies that people most trust with their personal financial data, telecoms network operators didn't rank highly. The survey found eBay's PayPal electronic payment system was held in the highest regard, followed by Visa, Mastercard, Apple and Nokia.

Telefonica has also reached a deal to collaborate on NFC technology with France Telecom's Orange and Britain's Vodafone.

"We are getting ever closer to the point where our customers will be able to take the contents of their wallets and put them on their mobiles," Telefonica's Matthew Key said.

He said Telefonica chose BlackBerry for the trial because of the security of its platform. He said Telefonica expects to launch commercial wallet services in several markets next year.

The company has more than 300 million customers with a focus on Europe and Latin America.

(Editing by Peter Galloway)

Posted by Jason Lomberg, Technical Editor

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