A recent blog posting by Olga Kharif and Serena Saitto on the Bloomberg website states that Google is in plans to test a payment system using their Android OS and VeriFone Systems Inc.’s pay point machines. While all this information comes from a “close source” and is not being verified by either Google or VeriFone, its does show there to be a potential for growth for the VeriFone folks. In reviewing their 10-k SEC filing, its evident in their statements that about 50-60% of their annual revenue is mostly derived from over overseas sales. This is attributed to the high penetration in the US of electronic payment machines as well as the requirements from foreign governments for more sophisticated systems to ensure VAT (Value Added Tax) and Sales Taxes are being collected (and thus paid to the governments.) If the news about the tests with VeriFone Systems and Google are true, its seeming like a good thing for VeriFone to help setup this NFC infrastructure and tap open this US market for the next generation of electronic pay systems.
As I blogged about a few months ago, NFC – Near Field Communication – is a type of RF technology which allows a fast burst of data to go from one unit to another unit when they are placed close together. You may have heard about RFID (R – F – ID) technology already in use. Some of our debit cards have this where you can touch the card to the Credit Card machine when checking out and your payment information is moved through the device to the terminal for payments. Embedded in the debit card is a chip which is passive (sleeping) but awakes when waved near the credit card reader. The reader then begins a communication with the chip, which includes an authorization process and ends with your debit account information being sent to the Credit Card machine. Its the easiest way to describe the process. We’ve all been using this type of technology: Mobile Speed Pass; E-Z Pass for those of you in the Toll Highway states; the card your employer gave you to get you into the building is also a type of RFID technology.
So imagine doing this with your cell phone, which is much different than Mobile Speed Pass, E-Z Pass, and your credit cards. This is because your mobile is connected to the internet and the mobile phone network.
Keep your eyes peeled for announcements to come. I think in the long run making commerce more streamlined will help the consumer avoid fraud (and put more money in our pockets.) Oh and let’s not forget – Apple and iPhone 5. The iPhone 5 is rumored to have NFC mobile hardware built in to the phone. Rumored….
The post I refer to is here:
Bloomberg Blog Post – Google Is Said to Test Mobile-Payment System With VeriFone – By Olga Kharif and Serena Saitto