Two major telecom operators in Brazil announced that they have started trials using near field communication (NFC) technologies for mobile payments. TIM has partnered with Itaú, MasterCard and Gemalto for its pilot project, while Vivo has chosen Bradesco and Cielo. Itaú and Bradesco are two of the largest financial institutions in Latin America.
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According to TIM, the main objectives of the pilot are to gain knowledge about the technology, train internal employees, and especially, evaluate difficulties and feedbacks for a future roll out. TIM and Itaú said they intend to expand the tests gradually, depending on the results of the pilot. TIM is considering offering NFC technology to customers in the second half of this year.
TIM is conducting its NFC project for mobile payments in a partnership with Banco Itaú, MasterCard, Redecard and the vendor Gemalto, the leading digital security firm in the Brazilian market. For the pilot, they made 50 devices available that are compatible with the Mobile PayPass ™ technology developed by MasterCard to a group of selected people who used the devices to pay their bills in 100 restaurants accredited to the project in Barra da Tijuca (Rio de Janeiro) and Jabaquara (São Paulo).
Instead of accepting a physical credit card, the merchant uses this technology to enter the amount in Point of Sale (POS) software from MasterCard’s Redecard. The purchases are then charged to the credit card or the bank.
To address security needs for the project, TIM is working with Gemalto, which is supplying the TSM (trusted services management) solution.
Vivo, Telefónica’s Brazilian unit, announced the launch of its pilot project implementing a payment model using a virtual debit card via phone. The initiative uses NFC contactless technology and a Vivo mobile application to access the virtual bank card.
For the pilot, the companies chose to use their own employees to test the solution. Workers from both companies will receive an NFC-enabled cell phone from Vivo and a virtual debit card linked to the line. This combination will allow them to purchase items at Cielo’s credentialed merchants—approximately 300,000 stores.
Since December, Vivo’s financial partner, Bradesco, has offered cards with NFC technology to its premium segment customers.
In fact, in November Claro and Bradesco announced plans to launch two mobile payment services in 2013. The solutions result from a joint venture the companies formed last year, named MPO (Mobile Payment Operator). Both products—a co-branded virtual wallet tied to a mobile line and a solution to enable transactions via near field communications—are in the development phase.
Also last year, less than a week after the Claro/Bradesco announcement, Telefónica’s Vivo and MasterCard presented a similar solution with the same goal: to include Brazilians without bank accounts in the financial system, using a prepaid mobile account.
Even with these tests, Frost & Sullivan predicts that near field communication won’t take off in Latin America this year, since short message service (SMS) solutions are likely to see increased adoption. In a presentation earlier in January, Renato Pasquini, Frost& Sullivan telecommunications team leader, said that the low penetration of high-end devices limits the potential for NFC at the moment, although some Point of Sale terminals are already compatible. However, he said NFC trials are expected in 2013, such as during the FIFA Confederations Cup in Brazil.
