Dutch banks, telcos team up for 2012 smartphone payment system

A number of Holland’s leading banks and mobile phone operators have teamed up to offer a smartphone payment system by 2012, the first of its kind in Europe.

The banks include ABN Amro, Rabobank, and ING, while the telcos include Royal KPN NV, Vodafne, and Deutsche Telekom’s T-Mobile, all of which will take part in a joint venture designed to provide the country with a secure mobile payment system within two years.

The scheme will turn Dutch smartphones into mobile wallets, allowing them to potentially ditch their credit cards in favour of paying by phone. This should allow for store checkouts, vending machine payments, parking meter transactions, and even purchasing train tickets, all by scanning your smartphone across a point-of-sale window, which will result in a fully wireless payment.

The payment system will be based on contactless near-field communications (NFC), but not many handsets are currently NFC-capable. Nokia is planning to release a number of new NFC-capable phones next year and by 2012 the technology may be more widespread. In the mean time, however, Visa recently announced a microSD card contactless payment system that makes up for the lack of NFC-capable handsets.

In an interview with TechEye in August the head of Mobile Visa Europe, Mary Carol Harris, told us of the benefits of contactless mobile payment: “People always carry their mobile phone and usually have it immediately to hand. The aim is to make the payment process even simpler, faster and more convenient by making contactless payments using mobile phones and credit cards at all high-traffic points of sale (e.g. supermarkets, vending machines, etc.)”

There are some downsides, however, such as the fact that if your mobile goes dead then you cannot use it to make a payment, or that if your phone is stolen you also lose your digital credit card. For the latter case the standard procedure of contacting your bank to have the number blocked and a new one reissued applies.

Both Japan and South Korea already employ NFC-based mobile payment systems, while the US is attempting to bring the system in. The Netherlands will be the first country in Europe to roll out the new payment method.