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Visa, Samsung partner to drive adoption of NFC mobile payments

As part of the new agreement between the two companies, Samsung will load Visa’s payWave app onto its next generation of NFC-enabled mobile devices so users can begin make purchases using their smartphones. Additionally, financial institutions with mobile payments programs will be able to use Visa’s services to securely download payment account information to NFC-enabled Samsung devices.

“The partnership enables Visa to tap into the opportunities available to an equipment manufacturer, such as Samsung,” said Dave Kaminsky, emerging technologies analyst at Mercator Advisory Group, Maynard, MA.

“Visa’s payWave app will now be included on all Samsung devices and FI’s will use Visa’s provisioning service on Samsung devices where possible,” he said. “Although the deal is not exclusive, it gives Visa a leg-up compared to its competition, both as a wallet provider and as a TSM.”

Mr. Kaminsky is not affiliated with Visa and spoke based on his experience in mobile.

Visa did not respond to a request for comment.

Tap-and-go payments
The agreement could help drive consumer demand for Samsung devices, which is already growing quickly, by offering devices ready for tap-and-go payments via NFC technology and Visa payment functionality.

The Visa payWave mobile app will be preloaded onto selected next-generation Samsung mobile devices featuring NFC technology and an embedded secure element.

Off the shelf, these devices will be ready to be personalized with Visa payment account information, which consumers will be able to initiate using a mobile payment application provided by their financial institution.

Scaling up mobile payments
By offering financial institutions a secure way to provision smartphones with payment account information, Visa and Samsung are hoping to make mobile payments broadly available around the world.

In order to enable financial institutions to launch large scale mobile NFC payment programs, Samsung will offer banks the ability to load payment account information over-the-air to a secure chip embedded in Samsung devices, using Visa’s Mobile Provisioning Service which is linked to Samsung KMS.

Near field communication, or NFC, technology has been widely heralded as one of the most secure methods for mobile payments. However, bringing NFC payments solutions to market has been a challenge because of how many stakeholders are involved, including hardware manufacturers, financial institutions, payment networks and retailers.

The Visa Samsung global alliance purports to be the first of its kind between a leading NFC handset manufacturer and payment network to pave the way for the implementation of large scale mobile payments programs.

The pre-NFC phase
Another challenge has been the lack of NFC enabled devices in consumers’ hands. However, that is starting to change. ABI Research forecasts that a total of 1.95 billion NFC-enabled devices will ship in 2017.

“Mobile payments will continue to grow, as more consumers purchase smartphones, more smartphones adopt NFC, and more merchants realize the benefits of mobile payments,” Mr. Kaminsky said.

“This year will still be in the pre-NFC phase, where mobile payments at the POS will still be largely bar code based, and largely using solutions provided by individual merchants – such as Starbucks – or by merchant aggregators – like LevelUp,” he said.

“Mobile payments will also develop in the card-not-present space, as people are increasingly using their mobile devices – including tablets – to make e-commerce purchases, and merchants are increasingly optimizing their websites to support the smaller screens and keyboards used by mobile devices.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York