Orange and Barclaycard set date for UK’s first commercial NFC service

British consumers will be able to use NFC phones to make payments at stores across the country from the second quarter of this year, Barclaycard and Everything Everywhere have announced.

Everything Everywhere and Barclaycard
BARCLAYCARD & EE: "Key partners in the development of the proposition"

Barclaycard and Everything Everywhere, the recently created merger between the UK arms of mobile network operators Orange and T-Mobile, have announced that the UK’s first commercial NFC service will go live during the second quarter of 2011.

The long-awaited launch will see consumers able to purchase NFC phones from Orange and then use them to make payments from a new MasterCard PayPass prepaid account stored on their mobile phone.

“When you get your new handset, you need to activate it and link it to your existing Barclaycard, Barclays debit or Orange Credit Card,” Orange has told NFC World. “Using your handset, you then simply download (or transfer) funds from your card, to your phone… Loading your account could not be easier and it can also be done online via MyBarclaycard. The mobile phone can then be used to make payments of £15 or less wherever contactless payments are accepted, by simply tapping the phone itself against a contactless reader.”

Orange and Barclaycard first formed a long-term strategic partnership to bring mobile payments to British consumers in March 2009 and a commercial launch was originally expected to take place in late 2010. Last month, Orange revealed it would begin introducing NFC services in the majority of countries in which it has a presence in 2011.

No brand name for the new service has yet been agreed upon, according to Orange, but the official announcement does mention a “forthcoming contactless Orange Cash prepaid payment card” and explains that “contactless mobile phone payments will feature as part of the wider Orange portfolio of products, developed in conjunction with Barclaycard,” indicating that the new service will see Orange rather than Barclaycard as the lead brand.

Currently, there are 42,500 points-of-sale equipped to handle contactless payments in the UK but contactless transaction volumes have been very low to date. In September 2010, for instance, a total of 150,000 contactless Barclaycard transactions were conducted — an average of just over three transactions per point of sale.

“We’re making something that’s been talked about for many years a reality”

London’s commuters, however, are likely to provide the key to driving adoption of the new service. Transport for London (TfL) is committed to converting the city’s buses as well as the London Underground to accepting payments via contactless payment cards and NFC, with work due to begin from the middle of this year. And, last week, MasterCard signed a multi-million pound deal with TfL that will see MasterCard branding appear on turnstiles on the underground as well as some six million of the plastic wallets issued to new Oyster cardholders this year.

Rival mobile network operator O2 is also expected to announce a commercial NFC launch in the near future. O2 Money, the operator’s financial services arm, is currently on the hunt for a number of NFC, card and payments specialists to “help establish the newest name in financial services.”

“This is the beginning of a revolution in how we pay for things on the high street,” says Gerry McQuade, Everything Everywhere’s chief development officer. “It’s a cultural shift that is as important as the launch of the personal credit card or ATMs. We’re making something that’s been talked about for many years a reality and very soon using your mobile to buy a sandwich, a cinema ticket or, in time, even something bigger like a computer will simply be the norm.”

“I believe that future generations will find it surprising that early this century we were still carrying separate items to buy goods and to communicate with each other,” added David Chan, CEO of Barclaycard Consumer Europe. “As payment experts, our role is to make it easier, more convenient and incredibly secure for people to make purchases and manage their money while on the move.”

Both Orange and Barclaycard have called on the services of Gemalto for the technology underlying the new service. The company is providing Orange with the NFC SIMs that will be issued to subscribers and is supplying Barclays with trusted service management (TSM) services, enabling the secure deployment and management of the mobile contactless payments.