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Google will soon roll out NFC billing thanks to a partnership with Mastercard and Citigroup. The service will debut on select Gingerbread handsets like the Nexus S. Not all handsets will be supported.  (Source: Great e-Reader)

With NFC you just tap your phone against the billing reader to complete a credit card transaction.  (Source: Tech Taxi)

Apple's iPhone and Research in Motion's Blackberries don't currently support NFC communications or payments. Future models may.  (Source: The iPhone Blog)
Forget your wallet? No problem if you have your phone and license...

Near field communications (NFC) is the kind of wondrous future-tech that promises to bring new convenience to every-day chores like shopping for groceries or fueling up at the pump.  Japanese customers have already been using NFC-enabled cell phones as credit cards for several years.

Now Google, Inc. (GOOG), makers of the world's top smartphone operating system, Android, have announced than NFC will soon arrive for American consumers. 

The announcement was made at the Web 2.0 Summit by Google CEO Eric Schmidt, who will step down as Google's CEO next Monday.  Web 2.0 is an annual internet-aimed conference held annually in San Francisco, Calif. since 2004.  The company had previously expressed interested in NFC payments, but had failed to fully elaborate on how it would execute the billing scheme.

I. Credit Cards on Your Phone

Initially Google has selected two corporate partners in the credit and banking industry -- MasterCard, Inc. (MA) and CitiGroup, Inc. (C).  

CitiGroup claims to be the largest issuer of credit cards in the world with its Citi Cards.  Much of the company's business is outside the U.S.  MasterCard is second to Visa (V) in the U.S., with 171 million credit cards and 123 million debit cards active within the U.S. [source].

As with standard cards, a fee will be charged to businesses.  It's unclear at this point whether the cardholders (customers) themselves will pay any additional periodical or spot fees for the service.

What Google did make clear is that it is not getting a cut of any fees from the card.  

It is offering the service for two reasons.

The first is that it makes an attractive selling point for its smartphones.  Top competitors Apple (AAPL) and Research in Motion (RIM) lack billing service on their popular U.S. models.

Secondly, Google will track your purchases and says it may use them to try to better target ads or discount offers at your phone.  

As traditional advertising begins to fade, targeted advertising is a booming business.  By direct ads that customers might actually care about, for example local sales or sales on items the user typically purchase, the uptake rates are far higher.  Everyone from U.S grocery chains like Kroger, to internet giants like Google, eBay/PayPal, and Facebook are deeply involved in the field.

The dark side of data mining is that more of your information will be stored with the potential for compromise.  While Google and others have engaged in efforts to anonymize data to a degree, advocacy groups and U.S. government officials have expressed concern about data mining and suggested possible legislation to limit its scope.

For now customers choosing to adopt the new Android service, will find themselves jumping deeper into Google's data mining bid.

II. Android Arrival is Imminent

The new service is supported by operating system APIs in Android 2.3 "Gingerbread".  

Gingerbread is Android's latest operating system version, which features user interface refinements, battery life improvements, increased web standards support, and improvements to the OS's copy, cut, and paste routines.

The Software Development Kit for Gingerbread rolled out to developers in December.  Motorola and Samsung appear to have advanced builds of Gingerbread ready for their smart phones whenever carriers decide to throw the switch.  Builds for Motorola's Droid X and Droid 2 and Samsung's Galaxy S smart phones have leaked in recent weeks.

Currently Gingerbread is exclusively available through official channels on Google's Nexus S, which went on sale in December of last year.

NFC requires special hardware, so it's unlikely that phones like the Galaxy S would be able to support the new technology.  For now the Nexus S appears to be consumer's best bet for getting access in the near future.

III. What is NFC and Where Can You Use It?

Near Field Communication relies on an active device (like a key fob or your phone) acting as an active (powered) sender and sending a signal to a passive receiver.  Typically the receiver is located within 4 cm of the sender in order to properly receive the signal.

The technology operates at the 13.56 MHz frequency, well below the frequency band commonly used with Wi-Fi, 2.4 GHz. 

The technology was developed and licensed by Dolby Labs' subsidiary Via Licensing Corp.

Currently one of the largest makers of NFC readers is Verifone Systems, Inc. (PAY).

There are actually thousands of such devices already employed across America.  Examples include checkout devices that you tap your card against and gas pump charge devices you tap a key fob against.  With the new deal, you could theoretically use your compatible Android smart phone with most of these devices.

You may need to have your license ready to present for larger purchases, as with credit cards, to confirm your identity.

A recent Federal Reserve sponsored study [PDF] stated that there were 150,000 NFC readers installed at locations across America.  And the study claimed Americans own 70 million NFC enabled devices -- largely credit cards.

A MasterCard sponsored survey by Edgar, Dunn & Co. suggests mobile payments, the field that NFC billing falls under, will swell to a $618B USD market by 2016.

It's unclear how the device will coexist with the upcoming Isis billing system from Verizon Wireless (VZ), T-Mobile (Deutsche Telecom: DTE), and other players.  It appears, at present, that it will compete with such a system.

While wireless billing will almost certainly land on the iPhone, on Blackberries, and on the Windows Phone 7 platform in the near future, it appears that Google will be the first smart phone OS maker to leverage this fascinating, if a bit scary technology. 

The technology is thought to be relatively secure; it would likely take more effort to steal your card digital via NFC trickery than it would to steal your card information from a corporate database.



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RE: and license?
By CurseTheSky on 3/28/2011 3:37:33 PM , Rating: 2
I would imagine they mean a photo ID (driver's license). You probably are supposed to present your ID to verify who you are (and that you're not just walking around with someone else's phone), and then use your phone to make the transaction.

Though in theory it should work fine, I'd imagine that your average store cashier will either not want to bother checking your ID, or will be too fascinated with the fact that you can make a purchase using your phone to remember to check it.


RE: and license?
By cjohnson2136 on 3/28/2011 4:07:35 PM , Rating: 2
yeah it kinda of irritates me when they dont check cause on the back of my cards it says "PLEASE CHECK ID"


RE: and license?
By Motoman on 3/28/2011 8:23:37 PM , Rating: 2
I'm going to guess you're not aware that it's against all credit card merchant agreements to check a customer's ID before approving a sale. Just like it's a violation of those same merchant agreements to approve a sale to a CC that hasn't been signed...like, if the person wrote "SEE ID" on the signature strip.

Morons think that putting "SEE ID" on their CCs somehow protects them. It doesn't - and in fact, makes it worse for you in the event that someone does steal your card. Anyone can get a fake ID made up that has their face and your name on it...easily. It's child's play. And then, if a clueless merchant actually does violate their merchant agreements and request to see the ID, now they've physically "verified" that it was you who made the purchase - and now you've potentially made it harder for yourself to dispute the charge. And made it easier for the merchant to hang on to your money...and the scam artist to get away with their scam.

...all of which is why merchants who know WTF they're doing won't accept such cards. Like the post office - try paying for postage with a card at the post office that has "SEE ID" in the signature strip.


RE: and license?
By Alexvrb on 3/28/2011 8:44:53 PM , Rating: 3
You walk in with a stolen credit card. The name is Nick Papageorgio, and it is signed. They don't bother checking ID, because after all they're not even supposed to, right? So it is no different than writing Check ID.

Heck, in the case of Check ID you're potentially making the criminal work a little harder to produce/buy fake ID - and it may even take some time to do so. Hopefully by then you've realized you lost the card and cancelled it. Some modern IDs are fairly hard to fake, too. I'm not arguing that it *really* protects them, but I don't think that it makes all of them "morons" as you say.

Further, you argue that it somehow makes it harder to dispute the charges. Care to back that claim up with some proof? The only thing the merchant has verified is that the supposed cardholder has an ID that appears to match the name on the card. That doesn't prove anything, since "anyone can get a fake ID made up that has their face", right?

For what it's worth, I don't write Check ID. But I don't understand your vitriol, either.


RE: and license?
By Motoman on 3/28/2011 10:08:59 PM , Rating: 2
Because it's stupid. Stupid should make you mad.

I also forgot to mention that if you don't sign the back of the card, the thief then doesn't even have to bother learning how to forge your signature.

The whole "SEE ID" myth is only a half-notch above wearing a tinfoil hat.


RE: and license?
By The Raven on 3/29/2011 12:13:47 AM , Rating: 2
I'm guessing you haven't looked at your ID in a while. Look closely and you will see that it has your signature on it. So basically putting "SEE ID" on the card is the same as signing the card and more .

I worked retail a long time ago but I remember that we always had to watch out for stolen cards, fake bills, and underage drunks. There is a responsibility that the shopkeep has and for someone to put "SEE ID" on their card makes it much easier for the employees to do that part of their job.

Unfortunately, it makes other parts of the job more difficult and that is why so many cashiers err on the side of lazy and don't check.

I always checked to see that the signature matched the card but I am no handwriting specialist and therefore couldn't tell if someone was forging another's sig. But there were 2 occasions (that I can remember) where I asked to see ID just like they wrote on the card and they couldn't come up with the ID. They would give me the "come on, its only 5-10 bucks" spiel for 2 seconds and then back down and go away without a scene. Both times I would guess that it was actually their card, but how can I judge when they are only in the store for 3 minutes? I don't have the chance to get to know them over a light lunch.

Trust me... "SEE ID" is better than just signing the damn thing for the cardholder and the cashier should they actually heed the message like me. I know there are not many of us out there, but I do see them time to time. Maybe 5-10% of the time in my experience (in CA and MO).
Even if it was 1% you are just that much more protected from jumping through claims whoops.

Come up with a better idea or give it a rest.


RE: and license?
By Alexvrb on 3/29/2011 8:25:31 PM , Rating: 2
But if they use a fake ID, and forge the signature in the same way on the fake ID and the credit card slip, it won't matter. That's why I never brought this point up.

What it CAN do are two issues that I did bring up: It might make more work for the criminal, and possibly delay their use of the card (hopefully by then you'll have cancelled).


RE: and license?
By The Raven on 3/30/2011 11:39:51 PM , Rating: 2
quote:
But if they use a fake ID, and forge the signature in the same way on the fake ID and the credit card slip, it won't matter.

So how is this worse than just signing your card? That is my simple point: it is better to put "SEE ID" than simply signing the card.

As you say it is all about measure of security. Is putting "SEE ID" some sort of foolproof protection? Hell no. But it is better in my opinion than just signing (unless someone can prove otherwise).

Same with this technology. Is it completely secure? Certainly not if all you need is your phone without an ID (either picture ID or PIN). And that is what started this thread of comments.


RE: and license?
By Alexvrb on 4/5/2011 8:23:29 PM , Rating: 2
I never said See ID was worse. I was arguing that See ID is not stupid, and that it is the same or better than just signing. You didn't read my other posts. The only thing I said negatice regarding See ID was just pointing out that some of the claimed advantages of See ID aren't valid.


RE: and license?
By Solandri on 3/29/2011 7:36:26 AM , Rating: 2
quote:
Heck, in the case of Check ID you're potentially making the criminal work a little harder to produce/buy fake ID

No, Motoman is right. It's the craziest thing, but MasterCard and Visa prohibit merchants from requiring an ID check to accept a credit card. They're allowed to ask, but if you refuse to provide ID, they have to accept the card and let you make the purchase. Any thief who uses stolen cards regularly knows this.
http://www.privacyrights.org/ar/Alert-FS15.htm

(It's crazy because it's the merchant who has to pay for any fraudulent transactions. If the real owner of the card gets the charges reversed, the merchant is out the money and the merchandise. Despite what the credit card companies make you think, the interest and fees you pay them doesn't actually go to combating fraud. It all comes out of the merchant's pocket. Online credit card transactions are actually safer for the merchant because you have to give them your shipping address, which they can then verify with the credit card company. In retail, the merchant is forced to accept the card with no corroborating info.)

quote:
Further, you argue that it somehow makes it harder to dispute the charges. Care to back that claim up with some proof? The only thing the merchant has verified is that the supposed cardholder has an ID that appears to match the name on the card. That doesn't prove anything,

Depends on the system the merchant has set up. Like I said, the credit card processors let you verify certain personal infomration - usually billing address and home phone number. That's why gas stations sometimes ask you to enter your zip code, and some stores ask for your phone number. When they process your card, this additional info gets sent to the credit card processor, gets checked against your billing info, and if it doesn't match it raises a flag which the merchant can then use as grounds for refusing the transaction.


RE: and license?
By Alexvrb on 3/29/2011 8:21:52 PM , Rating: 2
I didn't disagree with the idea that MC and Visa prohibit checking for ID. HE was the one who said that even if they DID check, that they could just forge an ID. That was the scenario I was responding to. Thanks anyway though.

Regarding your second response, what does that have to do with ANYTHING I said? Moto was talking about how "Check ID" would make it harder for you, the consumer, to reverse fraudulent charges. You didn't address that in any way, shape or form. You were talking about things like requesting phone or zip, and that stuff can apply regardless of whether they sign the card or not!


RE: and license?
By The Raven on 3/30/2011 11:37:59 PM , Rating: 2
Motoman is right?
You have a funny way of backing him up.

From your link...
quote:
If you want merchants to ask for your ID, sign your card and write “Ask for ID” below your signature (however, merchants are not bound to honor that instruction). If you do not want to show ID, simply sign your card and refuse to provide ID if asked.

Moto is dead wrong according to this.

They prohibit mandatory ID checks, but if you the card holder request it they certainly can check.

This shows that it is indeed an added security measure to write "SEE ID" on the back.


RE: and license?
By The Raven on 3/29/2011 12:20:19 AM , Rating: 2
quote:
try paying for postage with a card at the post office that has "SEE ID" in the signature strip.

Also, I never carry cash and all my cards say "SEE ID" on them. Where do you think the cards I use to send packages to Japan come from... THE SKY?!


RE: and license?
By Sylar on 3/28/2011 4:56:49 PM , Rating: 2
Wouldn't it be easier if they implemented a pin feature as well to prevent theft? If I have to pull out my id, I may as well hand them my CC.


RE: and license?
By omnicronx on 3/28/2011 5:58:59 PM , Rating: 4
This can't really replace all your sources of cash anyways, unless you want to rely on what will essentially be a battery powered credit card ;)

"Sorry bud can you get this one? My credit card ran out of batteries again!"


RE: and license?
By Sylar on 3/28/2011 7:08:48 PM , Rating: 3
Yea, but the reasoning behind my post was that if I'm going to pull out my wallet to get my ID, I may as well pull out my CC as well to pay for it since it's also in my wallet. But it would be a different story if I can swipe my phone and punch in some passkey pin to authenticate.


RE: and license?
By Motoman on 3/28/2011 8:24:32 PM , Rating: 2
...because pulling out your phone is different from pulling out your wallet?


RE: and license?
By Alexvrb on 3/28/2011 8:57:23 PM , Rating: 2
Different, no, seperate, yes. They're talking about the potential need for additional identification, vs a PIN scenario.

Right now, using traditional CCs: if you pull out your wallet, you've likely got your ID and CC both very handy. In the future: If you're paying with your phone and you still require ID for some reason, you've got to pull out your wallet, and then your phone, unlock it, and fire up the NFS CC funtion (don't want it running all the time). Is it a big deal? No. But why switch to something that is even LESS convenient than what we already have?

So if they used a PIN number similar to Debit transations, I would support an NFC-based CC function for phones. Assuming it didn't cost extra for myself or the vendor. Otherwise I'll just stick with Debit. After all, I don't go anywhere without my wallet anyway.


RE: and license?
By The Raven on 3/29/2011 12:28:50 AM , Rating: 2
PIN FTW!


RE: and license?
By Solandri on 3/29/2011 7:50:14 AM , Rating: 2
Since the NFC is attached to a computer (your phone), it opens up the possibility of public/private key encryption. The phone can have a chip which encrypts the card number and some transaction number hash with its private key and the credit card processor's public key. It transmits that encrypted transaction over the net to the credit card processor. The credit card processor then looks up the device's public key, and uses that + their private key to decrypt the transaction.

It'd actually be safer than a card + PIN. That's vulnerable to someone videotaping you typing your PIN and zooming in to get your card numbers. Of course you have to be sure to secure your phone with some unlock PIN or pattern. But for a thief to use that he'd have to videotape it and physically steal your phone, since there would be no way to extract its private key remotely.


RE: and license?
By JakLee on 3/29/2011 1:46:19 PM , Rating: 2
How about on a touch screen phone a fingerprint scanner ala biometric unlock - a simple app that "securely verify's you are you" via fingerprints.... wouldn't even require anything more than unlocking your phone & opening said app (which may just be able to rolled up into one NFC app)


RE: and license?
By Alexvrb on 3/29/2011 8:50:35 PM , Rating: 2
Solandri, you're again misinterpreting what I am talking about. I wasn't talking about security, I was talking about convenience. Although for the record, NFC + PIN might be even more secure than NFC alone. Regardless, look at the post I replied to. Then read the article, where they talk about the strong possibility of needing ID in addition to your phone.

Moto was saying that pulling out your phone is the same as pulling out your wallet. I was merely pointing out that if they require ID, now you're pulling out BOTH, which is silly. I'll break it down again.

Non-NFC:
If you pull out your wallet, you have the CC and your ID. So if they need your ID (they shouldn't in most cases), you've already got it right there. In Debit + PIN scenarios, they won't need your ID, nor even a ZIP or Phone number.

NFC: Now you're pulling out your wallet, showing ID, and pulling out your phone, unlocking it, and activating NFC. If they used a PIN similar to the debit system, they could make it about as simple as Debit transactions are today.

Is it a big deal? No. Not really. But why make things more difficult and complicated than they are today? Also, if your phone is somehow rendered inoperable (it happens, that's why smartphone insurance exists), now you've lost access to your NFC payment option.

Also, a slightly OT look at a potential near field near future:
"Yes, I'd like to pay the $400 fee to get my $2500 iBananaPhone replaced under insurance, but I don't have access to my cards because they are all on my broken phone."

"Well sir, you appear to be iBoned."


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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