A New Payment Option

In Japan, customers use a version of this technology to actually make purchases with a mobile phone. This technology has been used in Japan for years to pay for everything from train tickets to groceries by simply waving a cell phone over a reader. Such technologies have been used on small-scale trials in the United States, including in Atlanta, New York and the San Francisco Bay area.

Smart Participation

Unfortunately, the technology used in Japan cannot be used in all places of the United States. For such payments to work here, cell phone manufacturers, carriers, financial institutions and retailers must all participate. There also must be an intermediary that is trusted by both the financial institutions and the carriers to activate the virtual credit cards inside the phone. In Japan there was a single carrier, NTT DoCoMo, which accounted for more than half the Japanese market at the time the system was implemented which made it easier to use the mobile phone technology.*

The benefits to adding the widely used smart card technology in cell phones to transit use is that a phone allows passengers to accomplish many things that a conventional card cannot. With smart card technology and near field communication capacity on a cell phone, passengers will be able to use their mobile phones not only as a ticket to board any mode of transportation, but as an electronic purse that has the purchasing power of a credit card. There is more functionality with an input and output of a cell phone, whereas a smart card in itself does not have the capabilities to use near field communication (NFC) in the same way.

The NFC used in Japan is the same type of technology that would allow the smart card to be used in transit and would also enable a phone to connect with an electronic reader. It is currently in widespread use — though, outside of Japan it is not used in mobile phones.

The current proposals in the United States for such technology are in the beginning phases — newer iPhones and other brands are working to make sure they have the capabilities to adapt to smart card technology and use NFC when the time comes. Credit card companies like MasterCard and Visa are also taking steps to work with companies to provide similar chips that could work as electronic purses.

In the meantime, information technology companies will be working in European countries to implement pilot projects of NFC payments on buses. It is difficult to initiate NFC technology on a large scale because there are not enough terminals or mobiles yet that have the capabilities. In the next two or three years, more and more cell phones will include NFC technology and will then allow for the possibility of mass use. As the NFC phones become more prevalent in Europe and in North America, it will be applied to transit. MT

Aritza Aldama is the business line manager for Fare Collection Parking. Floyd Diaz is the vice president business development-transit for Telvent and has more than 20 years of business development experience in the North American transit industry.

* 1. Berlin, Leslie. “Cellphones as Credit Cards? Americans Must Wait.” 24 Jan. 2009. Web. 26 Apr. 2010.