Indian telecom operator Tata Docomo will trial Near Field Communications based mobile payments in Hyderabad, in partnership with XIUS. Initially on offer will be operator based services like mobile phone top-up (expectedly), as well as content like ringtones and wallpapers. Tata Docomo will use the NFC based payments to increase its retail points of presence, and expand the availability of services to coffee shops and most interestingly, through “self-service Active Posters”. Active Posters are paper-thin-self-service terminals, and glass touch sensing, enabling as many as 18 retail touch points at any customer gathering point. However, what’s worth noting is that Xius had done a trial with Bharti Airtel in 2008, and nothing came of it, so hold your horses – this is just a trial.
Our take on the trial
– Operator led: I’d have expected a handset manufacturer, if not a VAS company, to trial an off-deck mode of payment like NFC – they need it more than telecom operators, which currently provide the primary mode of payment for mobile services, through pre-paid cards.
– Another operator planning to go retail: the opportunity here for Tata Docomo is to build out a retail payments infrastructure that goes beyond just telecom payments. Airtel Money is extremely promising, but there’s a complicated process involved for enabling payments. This is where NFC’s one touch authentication will work.
– Content downloads: is there really a business case to be made for off-deck content downloads? There might be takers for ad-supported free content, but anything that is downloadable, and can be bluetooth-ed or copied to a memory card, is pirated.
– Docomo legacy, and opportunity: NTT Docomo, an investor in Tata Docomo has been one of the key success stories of NFC based payments. It wouldn’t be surprising to see Tata Docomo follow suit. Perhaps we could see cross-border NFC payments, similar to the deal between NTT Docomo and Korea’s KT.
– Payment culture: Indians typically deal in cash for small purchases (and often, large as well). The credit card penetration is abysmally low in the country, and while some of those will be early adopters for NFC based payments, I’m sceptical about whether this will really scale.
– SIM Change: The critical element for Tata Docomo-Xius trial will be the SIM card: It’s not clear from Xius’ website whether Xius’ contactless SIM cards will also be the Tata Docomo mobile SIM. If that is the case, then there’s the challenge (and cost) of making users change to an NFC enabled SIM. If not, then the extra SIM will be an issue. An idea we like: using a memorycard for contactless transactions, launched by Tyfone, a company backed by Polaris, HDFC Holdings and Ojas.