Telco testing 'mobile wallet' pay-by-phone service

This 'mobile wallet' service works by using a near-field communication chip inside a smartphone. Photo / Thinkstock

The days rummaging through your wallet for bank cards, 2-for-1 vouchers or a train ticket will soon belong to the past - if Vodafone has its way.

The telco began testing infrastructure this week which may allow customers to make over-the-counter purchases, pay for public transport, or open a card-controlled door with a mobile phone.

Vodafone staff demonstrated the technology last week, buying coffees by holding their phone up to a small terminal on the counter.

Instead of a paper receipt, a message was sent to the phone with transaction details.

This "mobile wallet" service works by using a near-field communication (NFC) chip inside a smartphone.

NFC is technology that allows information to pass from one device to another when they are close to each other.

It is regarded as safer than Bluetooth for transferring personal data as it has a much shorter range, reducing the risk of information spilling into the wrong hands.

Mobile wallet services were launched in North America and the United Kingdom this year and have been operational in Japan since 2004 and South Korea since 2007.

Vodafone flagged their plans for it in July, but now has live NFC-testing terminals at two cafes in Auckland and Wellington.

The company imported smartphones with an NFC chip from Europe for the trials.

But while the technology is already here, the service will not be rolled out commercially until the start of 2013, said Vodafone's chief strategy officer, Zac Summers.

"We're in conversations with [competitors] to make sure this happens," he said.

"The way forward for this is an open-access infrastructure, where any telco can operate it and where any service provider, whether a bank, or Les Mills, Air New Zealand, Fly Buys or Snapper [can access it]."

Not only would the service allow customers to leave their wallets at home, Summers said it also reduced the transaction time and cost at the till.

"For the customer it makes sense and for the retailer it makes sense."

BNZ, Visa and Paymark are working with Vodafone in the trial over the next three months.