In mid-2011, Komerční banka, Citibank Europe, Globus ČR, VISA Europe and Telefónica O2 Czech Republic will launch a pilot project for mobile contactless payments. The new technology will transfer the payment functionalities from the conventional payment cards to the SIM cards in mobile handsets.

The purpose of the six-moth project is to collect findings on the actual use of mobile contactless payments and make preparations for the commercial launch of this service. Two hundred clients of Komerční banka, Citibank and Telefónica O2 each will be involved in the pilot operation. Selected check-out counters at four Globus hypermarkets in Prague and Plzeň will be equipped with terminals accepting contactless payments via mobile handsets. VISA Europe, a card association, will provide the payment application that will be implemented on the SIM cards in mobile handsets exclusively in the O2 network.

The Czech Republic has a large potential for widespread contactless mobile payments. “By the end of last year, banks operating in the Czech Republic had issued almost 9.3 million payment cards, using which their holders paid at retailers for purchases worth more than CZK 203 billion. Card payments help to reduce the risks for consumers, which stem from carrying cash, while they help retailers to optimise their operation. For Komerční banka, mobile contactless payments are promising exactly because they are one of the ways of making non-cash payments even more convenient for clients, and, in turn, further increasing the volumes of payments made using cards,” said Sirus Zafar, Head of Cards at Komerční banka.

“Mobile payments are based on state-of-the-art NFC (Near Field Communication) contactless technology and the implementation of an antenna, which the manufacturer embeds directly in the mobile handset or the SD card. The transaction takes place by holding the handset close to the terminal, which guarantees the highest level of security in the execution of transactions. At the same time, mobile payments, similarly as all other functions, are part of Visa Europe’s latest platform for the processing of all transactions, which features a number of security elements,” says Marcel Gajdoš, Country Manager Visa Europe for the Czech Republic and Slovakia for contactless and mobile projects.

Consumers will pay in particular small amounts very quickly via their mobile handset. In practice, clients will simply tell the check-out operator that they will pay using a card in their mobile handsets. Then they hold the handset close to the reader at the check-out counter and wait for confirmation – a tone signalling the successful execution of the financial transaction.

“If the value of the purchased goods is more than CZK 500, the application will request the client to key in a PassCode on his handset, with the help of which he will authorise the payment. PassCode is stored in a secured section of the handset’s SIM card and in this case replaces the conventional PIN code that clients key in for transactions made using their conventional payment cards,” said Stanislav Novotný, Credit card product manager at Citibank.

The speed of payment is a very important aspect especially for the retailers who decide to equip their check-out counters with a terminal for contactless mobile payments.

“Globus hypermarkets are well known for their consistent focus not only on the quality of the goods they sell but also on the provision of highly welcome additional services. Speeding up check out and offering a new, convenient payment method are therefore a mater-of-course for us,” added Boris Malý, Marketing Director at Globus ČR.

The application of the O2 Wallet electronic wallet, developed by Telefónica, will also help to extend the use of mobile telephones to other areas of everyday life. The users will therefore be able to have the content of today’s conventional wallet (for example, payment, transport and loyalty cards, discount vouchers etc.) stored on the SIM card of their mobile handset. It is very easy and convenient to use the electronic wallet in a handset. Another advantage is the confirmation of payment transactions in real time.

Samsung Star 5230 NFC handsets with a pre-installed O2 Wallet mobile application will be used in the pilot project.

“We expect to deploy special versions of the O2 Wallet application for Apple iPhone, BlackBerry, Samsung Galaxy II and other handsets featuring the NFC technology in the forthcoming commercial operation,” said Richard Walitza, Manager for NFC Financial Services at Telefónica O2 Czech Republic.

The testing of mobile contactless payments will be started in mid-2011. Over six months, more than 400 customers will make several thousand transactions at 50 selected check-out counters of GLOBUS hypermarkets. According to expectations, payment cards implemented on O2 SIM cards are to be included in the standard offering in 2012.

Contacts for additional information:

Komerční banka:
Monika Klucová, Head, External Communication,
tel.: 955 532 132, monika_klucova@kb.cz

Citibank Europe:
Branislav Cehlárik, Public Affairs Officer for the Czech Republic and Slovakia,
tel.: 233 061 661, branislav.cehlarik@citi.com 

GLOBUS ČR:
Boris Malý, Marketing Director,
tel.: 283 066 205, b.maly@globus.cz

Visa Europe:
Tomáš Kubík, Grayling Czech Republic,
tel. 224 251 555, tomas.kubik@grayling.com

Telefónica O2 Czech Republic:
Martin Žabka, spokesman,
tel.: 800 163 342, public.relations.cz@o2.com