Jack In The Box In California CellPhone Payment Trial

Written by Evan Schuman
February 1st, 2008

Some 230 Oakland, Ca., commuters started a trial this week where they were issued specially-equipped near field communication (NFC) Samsung phones, devices that could be used to directly pay for the subway, Jack In The Box meals and can interact with underground posters to get directions.

The trial with the Bay Area Rapid Transit (BART) commuters started Tuesday and is expected to continue for four months, said Mohammad Khan, the CEO of Vivotech, which is one of the technology vendors involved in the trial. Sprint is also a key partner in the project.

The trial starts with the consumer’s trial phones being loaded with $48 for BART transportation. Study participants needed to be Sprint customers who were also daily BART commuters. After the $48 is used up, the phone would start charging against the credit cart associated with the phone.

Jack In The Box—which has been experimenting with NFC for about eight months—plays into the trial in two ways. First, their restaurants are typically located near key BART stations. But more technologically interesting, Jack In The Box is behind the underground "smart posters" part of the trial. To be literal, it’s a Vivotech chip that is behind the posters, with the tag affixed right to the poster’s back. When one of the trial’s NFC phones is pointed at the poster, an application is automatically launched that provides step-by-step directions to the nearest Jack In The Box. Because these posters are underground, there is no opportunity for GPS interaction and a cell signal might not even be possible. The directions are based on the tag’s awareness of exactly where that posted is supposed to be hanging.

This trial is significant because U.S. mobile phone payments have generally been limited because of the resistance of the carriers. In Europe and especially in Asia, carriers—which are often less powerful than they are in the U.S.—have been more open to supporting payments.

The retail use of smartphone to poster interactions is a hot issue these days, with several major retailers considering such moves and Sears having started such a trial in mid-December.

Those trials have been using 2-D barcodes, but many in that space see NFC replacing 2-D barcodes in a couple of years. NFC is considered easier to use (no need to position a barcode just perfectly for the digital camera to see it) but much less mature.

A report out this week from market analysis firm In-Stat suggests that NFC is slowly advancing. "Although 2008 will not be ‘the year of mobile payments’ in the U.S., some progress is likely," said In-Stat analyst David Chamberlain. "There is evidence that the US market may overcome a crucial issue—technology incompatibility—and make progress during 2008 toward contactless payments using cellphones. Companies in several different sectors all ultimately want to deploy near field communications, the key enabling technology, into handsets as well as in merchant payment terminals. There is also general agreement that the current generation of mobile banking services is an important first step toward accomplishing that goal."

In-Stat also gave some specific market predictions. "Depending on several technology, commercial, and marketing factors, between 8 million and 30 million customers in North America will be using NFC-based contactless payments by 2012," the report said. More than "34 million cell phones could be used for other financial applications like online banking by 2012."


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