Airtel partners with XIUS-bcgi to develop exciting contact-less payment technology – could transform the way people pay
According to this Press Release, a company called XIUS-bcgi has developed a new technology called eCogNito, which is essentially enables contactless payment for goods and services through the mobile phone. The technology is embedded within the SIM card, therefore doesn’t need special mobile technology, or indeed very advanced mobile phones – indeed the company claims that it is already compatible with millions of handsets, on any network. Bharti Airtel has signed a memorandum of understanding with XIUS-bcgi to roll out a pilot scheme, which they claim already has 260,000 subscribers for this initiative.
XIUS-bcgi has also invented a new technology called ‘Active Posters’ (AP). These are paper thin devices that can be mounted behind a glass terminal, which communicate with the eCogNito solution, allowing any shop with a glass front to become a 24×7 store. Users have to point the mobile phone to an AP – say an AP for a ring tone printed on say a Poster for a new music CD – which will initiate a dialogue between the AP and the mobile phone. I imagine at this point, the user might be able to download information related to the ringtone, and even purchase it if he so wishes.
What’s exciting is that these contactless technologies may herald a completely new way of paying for goods and services. Imagine a world where you’ll be able to step into a Delhi Metro station, and instead of having you buy a token from a counter, you simply pass your mobile phone over a reader, which deducts the right amount from your funds and lets you though the turnstiles. Before stepping into work, you stop by the Café Coffee Day closest to your office, but instead of paying for your latte using cash or debit cards, you pass your mobile phone over a scanner, which again deducts the right amount. Just as you’re about to step into your office, you see a promotional poster about the latest bollywood action blockbuster – ‘point your mobile here to enter a competition for free tickets’, it says. You follow instructions, and automatically the internet browser on your phone points starts up and takes you to the site.
The services are not operator billed – which as Cerius Shah of ContentSutra rightly pointed out in his post (also check out Ashish’s post on pluggD.in), makes sense given that 92% of Airtel’s subscribers are pre-paid customers. Therefore, I’m unsure about is how the payment mechanism will be linked to your funds. Do the smart cards need to be refilled, the same way that you’d top up a pre-paid card? If so, will Airtel start speaking to major bank networks, encouraging them to allow for refilling of this mobile wallet through their ATM network? Or will this mobile wallet be directly linked to the customer’s current account? This also brings up important questions about security and privacy: I imagine there will be built in mechanisms to protect users from theft and abuse – such as limiting payment sizes, asking the users to input a security pin number etc.
There have been a number of initiatives globally to develop such ‘contact-less’ smart cards. The convenience of this particular one however, makes it all the more exciting. Barclays, in the UK has introduced an Oystercard – a credit-cum-contactless card, which can be used to pay for subway train tickets.
The major hurdle that needs to be overcome for this technology in my opinion is vendors’ adoption and integration with their own systems. For consumers to really start using it, scanners and APs should be widespread enough that they immediately see the convenience of using this as a primary mechanism for payment for small purchases, instead of just reaching into their wallet to pull out a Rs. 50 note.
While Airtel’s size, customer base, distribution capability and influence will certainly help in pushing adoption by encouraging users to pay for pre-paid refills etc. using this payment gateway – I think that ‘bread-and-butter’ partnerships will go a long way in speeding up user adoption of this technology. When I say ‘bread-and-butter’ partnership, I mean tying up with a product / service vendor that is strongly embedded in the customer’s daily life – this might be a pan India coffee chain such as Café Coffee Day. Or better yet, taking cue from Barclays in the UK – a tie up with the Delhi metro.
I’m going to watch these developments on this story closely – I’m quite interested to see how this technology shapes up. In the mean time, well done Airtel on constantly being on the cutting edge of innovation. I’ve always believed in this company, and I’m sure that if it continues to innovate like its doing, its stock will only head up. Its currently trading around Rs. 840 and at a PE multiple of 26, down from 52 week high of Rs. 1150 in mid October 2007.
What are your views on this? Do you think that users will adopt this technology? What ideas do you have for the way that this technology might be used? Leave a comment!
Image credits: Rediff Moneywiz, Geniesimcards
Tags: Finance, Innovation, Investments, Mobile, Technology, Telecom
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