Mobile money roundup: NACHA regulation, Visa NFC rollout and pay by sound

NACHA has declared it will expand its US payment regulations to cover mobile payments. MobiCash has announced an African contactless payment system that works by sound instead of radio – and a similar service has been announced in Germany. VISA has launched a huge trial of NFC payments in Melbourne with National Australia Bank… and more.

NACHA expands its rules to cover mobile

NACHA, otherwise known as The Electronic Payments Association, is a massive American association that enables and oversees electronic payments. This mostly done through a system that NACHA maintains, called the Automated Clearing House (ACH) Network – a payments service that over 15,000 institutions cleared payments through last year in the United States.

NACHA seems to have decided just recently that this “mobile payments” thing is actually going to be a going concern. As a result, it is now taking steps to regulate the use of mobile devices for payments in the US. Since the number of mobile payment services is now exploding, NACHA strongly wishes to avoid a situation where there are conflicting services, or services that could damage the reputation of mobile payments in the consumer sphere. Rather than create a new code, NACHA is pretty much just extending its current set of rules for web-based transactions over to mobile.

Contactless payment system works by sound, not radio

Here’s an interesting one. Mobile payment company MobiCash is using technology developed by French-based Tagattitude to create a contactless payment service in Africa. The idea is that you can just use your phone to do any cash transaction, supported by MobiCash. The system can be used to pay merchants, or send money to a friend. How does it work? The Tagattitude technology is used as the “signing” process. Using SMS, a customer and merchant confirm that the transaction is to take place. The payer then rings MobiCash and enters a once-off PIN they recieve by SMS. The phone then transmits a sound code – which the merchant records on a MobiCash reader which confirms the validity of the code. The beauty of this system is that even phones that can’t handle any short-range wireless communications (like RFID) can use it.

Tagattitude actually provided a really good video showing the system in use in Africa:

Update: here’s a fun fact – I made the process by which MobiCash works seem FAR too complicated in the above write-up. It has been in touch, and offered a simpler explanation: “the merchant enters the amount due in the terminal and invites the customer to enter their phone number. The customer receives a phone call from MobiCash and is invited to enter their passcode in their phone and then place their phone in the terminal so that it receives the ‘sound code’ emitted by the terminal which signs the transaction.”

VISA rolls out major NFC trial with NAB in Australia

So VISA and the National Australia Bank have kicked off a massive NFC trial in Australia. Over 500 companies in Melbourne will now accept payment via a simple plastic card that you wave over a reader installed by the check-out. The entire process is automated, and will allow users to make transactions of up to A$100 Australian dollars without needing a PIN or signature. Up until recently, that limit was set at A$35, but VISA bumped the limit up at the same time as this launch.

Ok, so this is only for plastic cards. But the important thing is that the reader technology IS NOW INSTALLED. And it will read NFC from any source, be it card or mobile. And earlier this year, VISA announced a major push for mobile payments.

Another sound-based mobile payments solution, this time in Germany

I was impressed by the African implementation of audio-based contactless payments above. Imagine my surprise when there was a second instance only a short time earlier!

Netherlands company Margento maintains a mobile transaction service based on what it call “Data-over-Voice”, which essentially works the same as the French solution above – your phone transmits data via sound, which is read and decoded by a scanner at the point of sale. It has announced it is entering into a 50-50 joint venture with the services branch of multinational company Bertelsmann, Arvato Services. Margento and Arvato will be using the Data-over-Voice system for loyalty/coupon redemption, payments for products and services, balance top-up, mobile tickets, and electronic gift vouchers.

Mobile payments service for travel hits India from Paymate

Paymate has been doing good business in India. In June it announced a massive mobile application deal with Syndicate Bank. In August, there was a new deal with DirectPay to mobile-enable merchants across India. And now it has announced a new mobile payments service called mSmart in India, with tech developer Galileo. The service allows phone owners to perform credit card transactions over their phones, even on low-end devices or networks with no 3G functions. The service connects the user directly with their bank, where they can enter the required codes and numbers on their device keypad to validate a transaction. The service can only be used for travelling (by air or rail), and is available to almost 5,000 travel agents and 11,000 travel outlets.