Tyfone is putting the pieces together for a commercial mobile wallet offering, forming an alliance with First Data.
Tyfone has developed an offering similar to what's known as near field communications that lets users tap their phones against a scanner at a cash register to pay for something. But rather than building the technology into the phone or on the SIM card, Tyfone builds it on a MicroSD card.
That makes it easier to remotely make changes to the card over the air and could make the concept more palatable in the U.S., where MicroSD cards are more universal than SIM cards. People with Tyfone's product can use the MicroSD card to store other data like music, in addition to the mobile payment technology.
The deal means that First Data, which handles transactions, will supply Tyfone's cards and the software platform that helps manage the cards to merchants and financial institutions.
The companies, however, have not announced any deals with critical partners: retailers or banks that have committed to using the cards.
There are a few scenarios in which a retailer could use the cards, said Siva Narendra, chief technology officer of Tyfone. A merchant like Starbucks, for example, could give or sell the cards to customers who would use them like they already use prepaid Starbucks cards. Starbucks, which sells music in addition to coffee, could even preload songs onto the MicroSD card.
Banks could also issue the Tyfone cards in place of existing debit or credit cards.
Tyfone says the scanners are becoming more common. "Contactless reader infrastructure deployment is its own lifecycle. That's being seeded by the fact that plastic cards--there are 20 million plus--have contactless payment capabilities," Narendra said. Some credit cards already feature the same kind of chips as Tyfone's MicroSD cards, letting users tap them at the cash register to pay.
In addition, Tyfone expects that its technology might first work in the transportation sector. There are already 13 major cities in the U.S. that either have the contactless payment infrastructure in place or are in the process of installing it this year, he said. That means that a transportation agency could allow riders to buy Tyfone's MicroSD cards and tap their phones when entering a bus to pay for the ride.
End-users can reference an application on their phones to check the balance of a prepaid card. A Tyfone card issuer can set up security in various ways, including requiring a user to enter a password before the card is debited.
Users won't need to buy additional Tyfone cards, swapping them in and out of the phone when necessary, if they want to use the cards for multiple payment purposes. "Let's say you have a debit card and tomorrow you get a prepay card. You don't need to change the card. You can get the application downloaded into the security chip remotely," Narendra said.
Tyfone and First Data aren't alone in working on this type of concept. Earlier this year Visa signed a deal with DeviceFidelity to market a similar MicroSD card system. It is designed to let end-users make Visa payments at any retailer that can scan a contactless device.
Tyfone may also have some competition from phone applications. For instance, Starbucks is trialing an iPhone app that serves as a prepaid card. When users approach the register in a store they bring up the application, which features a barcode representing their account. The clerk scans the barcode, which debits the user's account.
Companies have been working on the idea of using a mobile phone as a wallet for years. In late 2006, Nokia formed a joint venture company designed to encourage near-field communications technologies. But in December last year, it sold its share in the company.
One of the biggest barriers may have been the idea of building the technology into the hardware of mobile phones or on SIM cards, which requires all the other parties involved in the technology to work with mobile operators. "That's what has put the breaks on NFC," said Narendra. Plus, in the U.S., some operators don't use SIM cards.
Tyfone and First Data say they hope to start offering products to end-users in the second half of this year.