Visa Inc. is letting iPhone users make mobile transactions by waving their handset in front of a contactless payment terminal.

The payments giant tapped DeviceFidelity Inc.’s In2Pay microSD technology platform and combined it with a specially designed, patent-pending protective case that adds mobile contactless capability to the iPhone 3GS and iPhone 3G.

“The strategy behind this launch is threefold: This technology can enable consumers to use their mobile devices to make Visa mobile payments at merchant locations with contactless acceptance,” said Dave Wentker, San Francisco-based head of mobile contactless payments at Visa. “Frankly, it’s simple, secure and convenient.

“For merchants this means the investment in contactless acceptance enables them to also accept mobile payments,” he said. “The technology enables financial institutions to offer an innovative payment product, allowing account holders to pay by waving their phone in front of a contactless terminal.

“For financial institutions with existing mobile services, such as a mobile banking, this technology enables them to integrate mobile payments and banking.”

Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to digital currency.

The VisaNet processing network is capable of handling more than 10,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants.

Headquartered in Richardson, TX, DeviceFidelity develops plug-and-play technologies that help a variety of institutions to deploy their services and applications on millions of mobile phones worldwide.

Its patent-pending In2Pay microSD platform transforms any mobile phone with a memory card slot into an interactive contactless transaction device.

Mobile contactless payments
According to the Smart Card Alliance, 150,000-plus merchant locations in the United States accept contactless payments, including AMC movie theaters, Walgreens, CVS, 7-11, BP, Arby’s, McDonald’s, Office Depot, PetCo, Subway and the San Francisco Giants’ AT&T Park.

All of those merchants support Visa payWave at their point-of-sale.

The majority of merchants who accept contactless payments fall into the small ticket category where the average transaction size is below $25, such as fast food restaurants, convenience stores, movie theaters, taxis and sporting venues.

“However, with more contactless payment devices—both cards and mobile phones—available to consumers, we hope more merchants will upgrade their point-of-sale terminals in order to accept contactless transactions,” Mr. Wentker said.

In2Pay
DeviceFidelity and Visa collaborated to combine Visa’s contactless payment technology, Visa payWave, and In2Pay technology to transform a mobile phone with a microSD memory slot into a mobile contactless payment device.

Trials are scheduled to start during the second quarter of 2010.

“Visa believes that this partnership has the potential to advance the adoption of NFC, and pave the way for a broad-scale deployment of NFC-enabled mobile devices,” Mr. Wentker said.

“The In2Pay payment solution circumvents the iPhone’s lack of a memory card slot, thus finally providing iPhone users the ability to make contactless transactions,” he said.

By placing a removable In2Pay microSD into the protective case, iPhone users can take advantage of In2Pay’s secure contactless capabilities where contactless transactions are offered.

Uses of the platform range from buying goods in retail stores and at unattended kiosks, to transit ticketing and securely accessing buildings and computers networks.

Visa claims that by extending this functionality to iPhone, it has the potential to accelerate the adoption of mobile contactless payments worldwide, especially in geographies where merchants have already upgraded payment terminals to accept contactless transactions.

The In2Pay platform is designed to stay attached to iPhone and provides a micro-USB slot for users to sync and charge their devices.

DeviceFidelity claims that its In2Pay microSD provides secure one-click access to contactless transactions.

Compatible with smart card industry standards, the microSD can be issued and personalized like traditional smart cards or, in the future, through a secure download of the account information via a mobile network.

DeviceFidelity has recently launched a partnership program allowing application and Trusted Service Manager system developers to upgrade their NFC services by adding support for the In2Pay microSD.

Adoption of contactless payments has been slower in North America compared to other areas around the world, and tends to be more wide spread in metropolitan areas such as the New York tri-state area, the San Francisco Bay area, Denver, Washington and Chicago.

“We believe that our work with DeviceFidelity has the potential to accelerate  mobile contactless payments in the U.S.,” Mr. Wentker said.

“In addition, Visa continues to work with mobile carriers, device manufacturers, financial institutions and technology providers to develop a range of mobile services, including mobile payments, mobile money transfer, mobile transaction alerts and coupons,” he said.