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U.S. Bank's iPhone Mobile Payment System Targets Travelers

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Certain U.S. Bank customers will soon have an opportunity to try the bank's new Go Mobile payment system, which allows iPhone owners to make contactless payments using a Near Field Communication-equipped case.

New FlexPerks Travel Rewards Visa Signature cardholders in Salt Lake City and Portland, Ore., who sign up for the U.S. Bank service will be the first to test the contactless payment system prior to a broader rollout later this year, the bank announced Jan. 10.

Salt Lake City is already well equipped to handle mobile NFC payments. It is one of two test cities for the mobile carriers' Isis payment venture, and Google is planning its own mobile-wallet deployment there through a partnership with Utah's Associated Food Stores.

Image: Bloomberg News

U.S. Bank customers would receive a U.S. Bank Go Mobile iPhone case with their new card, the bank said. The case, developed through Richardson, Texas-based DeviceFidelity, is equipped with an NFC-chip with an embedded secure element that allows contactless payments at retailers who accept Visa payWave transactions, the bank stated in a press release. The case works with Apple's iPhone 4 and iPhone 4S models.

The case also has an extra battery to extend the phone's charge time by more than 50 percent. The extra power should benefit the frequent travelers who use FlexPerks cards, the bank stated.

Consumers using the system would download the Go Mobile application for their iPhone. The application allows consumers to keep track of their payments and account balances, says Dominic Venturo, chief innovation officer for U.S. Bank Payment Services. The carry case chip is a "true NFC chip" because it allows two-way communication from the bank or merchant back to the customer, Venturo adds.

U.S. Bank targeted the "traveling demographics" because those customers tend to conduct mobile banking and manage their lives through their smartphones, Venturo says.

"This mobile payments solution is a natural extension of that [smartphone use]," Venturo says.

The bank secures payments made through the application with advanced encryption, passcode and privacy protection, zero fraud liability and real-time fraud monitoring. Datacard Group provides the security software for the Go Mobile program, the bank says.

U.S. Bank is a unit of Minneapolis, Minn.-based US Bancorp.

Several players are trying many technologies to allow mobile payments, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group.

"As companies continue experimenting, they have tried chips in or near phones, dongles, stickers, carrying cases and other methods," Ablowitz says. "And the truth is, there will always be multiple solutions available."

U.S. Bank has surely done its research and surmised that its traveling customers would use the Go Mobile system, Ablowitz says. "What we don't know is if the bank wants to spur mobile payments or they view this as a good marketing angle in providing this service to those customers."

Still, there is little doubt that the industry will continue to see efforts made throughout 2013 that combine phones with the payments world, he adds.

While Apple's omission of NFC from its iPhone necessitates the addition of extra hardware to permit mobile payments, this issue is becoming less of a hurdle. For the Isis wallet, this week Incipio Technologies and AT&T announced a payment-capable iPhone 4 cover called Cashwrap

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