DNB is the first bank in Norway to deploy a new Near Field Communication-based mobile payments scheme that will eventually involve most of the country's largest financial institutions.
"It is good timing for a [mobile] wallet here. The large retailers are almost ready and the Norwegian smartphone market is mature," says Ingjerd Blekeli Spiten, executive vice president for e-business at DNB.
The wallet is operated by TSM Nordic, a company jointly owned by DNB and Telenor, Norway's largest mobile carrier. Telenor has about three million subscribers in Norway and 150 million globally. DNB has about two million customers.
Gemalto will provide technology services, including the Allynis TSM Hub, integration and deployment support for mobile contactless payments and ancillary mobile commerce services.
The TSM Hub acts as a single connection point that mobile operators, banks, public transportation authorities and other companies can use to provide mobile paymentsan effort to build an interoperable payments system across Norway.
DNB is the first to support the mobile wallet, with Sparebank 1 Group, Skandiabanken and Fana Sparebank planning to roll out the wallet over the next six to 12 months.
About 30% of the payment terminals in Norway are ready to accept contactless payments, a percentage that is expanding quickly, according to DNB, which also plans to support the mobile wallet in other countries. Its vendor Gemalto has also provided technology for Isis and the Merchant Customer Exchange in the U.S., and for mobile payments in Taiwan.
The Norwegian mobile wallet is in pilot with about 150 people in Norway, with a formal launch planned for April.
"We're gradually adding more people each week," Blekeli Spiten says. DNB and Telenor formed the joint venture this year, and have previously collaborated on other mobile commerce technology.
One missing element at this point is local SIM cards to store on the smartphones to power the wallet. The wallet is still using SIM cards from Iceland, and DNB expects Norwegian SIM cards will be available within the next couple of weeks. The wallet will launch with Visa, and MasterCard acceptance is expected in the second quarter of 2014.
"When taking about NFC payments, most people focus on the need to have NFC-enabled handsets and point of sale terminals. Some tend to forget that this is still not enough, and you need to have an NFC-enabled SIM card as well," says Zil Bareisis, a senior analyst at Celent. "All of the statistics showing the growth of NFC-enabled phones don't mean much unless those phones come with the right SIM card. Given that those cards are more expensive than traditional SIM cards, operators sometimes are reluctant to put them into the phones."
DNB plans to eventually provide value-added services such as marketing and cross-selling. "Coupons are not as prevalent in Norway as in the U.S., but we are looking at adding loyalty programs to the wallet," Blekeli Spiten says.
One example of a value-add could be the pairing of mobile payments with other financial services at the point of sale. "If you are buying a bike in a store, we can use the wallet to offer other services, such as insurance for your bike," Blekeli Spiten says.
The wallet's brand will be ValYouconsumers will download the ValYou app to use the wallet, though the wallet may carry other brands going forward as different banks and other stakeholders participate.
Interoperability and broad participation are considered important elements in getting merchants and consmers on board; the use of cash for transactions is down to about 6%, according to Euromonitor . "The success in getting rid of cash is enhanced by having all of the banks on the same system," Blekeli Spiten says
DNB and Telenor don't plan to use other technology such as QR codes or Bluetooth Low Energy (BLE) to power payments. "We believe NFC is the best technology in this market. It is the most secure method over bar codes and other types of applications," Blekeli Spiten says.