NXP sells contactless payments technology to Gemalto

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NXP sells contactless payments technology to Gemalto

By CAROLINE GABRIEL

Published: 9 March, 2009

READ MORE: Banking

Dutch semiconductor firm NXP continues to get out of the mobile business. Having ploughed its cellphone baseband activities into a joint venture with STMicro, and then sold its share to the new ST-Ericsson firm, it has now transferred its mobile services business to digital security and smartcard firm, Gemalto of France. Most significantly, this includes software and services for the Mifare platform, invented at NXP's former parent Philips, which is widely adopted in the booming market for contactless technology, in applications like mobile payments.

NXP is restructuring in a bid to cut debt and expects the deal to close in the second quarter. Financial terms were not disclosed. Gemalto is working on a software and services platform to link transport companies, mobile operators and banks more efficiently to support phone-based payment systems that can integrate with existing infrastructure. This uses the Mifare4Mobile interface specifications, which manage Mifare-based functions in devices. These specs remain the property of NXP however.

The two companies have been working together on Near Field Communications (NFC) applications, based on SIM cards, for several years, and at the recent Mobile World Congress joined with Infineon to show a Mifare-based system targeted at the key applications - access to transport systems, and payments, using the cellphone rather than a swipe card. Gemalto and NXP carried out a trial of Mifare on the Paris metro in 2007. At the time, Jean-Louis Carrara, VP Business Development at Gemalto, said more than 90% of the commuters in the Paris trial had said they would recommend the service to others. "People carry three, four, five credit cards with them, but usually one is at the top of the wallet," he said. "If you put a smartcard in a phone, that may become top of the wallet very quickly."

The major efforts in NFC to date have been spearheaded by Sony and Philips, whose de facto standard gained significant backing in 2004-5, notably from Nokia and Samsung, which conducted trials with Mastercard and Visa. While Samsung has focused on mobile content functions, most projects have been centered on mobile payments, with NTT DoCoMo the first to launch commercial services in this area based on NFC. The Sony-Philips platform emerged from Philips' Mifare project.

NXP will continue to develop NFC chips and will retain ownership of the Mifare4Mobile interface specifications and the associated intellectual property, and promises ensure interoperability and availability to all market players under the terms released last December.