Panasonic to bring NFC to IFE as industry faces mounting pressure


Some aviation industry observers have predicted that onboard Near Field Communication (NFC) applications for inflight entertainment (IFE) systems could be years away, but Panasonic Avionics assures it will launch the technology with airlines in the summer of 2015. The IFE heavyweight says it will pair NFC-enabled devices with embedded systems, allowing airlines to push information to passengers during their flight, personalize the experience, and support high-value transactions and purchases.

Enabling NFC on board further reinforces Panasonic’s vision of the “seamless passenger travel thread” and will integrate with the industry’s other NFC initiatives in baggage handling, check-in and airport logistics, says the firm.

The move is very timely. New EMV (Europay, Mastercard and Visa) chip technology standards will start to be enforced on 1 October 2015 in the United States. At that time, the liability for fraudulent charges on non-EMV point-of-sale terminals will shift from the card issuer to the merchant. Supporting contactless EMV payments on IFE platforms could ultimately eradicate any potential liability faced by airlines. And Panasonic assures that its NFC technology for IFE will be EMV-compliant.

However, it’s fair to say that the broader industry has been somewhat slow to respond to the looming liability shift. Indeed, during the recent APEX Technology Conference in Newport Beach, California, a panel of experts revealed that the APEX association is working with other industry groups to request an extension to the deadline.

“The biggest thing here is that once [October 2015] passes, the liability for fraudulent transactions shifts away from the issuer of the card to the merchant who accepts the card in the event that it could have been prevented if more secure payment technology had been used,” explained industry consultant Michael Planey. “And this effects us because, by some estimates, we have a few hundred thousand embedded card readers in seats flying globally right now.”

With US airline ancillary revenue bringing in a staggering $2 billion a year – through fees for checked baggage, extra legroom economy seats, onboard meals, IFE, etc. – Planey noted that switching to more secure inflight payment methods, though potentially costly in the short term, will ultimately prove to be a very good thing for the industry.

But that doesn’t mean it will come easily.

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IFPL’s contactless retail system for airlines

Citing the two year extension of the October 2015 deadline that was recently granted to big oil companies, Planey’s fellow panelist Inflight Peripherals business development engineer Mark Reed said: “It would be good to have an extension if we can arrange it, because it tends to take a while to get things on aircraft [and] by the time you jump through all the hoops for qualification, its gonna be a year or eighteen months away. The other interesting thing with PCI [Payment Card Industry] compliance is that it can take up to six months as well.”

“The airlines have a specific need here because they’re the ones left holding the bag on fraudulent transactions,” added Planey. “But they’re reliant upon the vendors to provide them compliant solutions, the airlines cannot do this themselves. So, the extension is intended to allow the vendors to bring themselves up to a standard that meets the EMVCo requirements and allows the airlines to, unlikely, retrofit but more likely, to start new installations going forward with compliant devices.”

And when it comes to compliant devices, the panel suggested that Chip & PIN point-of-sale (POS) devices and NFC compatible IFE are just the tip of the iceberg.

“The Industry is moving towards a diversity of solutions … the development of Google Wallet, Apple Pay and other forms of mobile technology are also going to effect this quite a bit,” said Planey. Paraphrasing former Google Wallet guru Osama Bedier, he added: “There’s more change coming in payment technology in the next five years then there’s been since the credit card itself was invented.” And whereas in the past, everyone knew what a credit card was and what it did, Planey said the future is wide open.

“Now there are going to be dimensional-less payment technologies, you won’t physically know just by looking at something: ‘Oh, this is how I pay.’ You’re going to have a phone, or you might have a card in your wallet, or you may be able to use your fitbit now … and all of these companies are going to be able to empower transactional data, and with that, financial transactions. NFC is the enabling technology, but, it doesn’t necessarily dictate what the card or the form will look like at the end.”

Also proposed in the session was the formation of an APEX Payment Technology Working Group, chaired by Planey (and comprised of several members of the ad hoc group that has been studying the issue for the past few months), to help collect data on the EMVCo timelines, definitions, technical requirements and to partner with Airlines for America (A4A) in petitioning EMVCo for an extension to the deadline.

Though the jury’s still out on whether or not the airlines will be granted a deadline extension, perhaps the more pressing question from a #PaxEx (passenger experience) point of view is whether or not passengers who will have grown accustomed to Chip & PIN’s rigorous safety standards in the interim will be comfortable using magstripe cards anymore at all, much less on a crowded airplane.

Hoping to lead the entire country “by example”, US President Barack Obama last month signed an Executive Order mandating that as of 1 January 2015, all government-issued credit and debit cards that transmit federal benefits must transition from the swipe-and-sign magstripe cards in use today to the much more secure Chip & PIN cards favored in almost every other country in the world.

He had ample reason for doing so. From 2005-2006 to 2011, when the EMV switchover took place in the UK and Europe, the region experienced a 56% drop in credit card fraud. Asia/Pacific also dropped 52%, but, card fraud in the same period in the United States went up 307%, noted Inflight Peripherals’ Reed.

Some #PaxEx companies, however, need no further incentive. IFPL, for instance, has revealed a new contactless retail system for airlines (pictured above and explained in-depth in this video). Explaining Panasonic Avionics’ decision to deliver EMV-compliant NFC applications for IFE, company CEO Paul Margis said, “We have seen the demand from airlines and their passengers, and after two years of research and development, we are proud to continue our innovation leadership by delivering this latest technology solution to our customers.”

He assures that Panasonic’s technology will allow passengers around the world to both personalize their travel experience and intensify their relationship with their airline in “incredibly valuable ways”, including synchronizing personal data to create “just-for-me” experiences. The system will also recognize a passenger’s frequent flyer status via NFC card or phone to enable access to benefits or promotions such as free inflight Wi-Fi for Gold members. The company’s NFC technology will also enable crew to check in and out for duty. Specific details are expected to be divulged in the coming months.

See our recent interview below with airline point-of-sale device leader GuestLogix about airlines’ changeover to EMV POS devices.