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How Would You Like to Pay for That? Cash, Card or Phone? Philips and Visa Usability Study Shows Consumers Like the Convenience of Contactless Payment Using Near Field Communication.

LAS VEGAS -- Royal Philips Electronics (NYSE:PHG)(AEX:PHI) and Visa International released the results of a new usability study of Near Field Communication (NFC) and contactless payment technology, which showed that consumers like the convenience, ease of use and "coolness" of making transactions with their mobile phones.

NFC facilitates secure, short-range communication between electronic devices, such as mobile phones, PDAs, computers and payments terminals via a fast and easy wireless connection. Combined with contactless payment technology, NFC can enable secure and convenient purchases with a mobile device. Using an NFC-enabled mobile phone, participants in the usability study conducted transactions in several different scenarios -- making a purchase at a coffee shop, downloading a movie trailer in a DVD store, shopping from a TV at home, and buying concert tickets from a smart poster.

Test results and implications

Participants in the usability study accepted and appreciated the concept of incorporating information transfer and secure payment functionality into mobile phones. Retail purchases with a mobile phone were particularly well received, as participants found Philips NFC technology and Visa contactless payments easy to understand, convenient and fast.

Study highlights include:

--Coolness factor of mobile transactions. Users enjoyed downloading content from NFC "smart" posters and responded favorably to the idea of purchasing tickets through posters. They described the technology as "cool" and "awesome" and liked the idea of then being able to use the phone to gain entry into an event.

--Mobile payment is easy to use. Consumers found it easy to make contactless payment using the mobile phone. Learning curves were very short, with all participants interacting confidently with the mobile phone and payment terminals. Consumers found it intuitive to initiate a transaction by holding up the phone to the terminal, as an alternative to presenting a payment card.

--Mobile payment is convenient and fast. The test participants enjoyed the ease of use, convenience, speed of contactless payments on an NFC-enabled phone. They also liked the idea of not always having to carry a wallet or purse.

--"Receiving" transactions should be automatic. When using the phone to make a purchase or download information, the transaction should be automatic; participants liked the simplicity of transactions that were initiated just by holding the mobile phone to an NFC-enabled reader. However, for "sending" applications, such as selling a ticket to a friend, users may prefer to initiate the transaction with a command.

--Need for clear, consistent mark. Test participants generally looked to find a mark to indicate exactly where an NFC transaction could take place. The most intuitive place for a mark was directly over the communication point. Users did not want to guess where and how to orient their mobile phones to complete a transaction.

"The usability study clearly demonstrates that consumers like the simplicity of using NFC to access and securely pay for entertainment, information and services while on the move," said Christophe Duverne, vice president and general manager, Identification, Philips Semiconductors and Chairman, NFC Forum. "Now it's up to us -- the industry -- to cooperate effectively and deliver on the promise of the technology by driving standardization and building the ecosystems that will ensure commercial success. And of course, we must keep the end-user experience first at all times."

"Visa was very pleased with the results of the study, which demonstrated not only that the participants reacted positively to contactless payments with mobile devices, but also that there is real excitement among consumers," said Gaylon Howe, executive vice president, Consumer Product Platforms, Visa International. "The study provides a strong validation for Visa as we continue to drive acceptance for contactless technology, which will be critical for widespread uptake of mobile payments."

Philips and Visa conducted the study in December 2005 in Atlanta, Georgia. The research is part of the companies' efforts to develop programs that bring convenience, ease of use and security to mobile transactions. The purpose of the research was to take an in-depth look at usability and learn about consumer behavior when interacting with the technology.

Editors' Notes

There are currently several major trials underway around the world, with more expected throughout the year, to understand the benefits NFC technology can bring to people's everyday lives.
-- Philips Arena Atlanta, USA
 Since December 2005, Visa and Philips have been working
 together on a major NFC trial that has been underway at the
 Philips Arena stadium in Atlanta, Georgia, allowing sports
 fans to easily buy goods at concession stands and apparel
 stores. Additionally they are able to access and download
 mobile content such as ringtones, wallpapers, screensavers and
 clips from favorite players and artists by holding their
 NFC-enabled phone in front of a poster embedded with an NFC
 tag. Other partners include Nokia, Cingular, Visa, Atlanta
 Spirit, Chase and VivoTech.

 -- City of Caen, France
 In October 2005, Philips, in collaboration with France
 Telecom, Orange, Samsung, retailer Group LaSer and Vinci Park,
 commenced a major multi-application NFC trial in Caen in
 Normandy, France. During the six month trial, 200 Caen
 residents will use Samsung D500 mobile phones with an embedded
 Philips NFC chip as a means of secure payment in selected
 retail stores, parking facilities and to download information
 about famous tourist sites, movie trailers and bus schedules.

 -- RMV, Germany
 Since April 2005, Philips has been working with Nokia and
 German public transport network operator Rhein-Main
 Verkehrsverbund (RMV) to trial an NFC ticketing solution that
 allows RMV's customers to use NFC-enabled Nokia 3220 phones to
 buy, store and use tickets around the bus network in the city
 of Hanau, near Frankfurt.

 -- Taiwan Proximity Mobile Service, Taiwan
 Since July 2005, Philips has been working with Taiwan's
 Proximity Mobile Transaction Service Alliance (PMTSA) to
 demonstrate a BenQ prototype mobile phone capable of making
 secure payments using NFC -- a milestone in the plan to deploy
 NFC-enabled mobile phones for access to Taiwan's public
 transport network.


The results of Visa and Philips' US pilot project, including consumer responses, are expected this summer, providing even more insights and information about the consumer experience with NFC applications.

Visa also recently announced a significant milestone with more than 20,000 Visa contactless point-of-sale locations in the United States. More merchants in segments such as quick service restaurants, convenience stores, movie theaters and gasoline stations are expected to continue to deploy contactless payment terminals, extending the potential for mobile payments with an installed acceptance base.

About Visa International

Visa connects cardholders, merchants and financial institutions through the world's largest electronic payments network. Visa products allow buyers and sellers to conduct commerce with ease and confidence in both the physical and virtual worlds. As an association owned by 21,000 member financial institutions, Visa is committed to the sustained growth of electronic payment systems to support the needs of all stakeholders and to drive economic growth. For more information, visit www.corporate.visa.com.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE:PHG)(AEX:PHI) is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 30.4 billion in 2005. With activities in the three interlocking domains of healthcare, lifestyle and technology and 159,200 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions. News from Philips is located at http://www.semiconductors.philips.com.
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Geographic Code:1USA
Date:Apr 5, 2006
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