Cell Phones and a Cashless Society

Banks and Mobile Operators to Go Head to Head for Mobile Payments Business

NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash.

January 14, 2010

NearFieldCommunicationsWorld.com - Banks and mobile network operators are set to go head to head in a bid to control the market for NFC mobile payments services, according to a new research report published today.

"NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash," says Sarah Clark, editor of NFCW and author of the new report. "What hasn't yet been decided, however, is who will win the battle to provide consumers with their new hi-tech mobile wallets."

So far, banks and operators have worked together to run field trials of NFC technology but, the report predicts, the emergence of new ways to add near field communication technology to existing mobile phones means they will soon find themselves in competition for control of this important new market.

"New products are now available that enable NFC functionality to be retrofitted to current mobile phones. These will enable banks to deliver NFC services to their customers without the involvement of mobile network operators, and this has fundamentally changed the balance of power between banks and operators," Clark explains.

While a collaborative approach between banks and operators may work in some instances, 'NFC: The Road to Commercial Deployment' predicts that most commercial deployments will have only one lead player. And that lead player will not necessarily be a mobile network operator.

"Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field," says Clark. "Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market."

"We now expect a competitive market to develop between mobile operators and banks in each market," Clark adds. "Here, overall leadership will not be determined by what business the company is currently in. Instead, it will be based on their overall business strength, on how well they execute their NFC strategy and on the alliances that they put into place."

Strong banks, for instance, will be able to make deals with weaker mobile network operators. And strong mobile network operators will make deals with weaker banks so that, ultimately, who ends up as a lead player in each market will depend not on whether they are a bank or an operator but on key factors such as:

• The strength of the company’s existing presence in its core market.


• How loyal its customers are.


• The level of risk it is willing to take in terms of investing in the deployment of NFC services.


• How successful it is in developing an attractive business proposition for potential key service providers and how quickly it manages to sign them up.

Although the widespread introduction of commercial NFC services can begin from early 2011, another year of field testing will need to take place before the trials this year will be different to those that have gone before.

"This year's trials will not be simple technical tests," says Clark. "Instead they will be pre-commercial trials, designed to enable NFC service providers to finalize their business plans."

The UK, France, United Arab Emirates, Singapore, Taiwan and Korea will be the first countries to introduce NFC commercially, the report predicts, beginning in 2011. The US, Canada, Spain, Germany, Italy, Norway, the Czech Republic, Romania and Australia are also expected to be early adopters of NFC.

'NFC: The Road to Commercial Deployment' examines the international market for near field communication technology from 2010 to 2014. It is published by SJB Research, a UK company specialising in analysing the market for emerging technologies in the mobile and payments fields.

The report provides detailed guidance for banks and mobile operators looking to introduce NFC successfully and for companies wishing to offer NFC-based services to their customers. It includes an analysis of the technical and business challenges that still need to be resolved and explains how mobile operators, banks, handset manufacturers, industry suppliers and key potential NFC service providers will resolve those issues during 2010.

'NFC: The Road to Commercial Deployment' explains the key factors that will decide which companies will become the mobile wallet market leaders and details what the first NFC services will need to offer in order to succeed.

One of the Players Must Take on the Risk Before NFC Can Succeed, Says Founder of Japanese Mobile Wallet

January 21, 2010

NearFieldCommunicationsWorld.com - Carl Atsushi Hirano, the driving force behind the introduction five years ago of Japan's Osaïfu Keitai mobile wallet service, has set out his thinking on what was required to make the service a success and what it will take to successfully introduce NFC services in other countries.

In the foreword to a new report on the Japanese mobile wallet service Osaïfu Keitai, Carl Atsushi Hirano, president and CEO of consultants NetStrategy and the head of mobile wallet services at NTT Docomo during the launch of the operator's Osaïfu Keitai service five years ago, has set out his thinking on what it will require to launch NFC services in other countries and why the technology has been a success in Japan:

"The first reason is that I researched the dissatisfactions and inconveniences of daily life. I'm convinced that these 'dissatisfactions' and 'inconveniences' are the mother and father of every new industry. Why do I have to have so many loyalty cards or credit cards in my wallet?

"Everything started with this idea. After a theft I would lose all of these cards, but if all of my cards are integrated on my mobile then all I need to do is make one phone call to my telephone operator to stop them. In order to create such a world, I created Osaïfu Keitai.

"I am certain that there is a demand for such a market the world over, as much in Europe as in the United States."

"It is important to construct an ecosystem from which all participants of the value chain — mobile operators, providers of contactless card technology, companies managing the services of the real world, such as retailers, public transit companies or beverage dispensers — earn a profit," Hirano adds.

"However, to create this ecosystem, we need to solve the hen or egg causality dilemma, as Andrei Hagi (a professor at Harvard Business School) explained in his Multisided Platform Theory, and one of the players has to take the risk to create and coordinate the ecosystem," he adds.

"In Japan, NTT Docomo took on the role of the market coordinator taking on a high risk. I wish, from the bottom of my heart, that another company or brave person will give birth to this ecosystem in Europe and in the United States. I am impatiently waiting for the day when I can buy a café au lait and a croissant in a Parisian café with my Japanese ''mobile.'"

According to the report, Mobile Felica in Japan, there are now a total of 60 million consumers equipped with Mobile Felica-enabled handsets. Of these, 35 million are customers of NTT Docomo's i-mode service, 10 million are signed up with KDDI and a further 10 million with Softbank Mobile.

Visa Europe to Invest €200 Million in Development of Contactless Payments by Card and Mobile

February 4, 2010

NearFieldCommunicationsWorld.com - "M-commerce is a strategic priority," says Visa Europe's head of UK and Ireland, "we are working and talking with all the mobile operators and handset manufacturers to develop standards for payment on mobile phones."

Visa Europe is to spend €200 million on R&D for low-value contactless payments by card and mobile device, says Marc O'Brien, Visa Europe's head of UK and Ireland.

The information was revealed by O'Brien during a visit to Dublin to brief Irish banks about the potential of contactless cards and NFC payments.

"Ulster Bank and Halifax now issue Visa Debit cards to their customers," a Visa Europe spokesman told NFC World. "Visa Debit is an innovation path to both contactless and mobile payments. Visa Europe discussed the successful trials it has had with contactless payments in other markets and shared information about them with Irish banks."

A report in Irish tech news publication Silicon Republic provides further details on Visa Europe's strategy and the size of the investment it is willing to make in the contactless and NFC market:

"Looking to the future, O'Brien said Visa is hard at work researching and developing new ways for people to pay, and one of the areas being given serious consideration is contactless payments via mobile phones using near field communication (NFC).

"For us, m-commerce is a strategic priority, and we are working and talking with all the mobile operators and handset manufacturers to develop standards for payment on mobile phones."

O'Brien says Visa spent €800 million over the last five years on R&D, out of which €170 million went into chip and PIN. "We envisage spending a further €200 million on R&D into low-value contactless payments by card and mobile device."

An earlier newspaper report that the Irish banks are looking to implement NFC as early as 2011 has been dismissed, however.

"The report was slightly overzealous, there are no confirmed plans to launch NFC mobile payments next year," says the Visa spokesman.