12:18 pm - Friday 20 October 2017

Amidst Uncertainties, NFC Mobile Payments Paving Its Way Into Mainstream

By Shashi K Singh - Mon Aug 20, 2:32 pm

Mobile phone operators are struggling to evaluate the merits and costs of incorporating the NFC mobile payment technology into their handsets. They are also trying to get it on the phones with an application embedded for it, but they are facing some challenges in having it at the point of sales. Although, they are putting their efforts to drive NFC mobile payments into mainstream, but the uncertainty still remains there.

The problem is that, no standard model has emerged so far for processing NFC mobile payments. Perhaps the biggest problem with NFC mobile payment is none of the iPhones and trend –setting companies have embraced the application.

However, the companies are launching their NFC Mobile payment application and collaborating with other companies to process the contactless payments. Subsequently, widespread adoption of NFC mobile payments is also increasing rapidly.

There is tough battle among the application developers in the mobile payment industry. Visa has recently collaborated with payment solution providers, and Google recently launched its NFC-enabled Wallet app to adopt the new wave of NFC technology for instantaneous financial transactions via NFC-equipped Smartphone at the retail stores. In this summer, a mobile payment joint venture created between T-Mobile, AT&T and Verizon Wireless had a trial launch of their NFC-enabled mobile payment app.

According to a report, in association with Citibank, DBS, EZ-Link, and all three mobile operators in Singapore, Gemalto, the smart card vendor, has recently announced that it will launch its NFC based mobile payment services in Singapore.

Recently in the month of June, xpWallet launched an NFC merchant payments product for the mobile operators, retail chain-stores, utility companies, and mobile financial service providers. The product is available with web and handset-based user interfaces, USSD menu, and with and without NFC Tags interfaces (See Full News Story).

Hong Kong-based NFC and smart card reader specialist Advanced Card Systems (ACS) has also moved into the contactless point-of-sale terminal market and has announced that the sample ACR123 POS terminal will be available in October 2012.

Furthermore, various research reports represent various market previews in the favor of mass adoption of NFC mobile payment.  Some analysis and forecasts suggests that there will be 1.2 billion mobile payment users with NFC-enabled handsets worldwide by the end-2016, up from 158.1 million in 2011. Mobile payment volumes are projected to account for nearly $ 1 trillion by end-2016, compared to $159.3 billion in 2011 (See mPayment Market Analysis).

Since, Near Field Communication (NFC) transactions involve a change in user behavior and require collaboration among several stakeholders such as financial institutions, mobile operators, card networks and merchants. So it will take time for both to happen.

According to the Gartner reports, NFC mobile payments will remain relatively low through 2015, but its boom will start from 2016. It is also expected that Web/WAP access to account for about 88pc of total transactions in North America and about 80pc in Western Europe by 2016.

According to a report by Parks Associates, NFC mobile payment application will become a standard feature on Smartphones over next few years. The report says that almost 50% of U.S. Smartphone users find an NFC mobile payment application appealing. Out of them, 16% of Smartphone users already use PayPal or other types of e-Wallet applications as their preferred method of mobile payments. These factors are creating demands for NFC mobile payments and boosting business for merchants, retailers, financial institutions, and mobile operators.

Industry experts assert that the NFC mobile payment market has diversified now into segments while the leading players are still aiming at providing the consumers a single and reliable wallet for both the retail as well as online payments which seems to be quite crucial.

However, the triggering point at which the NFC mobile payment technology will experience a surge in the rate of adoption in the market is yet to come for the industry. Personally, my ultimate thought is that NFC mobile payments will become a reality payment mainstream in a year or two.

In order to make the most of the new leveraging technology enabled by the mobile wallet, merchants and marketers need to reach a critical mass of users to pave the way to hit the triggering point.

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