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Mobile payments at last

Week 15, 2010

NFC is at the same time the most promising and the one needing the deeper infrastructure change. To run NFC full-blown applications such as open payment systems, we need payment terminals to support contactless cards, which might be a long process. We will also need new NFC-compliant handsets. The evolution towards a global contactless acceptance infrastructure will only come in steps. The steps might include infrastructure development for vertical applications, such as caretakers, nurses, or other professionals, or by a limited set of players in the financial institution world, as Barclays / Barclaycard is doing in the UK, or S2P in France. One of the most difficult step in the expansion of NFC will be to reach a global agreement between the banking world and the telecom world. Every pilot shows positive signs that we are going into the right direction. The next heavily publicized pilot, in Nice, France, that will start shortly, will be another demonstration of the huge level of customer support for the technology and the capacity bankers and network operators have to agree on a business model.

An alternative technology is the RF-SIM, communicating on a 2.4 GHz frequency. The advantage of the technology is that, according to its promoters, it works on any handset. However, real size implementations of RF-SIM technology are yet to be seen. And even China Mobile, one of the strongest supporters of RF-SIM, is ensuring it does not put all its eggs in one basket: at the same time it is launching an application in Shanghai on RF-SIM, and one in Hangzhou on NFC.

Finally, the convergence of financial transactions and mobile communication can be achieved without any infrastructure upgrade, with mobile money, the ability to transfer money between mobile phone users, using limited resources such as SIM Toolkit or SMS. So far, mobile money for domestic purpose in the developed world has not been as successful as anticipated, but it demonstrates its efficiency everyday in the developing world with low bancarization and high mobile penetration rates, such as in Kenya or the Philippines.

Mobile payment will happen. We all agree on it. The only questions remaining open are which technology will prevail, when and how different stakeholders will reach an agreement, and when these applications will reach their first billion users.

Thierry Spanjaard

Chief Editor

Smart Insights