Skip to main content

Mobile Phone Contactless Payment Models

Card-based contactless payment systems may be new, but the signs already point to a coming migration from cards, with their limited functions, to mobile handsets making use of Near Field Communications (NFC) to enable a whole range of sophisticated services including, but not limited to, contactless payment.

This migration will offer market participants a constantly changing and expanding set of opportunities to cement customer loyalty and reap the benefits of co-branding and cross-promotion. When ABI Research first examined the contactless payment market one year ago, it forecast that over 10 million contactless payment cards would be issued in North America during 2005. As the year drew to a close, that forecast proved highly accurate. With another year's worth of insight into market dynamics, the latest update concludes that over 40 million cards, mini-cards, and fobs will ship globally in 2006.

"Contactless commerce is on a steep growth curve, but cards are only an intermediate step," says Erik Michielsen, director of ABI Research's RFID and M2M practice. "By 2010, more than 50 percent of cellular handsets � some 500 million units � will incorporate NFC capabilities that will be used not only for payments at points of sale and remotely, but also to access information from smart objects. Imagine, for example, seeing a poster advertising a concert you want to attend. Hold your phone near the poster, and it connects you to a website where you buy your tickets, download them to the phone, and tap the phone at the turnstile to enter the show."

That one example suggests the multiple opportunities that will arise as this technology moves from card to phone. "Technology vendors, cards issuers and a wide variety of service and product providers will have to think holistically," says Michielsen, "not just about the technology�the silicon, antenna, memory and software�but about how to use the wealth of real-time usage information that more sophisticated systems can provide."

Michielsen adds that a key long-term challenge for the industry will be the management of customer relationships and brand identity across integrated payment platforms. "Within NFC, carrier and issuer cooperation has been inconsistent thus far, but consumer expectations will create increasing market pressure for industry players to find common ground on mutually agreeable business models."

Popular posts from this blog

Bold Broadband Policy: Yes We Can, America

Try to imagine this scenario, that General Motors and Ford were given exclusive franchises to build America's interstate highway system, and also all the highways that connect local communities. Now imagine that, based upon a financial crisis, these troubled companies decided to convert all "their" local arteries into toll-roads -- they then use incremental toll fees to severely limit all travel to and from small businesses. Why? This handicapping process reduced the need to invest in building better new roads, or repairing the dilapidated ones. But, wouldn't that short-sighted decision have a detrimental impact on the overall national economy? It's a moot point -- pure fantasy -- you say. The U.S. political leadership would never knowingly risk the nation's social and economic future on the financial viability of a restrictive duopoly. Or, would they? The 21st century Global Networked Economy travels across essential broadband infrastructure. The forced intro...