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Near Field Communication Trial in U.S. Market

A new trial in Dallas, Texas, bringing together MasterCard, Nokia and retail convenience store 7-Eleven, will see Near Field Communication (NFC) enabled mobile phones equipped with MasterCard "PayPass" contactless payment capability. Up to 500 participants will take part in the six month trial.

A key aspect of the trial is over-the-air NFC payment provisioning using Giesecke & Devrient's (G&D) new chip management offering. Previous trials have relied on card issuers managing the provision of each handset before handing them over to each trial participant -- a method that would be a barrier to the wide scale adoption of NFC payments.

Alongside provisioning issues, established operators have also struggled with two key issues around NFC-enabled payments -- finding the new revenue streams to cover the cost of including the technology in their handsets and, fundamentally, the reduced control that NFC payments bring into their wireless service infrastructure. NFC payments bring banking organizations into the wireless ecosystem and new business models have to be developed to establish each parties control and revenue streams.

ABI Research senior analyst Jonathan Collins says, "This trial tests a trusted third party model, placing G&D's new offering in the middle ground between issuer and operator. Success could help provide a blueprint for other MVNO's and major wireless operators to start to test and deploy NFC themselves."

The trial bears out ABI Research's earlier forecast that while the largest wireless operators struggle to develop business models for NFC payments, it will be innovative MVNOs that will lead the way.

ABI Research studies show that NFC-enabled cellular phones will reach 450 million units in 2011, representing nearly 30 percent of handsets shipped worldwide in that year.

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