Regardless of which term is preferred, mobile money, mobile payments or mobile wallet being just some of the most popular names that the mobile financial services operates under, the basic objective behind the mobile payments movement is to streamline the payment process by replacing a wallet full of credit cards with a mobile device. The vast majority of these providers except from the names share also a similar technology called near field communication (NFC), which is a “short-range wireless technology that enables the communication between devices over distances of less than 10 cm.” NFC technology if integrated into a phone can be used to make the phone behave like a contactless card (called card emulation) or as a card reader for ‘contactless payments’.

Contactless payments are a faster, more convenient alternative to cash when making small purchases at fast food restaurants, convenience stores, and transport terminals. They are also ideal for remote or unattended payment situations, such as vending machines, road tolls, or parking meters.

Although the technology behind NFC has been around for a while, it’s just starting to gain prominence in the Smartphone market. A recent report by Juniper Research revealed that one in four mobile owners in the U.S and Western Europe will be using NFC for mobile payments by 2017 and worldwide transactions are expected to be worth $180 billion. Even though the technology and the consumer interest are present still there are things need to be done in order for the NFC to be universally accepted and used by consumers.
 After studying NFC and its place in retail business in Europe Andreas Schaller and Thomas J.P. Wiechert in their research found that even though consumer response to the technology has been generally positive there are many different sectors need to be addressed before phones universally have this capability. According to the researchers manufacturers can continue to produce phones equipped with NFC chips but there is not going to be any mass adoption until retailers have compatible registers and mobile carriers and credit card companies come to agreements regarding transaction payments. So it shouldn’t be a surprise to anyone that in 2010 only about 10% of total POS (point-of –sale) terminal shipments included some form of contactless technology. 

Despite any sluggishness, it seems like interest might be on the up – at least in the UK. Research from Barclay’s cards reveals that the contactless payment symbol is now recognized by the majority of British people. In the same report a shift in consumer spending patterns is highlighted   with 61% of people stating their preference on cards over cash for transactions up to £20. Further more, Richard Armstrong Retailer Relationship Director, Barclaycard has stated “The number of people using contactless has rocketed over the last year. We’re now seeing our customers make more than a million such payments per month”. Until recently the majority of the consumers had the false impression that the technology isn’t safe. Research, revealed that 75% of people didn’t know that contactess like all card payments, are insured against fraud. When told that this was the case, more than four in ten said they would be even more inclined to use the technology with fewer than one in ten still having concerns.

Near field communications will be a major game changer in mobile phones. Of course, everything is considered a major game changer in today’s tech climate, but NFC truly presents a rare opportunity. The growing adoption of smartphones and the promise of billions of dollars give strong incentives for companies to invest in this technology

Mellon Market Research & Analysis