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Mobile industry naysays bullish NFC forecasts

Industry executives don't see the technology being mainstream for payments for 2-5 years, despite analyst predictions


Published: 9 March, 2012

READ MORE: Metrics | NFC

Industry forecasts often sound like wishful thinking to those at the coalface of a new market, and NFC-based mobile payments are among the technologies which invite the most controversy. According to Juniper Research, the value of NFC-enabled transactions will treble by 2015 to reach $74bn worldwide, but in a survey of mobile industry executives, most did not expect these payments to be mainstream for another 2-5 years - which gives a very small window to achieve such huge growth.

The more cautious outlook came from a survey conducted by Sybase365 at last week's Mobile World Congress. It found that 81% of respondents did not think NFC would become a driver of widespread adoption of m-payments until 2014-2017, or even later. Fewer than 10% thought NFC payments would become mainstream within the next year.

This is borne out by the policies of many large device and platform makers. Although Google has pushed ahead with its Wallet service, in a bid to lead the move to m-payments, this is still available only with one handset and one operator, and only in the US. Nokia has been a long time NFC enthusiast, but for now, mainly focuses on the 'unbanked' in emerging economies, and on non-payments applications such as person-to-person data exchange or ticketing.

One of the brakes on m-payments growth, according to the study, is consumer nervousness about security, with 38% of respondents saying this will be a major obstacle. "Mobile payments are arguably the leading topic of discussion in the mobile commerce ecosystem," said John Sims, president of Sybase 365, a unit of SAP. The company aims to take a role as an integrator and enabler, bringing operators, financial institutions and enterprises together to devise best practice and create platforms for m-payments adoption.

According to 26% of the respondents, mobile operators will be important catalysts in driving m-payments, while 24% think banks will take the lead role, and 19% favour web platforms like Amazon, PayPal or Groupon. Non-NFC options will be more important in the short term, including remote mobile payments.

"Material advances for mobile payments will only come about when banks, operators and retailers can converge on a business model, and with it true industry interoperability, leading to a widely embraced mobile payments system," said Sims.

Juniper remains upbeat, however, seeing NFC as "one of the principal drivers of the broader m-commerce market". Senior analyst David Snow told TotalTelecom m-commerce is about more than NFC though, saying: "The top three growth rates in order are mobile coupons, then money transfer, then NFC. Four of these segments - money transfer, physical goods, NFC, and coupons - will more than treble in transaction value over the next three years, while digital goods, banking, and tickets will still, on average, double over the same period."

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