NFC has created a lot of buzz lately. But will Near- Field –Communication become the number one solution for all mobile payments? The last 6-12 months showed the mobile payment ecosystem is taking shape with or without NFC. As operators, banks and credit card companies still fight over the biggest piece of the NFC revenue cake, other standards as proprietary and complementary technologies are developing at a much faster pace.
The term “Mobile Payment” refers to all payments and transactions carried out from and through a mobile phone for services, content and physical goods.
1. Credit card payments
Credit card payment is without a doubt the most common mobile payment solution. Apple is one of the biggest providers, using iTunes as the standard method for all payments other than vouchers. Credit card payment is also the standard method for most if not all m-Commerce applications, including retailers, travel bookings and more. One of the barriers for making credit card payments through mobile apps easy, is the requirement of PKI certification. This usually costs the developer up to 50.000 euro or more. Most merchants and developers get around installing a proper in-app solution by using a website or mobile website for the payment part. The disadvantage hereby
is that the user in most cases has to enter a lot of data every time they make a payment.
Credit card payment is without a doubt the most common mobile payment solution. Apple is one of the biggest providers, using iTunes as the standard method for all payments other than vouchers. Credit card payment is also the standard method for most if not all m-Commerce applications, including retailers, travel bookings and more. One of the barriers for making credit card payments through mobile apps easy, is the requirement of PKI certification. This usually costs the developer up to 50.000 euro or more. Most merchants and developers get around installing a proper in-app solution by using a website or mobile website for the payment part. The disadvantage hereby
is that the user in most cases has to enter a lot of data every time they make a payment.
2. Premium SMS payments
Still a very widely used payment method for micropayments is Premium SMS. It is broadly used for instance for parking, bus tickets, content purchases, vending machines, etc. To make this work operators in several countries (Finland, Sweden, Denmark, UK, etc) have changed their standard revenue share models and created what resembles a credit card payment. The main handicap is the limit of about 5 euro per transaction, which restricts long term growth. But the simplicity of premium SMS payments for small and simple things should not be underestimated.
Still a very widely used payment method for micropayments is Premium SMS. It is broadly used for instance for parking, bus tickets, content purchases, vending machines, etc. To make this work operators in several countries (Finland, Sweden, Denmark, UK, etc) have changed their standard revenue share models and created what resembles a credit card payment. The main handicap is the limit of about 5 euro per transaction, which restricts long term growth. But the simplicity of premium SMS payments for small and simple things should not be underestimated.
3. Paypal
Paypal was actually founded based on the concept of mobile money transfers between PDAs before it was evolved to its current service. It’s deployment for mobile payment therefore means a return to its roots. Being an established brand with a trusted technology and over 100m users put Paypal into a pole position for becoming a major mobile payment player. Nevertheless most users have never made use of Paypal on their mobile.
Paypal was actually founded based on the concept of mobile money transfers between PDAs before it was evolved to its current service. It’s deployment for mobile payment therefore means a return to its roots. Being an established brand with a trusted technology and over 100m users put Paypal into a pole position for becoming a major mobile payment player. Nevertheless most users have never made use of Paypal on their mobile.
Paypal is used as the standard method for Blackberry World. But still most Paypal transactions take place on eBay and Skype. Recently Paypal sued Google for copying their mobile payment technology. Paypal however, is not likely to benefit from the trial in terms of growing usage of the platform. Yet Paypal has a massive growth potential in the mobile payment space thanks to its secure and easy payments, leveraging direct links to bank accounts.
4. Google Wallet
Wherever there is an opportunity to collect customer data, Google will come running. For the last couple of years Google has slowly grown Google Checkouts as a solution for online stores. Now they are rapidly moving into the mobile payment space leveraging the growth of Android. The most recent initiative is a partnership with several of the top banks in the US, providing built-in NFC chips and NFC stickers attached to the back of Android devices. A lot more will certainly follow soon.
Wherever there is an opportunity to collect customer data, Google will come running. For the last couple of years Google has slowly grown Google Checkouts as a solution for online stores. Now they are rapidly moving into the mobile payment space leveraging the growth of Android. The most recent initiative is a partnership with several of the top banks in the US, providing built-in NFC chips and NFC stickers attached to the back of Android devices. A lot more will certainly follow soon.
5. Square
Thanks to the partnership with and support from Apple, Square as become a leading player in the mobile payment space. One of the interesting things about Square is that it enables small businesses to accept credit card payments in a very cost efficient way. The only props needed are a standard iPad, iPhone or Android device and a small reader that can be plugged into the audio jack.
Thanks to the partnership with and support from Apple, Square as become a leading player in the mobile payment space. One of the interesting things about Square is that it enables small businesses to accept credit card payments in a very cost efficient way. The only props needed are a standard iPad, iPhone or Android device and a small reader that can be plugged into the audio jack.
6. Local partnerships/ initiatives between operators and banks
Some markets have been quicker than others to establish mobile payment solutions. First and foremost Japan and Korea act as the leaders in this space. Similar initiatives in Belgium and France put those local markets ahead of the game on a European level. Partnerships and standards though are usually local with limited potential to grow beyond their domestic market.
Some markets have been quicker than others to establish mobile payment solutions. First and foremost Japan and Korea act as the leaders in this space. Similar initiatives in Belgium and France put those local markets ahead of the game on a European level. Partnerships and standards though are usually local with limited potential to grow beyond their domestic market.
Other interesting companies to watch for mobile payment include mFoundry, Zong, Boku, etc.
So what about NFC then?
NFC is really an enabler and not a mobile payment platform or method. The success of NFC will depend on device manufacturer adopting the technology as well as the integration of banks and credit card companies. It is also interesting to note that the implementations are primarily being driven by companies that monitor and store customer behaviour and data (e.g. Google). This may not always be in the interest of the end users. Nevertheless, penetration of NFC is increasing and we believe that it has a good chance to become a key enabler for mobile payments in the future. In the meantime however, mobile payments will happen with or without NFC.
NFC is really an enabler and not a mobile payment platform or method. The success of NFC will depend on device manufacturer adopting the technology as well as the integration of banks and credit card companies. It is also interesting to note that the implementations are primarily being driven by companies that monitor and store customer behaviour and data (e.g. Google). This may not always be in the interest of the end users. Nevertheless, penetration of NFC is increasing and we believe that it has a good chance to become a key enabler for mobile payments in the future. In the meantime however, mobile payments will happen with or without NFC.
