NFC (Near Field Communication) based mobile payment services have been around in major communications expos for years, and the Mobile Asia Expo held by GSMA is no exception. NFC is yet another hot topic in many roundtables and keynote speeches.
Franco Bernabe, president of GSMA and CEO of Telecom Italia, quoted estimates that mobile transactions based on NFC may exceed $50 billion in value in 2016. Senior VP of KT (Korea Telecom) Junghee Song also commented that 2012 should be an inflection point of NFC. In 2014, the number of mobile wallet users is expected to reach 340 million.
These bullish estimates don’t come out of nowhere. In the US, Singapore and west European countries, major mobile operators have reached agreements with banks and government organizations, coming out with agreements or strategic alliances such as ISIS, AFSCM, iDA, mpass and TRAVIK. On the other hand, Google and Microsoft have started major promotions of NFC mobile wallets on Android 4.0 and Windows Phone 8. A number of smartphones from Sony, Samsung, Nokia, HTC and RIM have already deployed NFC and more are yet to come.
However, even with these positive trends and promotions, are these estimates too optimistic? VISA started its contactless credit card campaign back in 2008, and has been actively promoting NFC-based mobile wallets recently. These promotions hardly brought any profit for its contactless payment services segment.
Another example would be NTT DoCoMo, which has been trying hard to seek strategic cooperation on NFC services between Asian and global telecom companies. The cooperation would enable NFC mobile transactions, coupons and advertising across the globe, bringing conveniences for users travelling abroad. After several years’ trying, the only business partners announced are KT (Korea Telecom) and China Mobile. At the booth of NTT docomo, staff members commented that detail of the cooperation is still being negotiated.
Besides the dismal market reaction, the inconsistency between different NFC payment solutions can be another barrier. Major security solutions such as embedded security elements, SD card-based solutions and USIM-based solutions each has their own supporters. Google wallet was turned down by three of the four largest telecom corporations in the US. Verizon, AT&T and T-Mobile refused to ship their NFC-enabled Android phones with Google Wallet pre-installed.
Despite the enthusiasts in the industry, many people think it would take more than a few years for mobile payment services to be widely accepted. Ajay Banga, CEO of MasterCard, commented that NFC mobile wallets were “a five-to-ten-year effort” in an interview last year. MasterCard is one of the first business partners of Google Wallet and has been building its own mobile transaction platform for years. In China, due to the popularity of cash transactions, the outdated POS machines and the newly established NFC standard, the market is far away from being ready.
In contrast to the controversy of mobile transactions, NFC has gain greater popularity by elevating interactive experience on smartphones. Android 4.0 and Windows Phone 8 both utilize NFC as an instrument for interaction between devices, simplifying the process of data exchange. Functions like Bluetooth and WiFi setup, “follow” on SNS, opening an app or changing phone settings can easily be triggered by touching your phone with someone else’s or tagging an NFC chip. TecTile NFC tag by Samsung is designed to achieve such functions. A highlight of NFC is the simplified WiFi and Bluetooth setup. Nokia provides a line of NFC Bluetooth headsets and speakers, followed by Motorola’s NFC Bluetooth headset shipping this year. Instead of searching and entering a PIN in your Settings menu every time, Bluetooth connection can be setup by simply touching your phone with the NFC device. Such a setup can easily be done between phones, tablets and Bluetooth headsets, WiFi routers, printers, TVs or even cars.
On the hardware side, besides NXP, more and more chip companies start to provide chip solutions with NFC integrated. Broadcom announced their NFC product line last September with the BCM2079x chips. Combo chips (WiFi, Bluetooth, FM) designed by Broadcom are widely used on mobile devices, including Apple’s iPhone, iPad and iPod Touch. Marvell, another major player in the industry, recently released their combo chip featuring 802.11ac, WiFi, Bluetooth and NFC. It’s expected that the new combo chips with NFC would have a step-up in sales and marketing. With these combo chips, cellphone and tablet manufacturers will be able to utilize NFC function with very little cost and not much effort in redesigning the circuit.