[Part 1]
Contactless (wireless) electronic payment transactions using your mobile device is on the verge of exponential growth as standards and contactless technology has evolved over this past decade. Near Field Communication (NFC) is the contactless technology that has made its way into the forefront and will be integrated into “soon to be released” handsets for making mobile payments, also called m-Payments.
According to a report by Research and Markets, in 2009 the value of all mobile payment transactions in the U.S, including SMS-type transactions, was $5.2 billion, constituting 6% of the global value of mobile payment transactions. This is expected to reach $56.7 billion in 2015, growing at a CAGR of 49.2%. The market share of the U.S.
Carriers, handset manufacturers, banks, merchants and credit card companies are stakeholders that have an interest in bringing this technology to the market, and have been conducting trials in North America for several years. Now with the formation of ISIS, a joint venture (JV) between AT&T, T-Mobile, Verizon, Discover Card and Barclays, and the announcements in 2010 of several handset manufacturers supporting NFC in certain models, the initiative is moving forward and NFC-based mobile payment is imminent. Sprint Wireless, however, is not presently part of the ISIS partnership and may be heading down a similar yet separate path.
Sprint Wireless is offering a Sprint Mobile Wallet that will be preloaded on Sprint Wireless phones beginning sometime in 2011. MasterCard and Visa, both missing from the ISIS partnership as well, will provide credit card infrastructure support along with Amazon Payments. CardinalCommerce is hosting/facilitating the transactions between the customer and the merchants for Sprint Wireless. With carriers in North America now forging ahead with NFC-enabled phones, it’s now up to the consumer to start taking advantage of this technology’s value proposition – secure payments, flexibility and convenience.
The credit card industry for over nearly six decades has progressively evolved the financial transaction system, making credit card and then online banking a safe and secure purchasing vehicle for consumers – quite a feat that has paved the way for the introduction of mobile payments using NFC. The new phase we’re entering into now is to convince the consumer (again) that conducting a financial transaction for goods and services is easy, safe and secure, but using the mobile phone rather than a “piece of plastic” (or paper).
As the digital age continues to influence our daily lives and “apprehensive” consumers begin to use mobile payment technology, the adoption rate for mobile payments will increase. What is the market potential for mobile payments and what is the value proposition that will influence and motivate the ecosystem?
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