NFC success will take pan-industry cooperation

22 November 2011 | Guy Matthews


If the market for making mobile payments using Near Field Communication (NFC) technology is ever going to take off, 2012 will be the year the ball gets rolling.

But many mobile network operators (MNOs) obviously remain uncertain about what their NFC strategy should be – if anything. They may have got the idea into their heads that NFC is a hype-driven bandwagon, best allowed to roll by.

Analyst firm ABI Research believes that NFC payments will soon be not only a reality, but a mass market phenomenon, particularly in western Europe and the United States. It has warned MNOs in those regions to get their handsets ready to face demand now, or risk missing out on their share of a big market.

As so often in the modern telecommunications era, it’s not the technology that poses the real challenge, but the matter of choosing a business model to make that technology a commercial flyer.

So far we’ve got Google Wallet, as well as MNO-led initiatives such as Citzyi in France and ISIS in the US. These and other pilot schemes could drive the installed base of NFC mobile payment users to more than 16% of mobile subscribers in the US and western Europe by late 2014, says ABI Research. But it says more is needed if critical mass is to be reached, and that partnership across the telecoms world and beyond is the only way this will be achieved.

So are we about to see a host of innovative NFC business models emerging – ones linking mobile operators with major backbone network operators and possibly also involving other third parties, like players from the equipment manufacturing community?

French carrier Orange, a company with no small stake in NFC success, would dearly love to see this. It has said it wants to collaborate with mobile service providers around Europe to help drive the market forward and create a commercial NFC ‘ecosystem’ by the end of next year.

Its NFC strategy will see it first try to establish a base of NFC-compatible devices across Europe, then build a market within individual countries with local partners.

It wants to work not only with service providers, but governments and standards bodies, towards a goal of a cross-border NFC market where any compatible device can be used to purchase goods and services in any country.

As with other next-generation service opportunities, like cloud-enabled applications, cross-industry cooperation is going to be the surest way to avoid a dangerous splintering of standards and models from country to country and service provider to service provider.

Guy can be contacted at guy@transom-enterprises.co.uk