Contactless mobile payments closer to a reality

Over the last few weeks there have been a flurry of much firmer announcements suggesting there will be a significant roll out of Near Field Communications (NFC) services across the UK, but with a real focus on scaling up for the Olympics in 2012.

Google's Nexus S has been making a lot of headlines for a few months. Built as a mass market smartphone its integral NFC chip has got tongues wagging. However, two recent announcements have meant the NFC subject's exploded into life.

First was Orange's partnership announcement with Barclaycard that will mean Everything Everywhere customers will be able to take advantage of what is claimed to be the UK's first mobile payments service. NFC hasn’t been embraced by lots of brands yet, but is already installed in Pret a Manger, Little Chef and National Trust, however the roll out gathered pace with McDonalds announcing they would be implementing the technology and Everything Everywhere stated that the proposition could definitely extend to T-Mobile customers. With O2 having already tested mobile contactless transport payments as a replacement for Oyster Cards it's a fair assumption that they may well be next up as it would be a comfortable fit with their O2 Money product.

The second big announcement was from Apple who would appear to be shaping up to make mobile payments a key launch message for both the iPad 2 and the iPhone 5. The firm states that both devices are being built with NFC chips installed. It is more than likely the payment system would integrate with iTunes which already holds users' card details and while it's probably going to launch first in the states, pressure from payment service providers in the UK as terminals grow in number will see the move to the UK quickly.

This move to the UK will undoubtedly be galvanised by the 2012 Olympics which seems to be shaping up to be the 'mobile Games' with many of the food outlets and transport hubs aiming to be fully contactless enabled and also BlackBerry announcing their intentions to join the game.

Contactless payments by mobile phone could become mainstream in 2011

Something odd happened in the past couple of years. Everyone stopped asking whether it’s the year of the mobile. That’s probably because mobile has now become mainstream and with the mainstream comes the tsunami of innovation, not least in the financial services sector.

This week Nokia announced that they were making a huge move in the mobile payments market to move closer to contactless payments with the launch of their C7 phone in 2011. The rumours are that the Near Field Communications (NFC) technology required are also appearing in patents being filed by Apple for the new generation iPhone and in addition Eric Schmidt, Google’s CEO has also announced that they working with NFC technology for the android platform. So does this mean an era of contactless payments may be just around the corner?

Alex Kwiatkowski - Principal Analyst in Ovum's Financial Services Technology Team voiced some doubts stating that 'While the ecosystem is evolving, old concerns (10+ years) over a viable business model for sustainable/decent revenue remain' he went on to say 'Nokia pulled its 6216 device (using NFC & SWP) in Feb '10, due to current state of NFC ecosystem and poor consumer experience.' So Nokia definitely have some credibility issues when it comes to the technology and with Symbian still performing so poorly, the issue is compounded.

However as always with Google and Apple in the frame the play becomes more serious from a software perspective and with Nokia’s ability to flood the market with low cost hardware, the battle could be fought on two fronts.

Ecosystem and revenue concerns there may be, but with 3 such massive players making a play and a whole host of bit part players around the edges, you get the impression that there must be something in it. Personally, the sooner I can get rid of my wallet the better so I’m hoping we’re not far away.