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.

Transactions via social networks and mobile gather pace

New research last week suggested that the pace of movement towards mobile payments is gathering. Teamspirit has been tracking the rise of alternative payment methodologies for a while, but it would seem the big banks aren’t necessarily taking the threat of the spread of these systems, through social networks, that seriously.

I’ve blogged previously about the potential impact of Facebook bank, but in the absence of a full commitment to all services the Facebook credits system that has been introduced, and widely used for payment of services such as online gaming, is very reminiscent of the way Paypal leveraged E-Bay to secure a foothold in the payments market to ultimately launch across the entire web. Facebook credits could easily follow the same model and become much more than the virtual currency it is currently.

But apart from these large social networks moving towards transaction it is the tipping point, provided by the adoption of smartphones that we feel will probably see the category explode. The emergence of smart phones, which can simply enable mobile wallets and interact with both marketing databases and payment-settlement networks means these devices can provide a bridge for what are currently e-commerce processors to reach the physical point of sale.

Evidence of this trend emerged earlier this week with news that PayPal and Google have found ways to let accountholders with their payment systems use their handsets to tap those accounts with physical merchants. As always the internet is finding ways of sweeping away all the old traditional structures, this doesn’t mean that the banks will necessarily lose, but their strong survival will in large part rest on an extremely powerful mobile strategy.