Thanks to Google and Nokia, in particular, near-field communication
technology (NFC) is headed into a phase of "explosive growth" in 2011
that will pave the way for changes in the mobile payments business, iSuppli
said in a Dec. 20 report.
The NFC technology, based on short-range wireless connectivity between
devices, allows for quick financial transactions that some analysts have said
are more secure than credit card payments.
"Imagine paying your bus fare, buying a plane ticket or making an
ATM/credit card purchase simply by holding your cell phone near a wireless
terminal," Jagdish Rebello, a director and principal analyst with iSuppli,
said in a statement. "This is the mobile payment revolution on the verge
of being unleashed by NFC technology. With NFC technology expected to be
integrated into Nokia's cell phones and Google's Android operating system, the
first shots of this revolution will be fired next year."
Worldwide shipments of mobile phones with built-in NFC capabilities are
expected to reach nearly 80 million units in 2011, before rising to 156 million
units in 2013 and 220.1 million units in 2014. The latter figure puts NFC on 13
percent of all cell phones that will be shipped, up from 4.1 percent in 2010.
NFC has been in the news lately, thanks to the Google Nexus S, the company's
second self-branded smartphone (although made by Samsung). Showing off the
Nexus S at the Web 2.0 Summit in November, Google CEO
Eric Schmidt explained that a consumer could potentially walk into a store and
have his or her phone "do commerce" as well know where the consumer
is, with his or her permission. "[NFC] could eventually literally replace
your credit card," he
told the audience.
For
a look at the NFC chip inside the Google Nexus S, click here.
Schmidt added that, to lessen their fraud loss rates, credit
card companies "have a big interest in building out that
infrastructure."
Verizon Wireless, AT&T and T-Mobile also have a big
interest in the technology, and on Nov. 16 announced they were working together
to build out an NFC-supporting
solution called Isis.
"Our mobile commerce network, through relationships
with merchants, will provide an enhanced, more convenient, more personalized
shopping experience for consumers," Michael Abbott said in a statement. A
former GE Capital executive, Abbott was tapped to be CEO
of Isis. "While mobile payments will be at the core of our offering, it is
only the start. We plan to create a mobile wallet that ultimately eliminates
the need for consumers to carry cash, credit and debit cards, reward cards,
coupons, tickets and transit passes."
Over the next 18 months, Abbott added, the trio will roll
out Isis in "key geographic markets."
Initially, Isis will use Discover's national payment
infrastructure and Barclaycard's expertise in contactless and mobile payments,
although moving forward, said Abbott, "Isis will be
available to all interested merchants, banks and mobile carriers."
Nokia, the worldwide leader in mobile phone market share,
has said that all of the smartphones it introduces in 2011 will include support
for NFC—although it's hardly a stranger to the technology. In 2005, Nokia
launched the first NFC-enabled phone, the Nokia 3220, and has since run
commercial trials in the United States,
Germany, Malaysia
and China.
"The successful kick-off of the first NFC Mobile
Payment Field Trial is very encouraging to all of us participating in the
mobile payment value chain. It also demonstrates our confidence in the NFC
technology and the new business model it enables," Joseph Zheng, director
of Nokia's NFC Consumer Solutions in China,
said in a 2006 statement following the China
field trial. Finally, it seems that U.S.
consumers are ready for—or at least will be treated to—the new business models
that NFC makes possible.
"iSuppli believes that 2012 will be the make-or-break
year for NFC," said iSuppli's Rebello. "With all the ongoing and
planned NFC trials in different regions of the world—as well as support for the
technology by major stakeholders, including wireless operators, financial
institutions and banks—it is imperative that business models be established
that allow each of the nodes to see value in offering the service."
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