Handset vendors have recently announced a new spate of NFC-enabled devices. That should be a cause of celebration for the m-payments market. In some ways it is. Putting NFC-based handsets into the hands of users will of course be key to the adoption of m-payment services. And if the handsets are attractive, even better. But a disarming number of recent announcements make little or no mention of the NFC’s payment capabilities. Instead they major on the information-sharing capability of technology, what is termed “pairing and sharing” of handsets whereby two devices are tapped together as a means to exchange content, for instance when playing games. Another popular application envisaged by vendors is moving music wirelessly from handsets to a speaker or headphones. Or, in another example, using a handset to touch the NFC tag in a poster to receive a link to an advertiser’s website.
All of these examples of new applications are perfectly interesting in their own way and might even in the future generate some revenue. But surely the mobile industry is missing the big picture here? The opportunity from NFC is as a mobile payments technology. Estimates about the size of the global mobile payments market in 2011 vary greatly but one thing unites them: the figures are huge. Juniper Research estimates a market size of US$240 billion this year and US$246 billion is the figure for the Yankee Group. By comparison, Gartner weighs in with a relatively modest US$86 billion. Bear in mind at present only a relatively small amount of these totals come through mobile handsets used at the point of sale, ie through NFC.
But the figures show the size of the potential market and the amount of money that the mobile industry risks leaving on the table if they don’t get their act together. So what’s going on? NXP, who as the leading NFC chipset vendor has a good view of the size of the handset market, cashed in its optimism about a month ago when it downgraded its prediction for total NFC handset shipments in 2011. Its new estimate is about 40 million, or even slightly below that. Some still see their new prediction as too optimistic. Pyramid Research predicts 17.5 million for 2011, although this is a sales rather than a shipments figure.
An edginess has crept in. Vendors need the encouragement of orders for NFC handsets from mobile operators. But the operators need to see a clear business model emerge for mobile money. They must find a modus operandi with the major financial institutions and other significant players such as Google. And they need to work out their model fast. Talk of content sharing and other applications is treading water for mobile operators. The real opportunity from NFC is in handling payments. Now is the time for the industry to fully grasp that and move forward.
Richard Handford, Content Editor, Mobile Money Live
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members