Simon Collins, WeDo Technologies’ vice president for business consulting, on the pluses and minuses of NFC

The combination of payment services plus the ubiquity of mobile has been hyped as the perfect marriage to generate revenues. Mobile operators are alive to the possibilities that this mix can provide, and have resurrected near field communications (NFC) as one way to realise and consolidate that union.

However, despite the numerous benefits NFC can offer, it poses some serious issues that operators must resolve before it becomes a mass market offering.

Changing market factors NFC has not received the market uptake that was originally expected of it when it comes to mobile payments, but it is not a new concept and not even a new technology, having existed in the form of RFID for several years. The deployment has been slowed by the vast investment it requires and a complex ecosystem of merchants, financial institutions and mobile operators having to agree how NFC will work and how the revenues from mobile payments will be shared.

However, the ascendency of the app store model and the increasing penetration of smartphones has reinvigorated interest in mobile payments via NFC, and put the technology firmly back on the agenda. It has received the backing of industry powerhouses Nokia, Samsung, LG, RIM, Apple, Microsoft and Google.

Several trials, pilots and tests have started and a number of commercial NFC implementations, and related services, are now in operation. It seems that NFC is now on the brink of becoming a mass market reality. So this would be an apt time for the industry to study some of the underlying issues that NFC raises in terms of fraud and revenue assurance.

Grasping risks and issues To fully understand the risks that NFC poses from a revenue assurance perspective for operators, it is important to fathom that the concept behind NFC is to make the interaction as straightforward as possible. Consumers simply touch an object to get, or transfer, finances without the need for PIN numbers or security. But this ease of use is the very thing that makes the concept vulnerable to several social and technical frauds and risks.

We are seeing this with chip-based passports for example, with fraudsters trying to compromise the technology to steal identity. This has, unfortunately, been very successful and software that utilises the same RFID technology is easily acquired on the web right now. Just as with a passport, the identity can be stolen from a mobile device. That identity can then be used to purchase goods which can then be sold on.

Other threats exist in the form of malware and viruses, even radio frequency interference, which all cause RFID to malfunction with a resultant loss in revenue for operators.

Any carrier bringing an NFC service to market must therefore ensure that it is not a disappointing, and therefore unprofitable one, or they will risk putting off adoption for the long term. It takes a long time to build a trusted reputation after all, and a fraction of that time to destroy it.

Blunting the blade Surprisingly, the problem of fraud and the resulting revenue assurance is one of the easier issues for operators to face when it comes to NFC, compared to the threat posed by over the top (OTT) players for example, who are looking to beat operators to the NFC dollars.

The most proactive approach for carriers could be to position themselves as the protectors of liability, assuming end to end liability and installing cutting edge revenue assurance technologies. These systems allow an operator to monitor and detect where fraud and overall revenue leakage is taking place in the network; and manage it, thereby protecting the consumer experience, and their own revenue stream.

If operators show they are accountable, are vigilant for these threats and can swiftly protect against them, they will reinforce their trust with consumers; and they will be able to generate significant value for themselves on NFC and allow this innovative technology to prosper and thrive.