NFC Business Models - Mobile World Live

NFC Business Models

27 JAN 2011

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A new generation of mobile phones equipped with near field communication (NFC) technology is set to revolutionise the way we decide what products to buy, where we choose to buy them and how we choose to pay, according to ‘NFC Business Models’, a new research report from SJB Research.

New NFC phones contain a high security chip known as a secure element, which acts like an electronic version of your wallet and can be used to replace everything from credit cards and loyalty cards, to bus and train tickets, library cards, door keys, coupons and even cash.

The tiny secure element chips can be built into mobile phones and other devices by the manufacturer, they can be integrated into SIM cards issued by mobile networks to their subscribers, and they can be added to existing phones via special microSD cards or stickers issued by banks and other organisations.

“Whoever provides a consumer with a secure element can then generate new revenues by leasing space on the chip to other businesses that also want to offer next generation mobile services to their customers,” said Sarah Clark, author of ‘NFC Business Models’ at SJB Research.

“Mobile network operators, banks, handset manufacturers and technology providers around the world are all planning to create major new revenue streams by providing consumers with these mobile wallets,” she explained.

“But understanding of the business
models that are most likely to succeed
is still in its early days and there
will be winners as well as losers in
the NFC revolution.”

Clark stated that while much of the current interest in NFC surrounds its potential as a payments technology, ultimately its core potential is not in payments, or, indeed, in any single vertical market. Key to the long term vision for large scale, commercially deployed NFC services is that consumers equipped with an NFC-enabled device will be able to use it to access a wide range of applications, from payments to discount coupons, access control to transport ticketing and beyond, enabling their device to act as a virtual Swiss Army knife of applications that can both replace the contents of their existing wallet or purse and deliver a range of new, value added services as well, she observed.

“Ultimately, NFC’s true potential lies with its ability to bridge the gap between the real world and the online world and, thereby, to deliver myriad new services and service improvements to businesses and government organisations of all types, in much the same way that the internet enables individuals and corporations to connect with each other online, regardless of the type of device they are using to access the web or the back office systems that the service provider has employed,” Clark commented.

She continued: “As with the evolution of the internet, however, it is likely that many of the most important services that will ultimately be offered via NFC are yet to be identified. It is only as the market evolves, and as technology advances, that NFC’s equivalents of Google, Facebook and Amazon are likely to emerge.

“Services will evolve that are
designed specifically to take
advantage of the full range of
capabilities of an NFC device, rather
than being built to simply replace
services designed to run on today’s
technology. Indeed, it may be that the
development of these new services is
an essential requirement for creating
demand for NFC technology,” she

The report explains in detail the latest thinking from around the world on how to implement the five fundamental building blocks required to make an NFC service a success. These are: the core infrastructure that will form the backbone upon which NFC services are delivered; the business models available to the mobile network operators, banks and handset manufacturers who will provide consumers with their mobile wallets; the issues involved and strategies for success in the NFC payments market; gaining buy-in from consumers and from service providers; the launch strategies that are most likely to succeed.


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