Hwan Chung, CEO at Danal Europe, looks at why NFC has yet to take off and what the mobile payments industry can do to get more consumers behind it
On the face of it, the future for NFC (Near Field Communication) looks very bright. Analysts have predicted that by 2015, one in two mobile phones will be NFC-enabled and that NFC will facilitate transactions worth $74 billion. Yet, despite the impressive forecasts, the industry still has a long way to go before mobile payments even come close to matching the revenues made by cash or credit card.The truth is that most people don’t currently have handsets capable of making contactless payments.
Just 30 million NFC-enabled mobile phones were shipped in 2011 – a fraction of the 1.6 billion handsets sold worldwide last year .
And those people that do own an NFC phone may not realise that their device has this functionality or wish to use it to make payments.
What’s more, stores that accept NFC payments are few and far between, and those that do have NFC readers in place typically only accept low-value payments, limiting the number of transactions that can be made via mobile payments.
Things are changing though. We’re starting to see mobile operators like O2 in the UK, and Rogers Communications in Canada, announce plans to enable NFC payments.
This is backed up by payment providers like Visa and PayPal, who are also getting in on the act. Whilst this is very commendable, little has been done to provide customers with the flexibility that they want to make payments – and that’s the main issue holding back the industry, not concerns about security or service availability.
It may sound obvious, but it is incredibly important to customers that mobile payments offer sufficient flexibility. In its current state, the industry is dictating to consumers exactly how they get credit and pay for items.
In reality, we should be trying to fit in with ways in which consumers manage their own money – whether that means allowing them to pay for items with debit or credit or another option, such as adding purchases to an existing mobile phone bill to pay later.
By listening to what it is that customers want from mobile payments and developing services based on that feedback, the industry can accelerate the move to NFC and even incorporate its development into other mobile payment services.
However, if operators and payment providers continue to dictate how mobile payments are made, NFC will remain on the starting blocks.
About the author
Hwan Chung is chief executive officer of Danal CS&F, headquartered in Amsterdam, the Netherlands. Prior to working at Danal, Mr. Chung served as the Senior Vice President of 4G wireless at Samsung Electronics from 2001 to 2009. He also served as the Vice President of SK Telecom for overseas businesses during 1990’s. Mr. Chung has received PhD and MS degrees in Electrical Engineering from Northwestern University in USA, and BS from Seoul National University.
Danal offers a full suite of innovative mobile payment solutions for consumers to merchants, carriers, and financial institutions. For more information, please visit the Danal Europe we site here.