Mobile Payments – Coming to a phone near you

At the end of August 2009, I wrote a post – The future is bright but is it mobile? In that post, I mentioned the fact that in the developing countries mobile phones were increasingly used for a wide variety of tasks, including banking. Meanwhile in the developed world affluent consumers were purchasing increasingly powerful mobile phones, including smarut phones and were looking for more ways in which to use them. Mobile commerce hadn’t taken off in the developed world due to the availability of other payment methods available to the relatively affluent customers such as credit cards and contactless cards. The move to using mobile phones for commerce is akin to where we find ourselves in terms of laptops morphing to smart phones, as this is where traditional wallets will be replaced with electronic digital wallets operated by mobile phones.

Let’s first take a look at the history behind the scenes to understand where we are today and the importance of the latest report released on 14/1/10 on this new technology, Near Field Communications (NFC). NFC happened as a result of the NFC Forum and its members, founded in 2004, recognising that evolution meant a new, short-range wireless connectivity technology had to be created. This article on the Integrated Transport Smartcard Organisation’s website (ITSO) provides a good introduction and will bring the reader to where we are currently and the new NFC adoption by the mobile industry for mobile payments in the future. In the UK, the movement towards contactless cards was initiated by ITSO in 1998, a non profit sharing organisation owned by its members. This led to the first contactless RFID Oyster cards being issued to the public in 2003 for the London Underground by TFL. As we moved closer to mobile phone NFC, other initiatives such as prepaid cards and prepaid contactless cards used by retailers such as Pret a Manger and coffee republic were developed.

Over the last few years, banks and payment vendors have tried different technologies with a varied success rate, including the latest contactless cards. The reason that mobile phones can be used with NFC now is because finally different standards have come together to support one another and make these payments secure. So, what we now see is that ITSO supports NFC as even the UK government is prepared to fund the switch to NFC compatible transport ticketing and the various card issuers have agreed the Payment Card Industry Data Security Standard (PCI DSS).

Trials of NFC technology in London revealed that Londoners wanted to use their mobiles to travel and shop. Mobiles will start replacing cash as the technology is rolled out within the UK from 2011. “Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field,” says Sarah Clark. “Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market.” As the technology becomes widely adopted, NFC based payments could reach $30 billion by 2012.

The following excerpt courtesy of Sourcewire. “NFC technology will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash,” says Sarah Clark, author of ‘NFC: The Road to Commercial Deployment‘. “What hasn’t yet been decided, however, is who will win the battle to provide consumers with their new hi-tech mobile wallets.”

Consumers with NFC-enabled phones will be able to simply touch their phone to a ‘smart’ poster or product label containing a RFID chip to sign up for a loyalty programme, collect a money-off coupon, download a trailer for a new movie, access the latest travel information or go straight to a product’s website to read customer ratings and reviews and compare prices.

Social networks will also get a major boost as with a NFC phone, you can exchange details of someone befriended online by simply touching your phones together when you meet them in the real world. Or touch your phone to a smart poster as you go into a restaurant to automatically update your Facebook status and get an offer coupon from the venue as a thank you for telling your friends you’re there.

Commuters will be able to store their travel pass on their phone and mobile versions of airline boarding cards, hotel room keys and even passports will make it quicker and easier to get from place to place. Paying bills will become much simpler, too. Simply touch two NFC phones together to transfer money to a friend, buy a drink or pay for a service.

“No more rummaging around for the right change, card, keys or paperwork and no more texting your location to your friends — with NFC everything can be handled by your mobile device,” says Clark. “And, of course, NFC is a highly secure technology. Consumers will be able to instantly lock all the mobile wallet services on their phone if it is lost or stolen and then get them automatically transferred onto a new phone as soon as it arrives. They will also be able to use their phone to make payments even when the battery is flat.”


About mubbisherahmed
I am passionate about IT and its ability to deliver cost effective, value for money solutions that can enhance performance and in many cases provide competitive advantage by using a range of solutions and approaches in innovative ways.

7 Responses to Mobile Payments – Coming to a phone near you

  1. mubbisherahmed says:

    Serge Olivier Atchu Yudom General Manager at Mobile Money Cameroon S.A left this comment on a social media site:

    In Cameroon Mobile Money Cameroon is Deploying MyMoney with Contacless Cards (keyholders with demos of watches and usb keys). NFC and biometrics is the future in sub-saharan rural areas. NFC brings robustness and biometrics replaces PIN Code management.

    I replied:

    Serge, it’s like I said, in terms of mobile payments, Africa really has shown the world the capabilities of using mobiles for payments, that provided access to the less well off as well.

    I think, the rest of the world would do well to learn from companies such as yours lessons learnt and how you developed the innovative ideas that lead you to create competitive advantage in an area where many people, in the early days, would have even doubted that mobiles would even become mainstream and be accepted by the larger populace.

    This is the first comment I have received from a service provider in South Africa and I would be quite keen to share the barriers you faced when you first setup and your experiences with my blog readers, if you get the time.

  2. mubbisherahmed says:

    Erika Hanson Brown ExecSelection, Business Development/Location Intelligence Sector; Mgr: LBx Journal said on a social media site:

    thanks, Mubbisher, for bringing up the topic of LOCATION INTELLIGENCE (the focus of my professional endeavors)!
    What does that have to do with mobile payments? EVERYTHING!!!!
    Let’s talk more….

    Also, you might be interested in going to This is a multi-media platform/venue for the discussion of LOCATION BUSINESS.
    (I’m excited; can you tell?)

    I replied:

    Erica, very interesting indeed. As Near Field communications (NFC) technology is rolled out, I am sure many service providers will be interested in the location intelligence aspects of it. It should open the doors to many new applications and change the way we interact through our phones. This will probably be analogous to the way we interact through digital television and better still through the capabilities of fast broadband, both through handhelds such as the iPhone to deliver many new applications and equally at our homes.

    Erica added:

    ….don’t forget the recent launch of the Nexus from Google. That will change everything! (They say it’s great.)

    I replied:

    Erica, apologies for disappointing you but the Nexus one from Google is NOT a NFC compatible phone for now, although as the technology hasn’t been widley adopted, Google have probably refrained from incorporating it into this version. As NFC will become widespread by 2011/12, who knows which phones we’ll be using by then.

    As Nokia were a founding member of the NFC Forum, they have released a NFC compatible phone, the Nokia 6131 NFC phone.

    Most manufacturers should be releasing NFC phones towards the latter part of this year and I suspect that even the NFC compatible Nokia phones are probably used only for trials at the moment.

  3. mubbisherahmed says:

    Aaron Whittaker A leading Solutions Architect creating efficient business and performance growth through virtualization posted the following on a social media site:

    2 things,
    how do you authorize payment (no pin number)
    anyone could steal my phone…
    and this is no good if i have a company phone and wish to buy a drink, i would need another personal phone or i would still need my wallet.

    I replied:

    Aaron, good questions, firstly, I will deal with what would happen if your phone was stolen?

    I will quote, Sarah Clark, the author of the report – ‘NFC: The Road to Commercial Deployment’.“NFC is a highly secure technology; consumers will be able to instantly lock all the mobile wallet services on their phone, if it is lost or stolen and then have them automatically transferred onto a new phone as soon as it arrives. They will also be able to use their phone to make payments even when the battery is flat.”

    Secondly, (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer uses a special mobile phone equipped with a smartcard and waves his/her phone near a reader module. Most transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from pre-paid account or charged to mobile or bank account directly.

    Thirdly, with regards to company phones, how they tackle this new technology will be subject to their company usage policy (CUP) and how flexible they are willing to make it. I can’t comment on that but you are right, if they don’t allow it, you would have to carry your wallet. Technically, it is possible to carry all your wallet on the NFC phone. So, what that could mean is that if the company allows it, you could carry the company credit card and all your credit/debit cards on the same phone.

    Good article that explains this in detail:

    I hope that helps you, Aaron.

    Aaron added:

    so the costs are just added to your phone bill? would the teleco company want to take a handling commission?

    I replied:

    This is a good discussion as we can now debate how it will all work. I suspect that the phone will come equipped with software based wallets allowing details of cards to be added.

    If that was the case and we all waved our mobiles to their readers, then technically, it would be like using a card instore. We pay, insert the card and the authorisation element is completed by the store (actual transmission of the data for authorisation). I don’t think that would be any different, so the costs would be added to our cards in the usual way, showing up on our normal card bills. I can’t see the telcos charging us any handling commisions either.

    It should open the doors to many new applications and change the way we interact through our phones. This will probably be analogous to the way we interact through digital television and better still through the capabilities of fast broadband, both through handhelds such as the iPhone to deliver many new applications and equally at our homes. So, the mobile operators will, I am sure, have plenty of ways of making money from it.

    That said, we won’t know for certain how it all pans out until it all moves from pilot to production.

  4. mubbisherahmed says:

    John Tengström Manager-Data and Strategic Relations at Cingular Wireless said the following on a social media site:

    I’m curious to hear your viewpoint as to whether or not mobile payment solutions will become more region specific as compared with influencing a worldwide accepted standard? Especially when considering cultural aspects toward influencing usage and technology, national laws and regulations and market acceptance. As a Finn, mobile payments are nothing new for me. In Finland, we first started using SMS as a transport for mobile commerce for purchasing beverages from vending machines. Soon movie tickets, car wash, parking meter….. You name it ….could all be purchased by using SMS. Even contactless cards have been widely used for over 20 years now in Finland for such applications as buying transportation on mass transit to running the laundry machine in your apartment.

    When I moved to the United States to work for Motorola, I was a part of a team responsible for marketing the P7389e and coming up with supporting applications. Although this was now almost 10 years ago it appears the market barriers may still be in place. Fantastic devices such as this one never took off. Even the Siemens IC35 which was suppose to revolutionize mobile commerce in Europe never really took off either. Granted, Europe has been far more successful in mobile commerce development and market acceptance to date than has North America.

    I also foresee mandates of security agencies responsible for homeland security in the U.S. broadening to such a level that legislation limits exactly what type of commerce or transaction may take place in a mobile environment. I wouldn’t even be surprised given the current climate that even if NFC technology were here today, we could get every possible benefit without first having the item we want to buy matched via UPC code against a national database of potential “safe” items allowed for purchase. Or better yet, perhaps in the background the silent flagging has already occurred simply because the items purchased was done so with foreign funds matching a specific individual against persons of interest in related government databases.

    Now assuming the majority of us are all honest people, how much personal freedom and liberty is actually being lost to make this a reality???

    I replied:

    John, thanks for your detailed and thought provoking comments and insight into how mobile payments have already been used in Finland for over twenty years.

    My view is that in many regions mobile payments are already established and quite mature, as you have alluded to, for example in Finland and many parts of Africa (Affordability of new NFC phones becomes an isssue as well in Africa). Short term, I cannot see the Finns moving to NFC as it would require significant investment in architecture at the back and front end. Long term, as this standard is supported by the who’s who of all the major players, such as Nokia, Samsung, Motorola, Microsoft, Mastercard, Visa, Amex etc, I think it will be adopted within the next 5-10 years globally.

    The ever increasing security threat, global governments wanting to be big brother and issues of privacy will inevitably come into play leading to issues of location intelligence. That will also spark the debate of how mobile operators would want to sell this data that opens the doors to many new applications and changes the way that we interact through our phones. That would probably be analogous to the way that we interact through digital television and better still through the capabilities of fast broadband, both through handhelds such as the iPhone and equally at our homes allowing the delivery of many new applications.

  5. shakattak says:

    NFC is deffinately the way forward and i agree with your article. Apple has already got plans to integrate the NFC technology into the iPhone 4G’s touchscreen, patent being filed in 2007. The patent application describes a method of building RFID circuitry into a touch sensor panel. There are 14 other major firms part of the GSM association which represents 700 Mobile operators around the world, they are all working together to build NFC applications.

    As far as the security threat is concerned, it will always be there no matter what technology is present. We always debate a new technology with being big brother and taking over certain aspects of our lives – the truth is change is happening all around us on a daily basis and if we looked back 5-10 years we would have been debating the very technology in place now or most of it anyway.

  6. mubbisherahmed says:

    Andre Kolodochka Multilingual manager with international experience said on a social media site:

    Mobile payment was available in South Korea from about 2001. so, how come nine years later it is “new”?

    I replied:

    Andre, mobile payment was available in Finland twenty years ago, so I agree, it’s nothing new. New, is the fact that Near field communications (NFC) hasn’t been used before and follows universally implemented ISO, ECMA, and ETSI standards. This is all under the guidance of the NFC Forum – – (Where you will see that the members are a who’s who of card payment providers, hardware, software vendors etc) and certainly within the UK, payment using mobiles wasn’t widely used apart from paying for parking by some councils etc.

  7. mubbisherahmed says:

    Paul Bloom Corporate Account Manager at Crown Computing added the following on a social media site:

    NFC is not a new technology, and one that my company, Crown Computing has been selling for some time.

    The only issue has been the take-up by the phone manufacturers; currently the Nokia mobile can have this deployed as standard.

    We, at Crown use it extensively for home care workers, and mobile users in Construction and Academia.

    Paul Bloom
    Corporate Account Manager
    Crown Computing

    I replied:

    I agree, as the NFC forum was setup in 2004 but as the wider rollout won’t happen in the UK till 2011/12, as far as the wider populace is concerned, when that rollout happens, it will be new technology for them. I will put this comment on my blog, who knows it may generate some business for you, Paul and thanks for the comment.

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