Mobile Money and Mobile Commerce -is now the inflection point? PART 2

In the second part of this post, you can find the rest of the Infographics on Mobile Money produced by Sapient.

The first in the series (below) highlights how the world's "unbanked" are acting as a key driver globally for the rise of mobile banking services in Asia, Africa and Latin America. The trend is for more mobile banking services to be launched, providing key facilities like cash transfer and Point-Of-Sale payments, with big corporate players getting in on the act.

The final Infographic shows a dramatic increase in m-payment users in the year from 2010 to 2011 and the likely increase in NFC-enabled devices and m-payment purchases.Privacy remains a key blocker in adoption today, though as the generation gap shortens (eventually) between the digital-natives and the analog-natives, this is likely to change.

Integrating NFC in mobile apps – implementation costs

In this guest post by Magnus Jern, he sums up the current opportunities and challenges of implementing NFC mobile solutions.

NFC has been around since 2003 but it´s not until now that technology and adoption are ready for commercial deployment. It is embedded in the latest Android handsets, including the Nexus S. RIM are including it in all their new devices and Apple want to equip the iPhone 5 with an NFC chip, despite rumours they would not. Nokia is launching a series of devices including NFC, starting with the C7 and most other handset manufacturers will include NFC in their devices within the next 2 years.

According to Wikipedia: “Near field communication, or NFC, is a set of short-range wireless technologies, typically requiring a distance of 4 cm or less. (…) This enables NFC targets to take very simple form factors such as tags, stickers, key fobs, or cards that do not require batteries. NFC peer-to-peer communication is also possible, where both devices are powered.”

The technology is enabling new and exciting mobile interactions such as loyalty cards,  identification, travel tickets and micro-payments.

What is the cost of implementing NFC in your mobile applications?

The implementation of writing and reading data on the application side is fairly straight forward, just a few API calls that most developers will already be familiar with.

So the cost of implementing NFC in an application is very small compared to the cost of setting up the backend infrastructure that may be required to support it.  A typical NFC application, which reads an NFC chip once to authenticate that the user has been in a certain store or redeemed a voucher, could cost as little as 10-20.000 euros to implement, but NFC itself can be added to existing applications very cheaply.

So what’s next?

During the coming years we will see thousands of different applications including NFC. Some of those will be ground-breaking and others will quickly be forgotten. Banks, retailers, transportation businesses, fast food restaurants and events companies will all be experimenting with the possibilities. Watch this space.

NFC - The best enabler for the future mobile wallet?

There has been talk of NFC as a big driver of the mobile wallet since at least 2008, and the idea of using NFC has been toyed with by operators for some time. Anything that adds value to what a mobile phone can do is clearly going to be appealing to mobile operators (especially if it locks subscribers in or has a proprietary element to it), though the numbers of different stakeholders involved is still holding back NFC. Retailers, financial institutions, operators and manufacturers all have a role to play but also all have different vested interests in how it should be deployed.

The curious thing is that NFC is touted as the cornerstone of mobile transactions, mobile payments and mobile banking in the future. The reality is that NFC was never conceived for this kind of use case. Born out of RFID technology, some of the earlier uses were in tracking physical goods (from cows to library books!). This is relevant because security and encryption of NFC is a key blocker for further deployement of mobile payments (or other secure uses, like accessing buildings).

Even though NFC chips can only be read optimally at a distance of 20cm, the radio frequencies emitted can be captured a few metres away. I remember attending a panel discussion earlier this year at the Mobile World Congress where a  PayPal executive was asked what was stopping them from developing mobile payments with NFC. The answer was that it was simply not safe enough.

This could change though -if NTT DoCoMo was able to deploy over 100,000 "NFC keys" to their mobile subscribers allowing them to unlock the front door to their homes with their mobile phone back in 2008, then securing NFC transmissions further should be possible.

I believe though that from securing NFC communication for simple use cases like unlocking doors to that of making payments, there is still a long way to go. But then, at the same time, there are sceptics who still believe online use of credit cards is unsafe, so a great deal will be down to popular perception. Apple...please lead the way....

2008 & The Rise of the Mobile Wallet

It's a popular time to make predictions for mobile trends in 2008 and there are some pretty good ones out there. I am going against the trend by not creating yet another list, but have to express my surprise at the lack of mention of the 'mobile wallet' in most bloggers' predictions.

FierceWireless published a summary yesterday that showed that the value of contactless m-payments in the US is expected to reach $820m by 2013 (according to ABI Research).

I believe that 2008 will see a leap forward in the development of the ‘mobile wallet’ and the launch of new handsets capable of performing the same transactions of a traditional credit card by using contactless NFC technology.This is backed up by ABI Research's latest forecast, where they predict a 10-fold increase in shipments of NFC handsets in 2008.

With operators, regulators, manufacturers and financial institutions scheduled to get together in Cairo in May at a GSMA Summit to thrash out a global framework for m-payments, a whole range of new services could become widely available in key markets by 2009.

Operators have too much at stake to ignore this opportunity to impose their own standards for m-payments and thus regain a modicum of control over their customer base in the face of increasingly open development platforms.

The question, however, is this: will a disruptive newcomer step in to offer an alternative should operators and other stakeholders fail to agree in May on a global deployment model?