Can Google's NFC initiative trigger uptake of m-payments?

The announcement by Google that its latest Android OS would support Near Field Communications (NFC) has been hailed by m-payment technology providers as a breakthrough moment.

To be fair, these firms have been waiting years for someone to recognise the opportunity NFC presents--and having Google onboard must have exceeded their most extravagant dreams.

This move by Google, helped by Nokia and RIM also committing to integrate NFC functionality into some or more of their handsets, starts to remove the fundamental roadblock--common to many new mobile services--of a lack of consumer devices capable of supporting an application such as m-payments.

This sudden flurry of activity comes after Apple provoked widespread rumours that it was seriously planning to integrate NFC into a forthcoming iPhone following the company registering a number of NFC-related patents.

All good news, and helped along even further by a new study conducted by Companies and Markets that the global market for m-payments would reach US$264.8 billion by the year 2015.

The firm believes that the participation of global institutions in NFC payment trials will provoke the growth of the market and sustain it in the coming years. One fact supporting this forecast, stated the company, was the existing four billion mobile phone users around the world holding approximately 1.6 billion bank accounts.

In Europe, the French cities of Caen and Strasbourg have been trialling m-payments since 2007 with about 1,000 customers and 500 retailers. Orange and Bouygues Telecom have participated, together with a number of financial institutions, into developing a system that they claim can be scaled for nationwide deployment.

The French city of Nice has also conducted a large-scale trial of m-payment and e-ticketing and apparently plans to go nationwide starting in 2012.

However, these grand intentions to deploy nationwide would seem to imply that m-payment services will be compatible with each other, and also work in other European countries.

In an attempt to tackle this thorny issue, MasterCard and the European Mobile Payment Association have issued interoperability specifications for technology suppliers wanting to become involved. At present, this group appears to be focused very much on France with Bouygues Telecom, Orange and SFR involved, together with BNP Paribas, Credit Agricole, Crédit Mutuel, La Banque Postale, Société Générale and Crédit Mutuel Arkéa as financial services partners.

MasterCard has stated that it will be possible for consumers to use their handsets to make purchases, but with the stipulation that the phone is recognised by the EMPA programme and is enabled to use MasterCard's PayPass terminals.

However, these requirements might not fit neatly into the strategies being developed by other operators and credit card issuers--as has been the situation for many years.

Also, the involvement of Google should perhaps not be seen as totally benevolent. This large and ever-hungry company will not have made its investment in NFC technology to sit idly as others reap the rewards from the lucrative value chain of m-payment services. - Paul

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