London first for mass-market NFC mobile payments, says Telefonica

The trial of NFC in the Spanish city of Sitges is proving successful enough for Telefonica that the company has plans for London to be the first major city in Europe to see the mass-market deployment of NFC-enabled handsets for mobile payments.

Telefonica's director of mobile financial services, Pablo Montesano, said that the British 2012 Olympics would be the catalyst to introduce handsets supporting NFC, making it the first large scale deployment outside of Japan and Korea.

According to Montesano, the critical elements required to make NFC a success were coming together--including standards, handset vendors accepting NFC into a wider range of devices, and consumer awareness driven by contactless card applications already commonly used in the transport ticketing sector.

"I expect there to be a lot of activity in this space in London before the Olympics, with a significant push from several players," Montesano said. "The reality is no-one knows when this will take off, but we are moving closer than ever to the tipping point," he added.

Telefonica has provided 1,500 NFC-enabled handsets to Sitges residents in a joint trial with Telefonica, Visa and the Spanish banking group La Caixa. The commercial trial, which started in May this year and will complete in November 2010, also involved 500 merchants equipped with compatible point of sale terminals.

Initial results from the trial show that 80 per cent of those involved have used the service once, while 52 per cent use mobile payments once a week. Interestingly, the average purchase price was €31, which would seem surprisingly high given that NFC-based mobile payments have been thought of as low value, high volume sales.

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