The launch of the UK’s first commercial NFC-based mobile payment service by Orange and Barclaycard can be viewed as the chicken. Now all we need is the egg, in the form of handsets.
There are just 12 NFC capable handsets in the market today, a count by Near Field Communications.com shows, and that includes the Samsung Tocco required on Orange and Barclaycard’s QuickTap service.
While Greenwich Consulting boss Fred Huet believes the service “is an interesting first step that should encourage more players to invest in the technology,” Informa Telecoms and Media principal analyst Guillermo Escofet states there is still a long way to go before there are enough compatible handsets from a wide range of vendors.
“This is one small step in the long, arduous, journey of turning mobile contactless payments into a mass market reality,” he notes. “It’s going to be a while yet before we get a wide enough choice of NFC-capable phones, despite the interest voiced by numerous handset makers to produce such phones.”
The NFC Forum hoped to boost the number of compatible handsets in December, when it launched a certification program for the devices. The scheme covers interoperability with other devices and sets standards for the minimum level of consistency in device behavior.
It’s no great leap of calculation to suggest that the number of handsets will grow inline with commercial service launches, however Escofet points out that is only half the battle in launching NFC services on mobile phones.
Retailers must also be considered – specifically their point of sale (PoS) equipment. Research by Telecoms Europe.net shows PoS kit has a typical upgrade cycle of five to seven years. With most retailers in Europe installing chip and pin equipment within the past three to five years, that means we are still two to four years away from their next natural upgrade phase.
“There is still a long way to go to convince the bulk of retailers of the business case of replacing their point-of-sale terminals with NFC-enabled terminals,” Escofet states.
QuickTap users can capitalize on a successful contactless card service Barclaycard launched in 2009. By March this year the firm had established a network of 52,000 retailers for the service, which saw 150% growth in usage during 2010.
A trial service run by O2 in London in 2008 confirms that consumer demand for mobile contactless payment services is high – with 78% stating they would use the service. QuickTap surely establishes that the chicken came first in terms of meeting that demand.