Cooperation on strategy needed to make NFC successful

The convergence of many different markets to deliver near-field communication (NFC) payments, and the complexity of these new commercial relationships, has created a barrier to widespread deployment of the technology, according to the Mobey Forum.

The global, not-for-profit, financial industry forum claims that as NFC technology continues to gain momentum, businesses need to explore different implementation models, define the business case and roles that will meet their requirements and establish a clear go-to-market strategy with partners.

Jordi Guaus, chair of the Mobey Forum Business Workgroup and head of mobile payments at Spanish bank “la Caixa”, explained that the group has compiled its research on how to NFC into a whitepaper entitled: Business Models for NFC Payments.

“The study acknowledges that customer demand for NFC services will grow substantially in the near term, presenting businesses with profitable opportunities,” he said. “The marketplace, however, still has a lot to do to ensure NFC payment reaches its potential. There are many implementation models to choose from requiring payment service providers and other stakeholders to make significant business decisions today about an emerging ecosystem that is evolving rapidly.”

The whitepaper analyses potential business models for facilitating mobile contactless payments when an NFC device is used, taking into account all the stakeholders involved. The analysis focuses on point of sale (POS) transactions using cards as a payment instrument.

Potential business models are analysed according to ecosystem dependencies, stakeholders and scope. One of the most critical decisions for a payment service provider is how to cooperate with other stakeholders to go to market, explained the group. It added that, in essence, there are three cooperation models:

• Collaborative model: in a specific region, the main stakeholders, secure element (SE) issuers, mobile contactless payment application (MCPA) service providers and other relevant parties jointly define a common landscape which allows each entity to participate.

• Bilateral model: in a specific region, one SE issuer and one MCPA service provider reach an agreement to develop NFC payments.

• Standalone model: there is no cooperation. The MCPA providers and the SE issuer are the same entity.

“The technology exists and is ready to go live. The focus now needs to be on making MCP a reality, by increasing the number of implementations and building an understanding of best practice and standards within the industry,” the group explained in the whitepaper. “It is too early to predict which MCP model will be favoured by consumers and businesses. This is likely to vary within different regions depending on a range of factors including existing infrastructure and the number of stakeholders.”

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