NFC receives mobile boost

A six-month study focusing on consumer acceptance of near field communications (NFC) carried out by the UK’s largest mobile network operator, O2, has come out strongly in favour of the contactless technology.

The O2 Wallet trial took place over six months between November 2007 and May 2008 and involved 500 triallists. It tested consumer demand for having cards you would normally carry in a wallet, such as Oyster and credit cards, available on a Nokia 6131 NFC mobile phone.

To travel on London’s transport system or make purchases in retail stores, the user touched the phone against a reader. The trial involved a range of firms including O2, Transport for London, Barclaycard, Visa Europe, TranSys, Nokia and AEG.

Nine out of ten triallists were happy using NFC technology on a mobile phone says O2 and 78 per cent said they would be interested in using contactless services if available. Convenience, ease-of-use and the status of having such an innovative device were seen as the main benefits.

According to the study interest in having Oyster on their mobile phones was particularly strong with 89 per cent of triallists saying they were interested in taking this up. Over two-thirds of triallists also said that they would be interested in having the Barclaycard Visa payWave feature on their mobile in the future.

The results chime with findings of Juniper Research which last month announced that around 2.1 billion mobile subscribers will be using mobile payment services for digital goods by 2013.

However, in an interview with Mobile Communications International Alan Goode, an analyst at Juniper Research, pointed out that although m-payments might prove popular, the margins are likely to be very tight.

Goode suggested that operators could rent space on the SIM or handset to a financial organisation which would then use it for its NFC payment application. But it is not clear that the financial institutions would want to strike deals with every operator in every market. They could, after all, simply strike one-time deals with the handset vendors. With NFC, the problem of operator revenue stream remains.

“The operators can’t gain in this scenario,” said Simon Cavill, CTO of mobile payments enabler Mi-pay. “I haven’t seen a single business case that works.”

In any case, the widespread deployment of NFC on mobile phones remains, by consensus, several years away. Not least because operators and banks are not seeking one another out with any real energy, because they cannot seem to agree on the conditions of their relationships. “In terms of who gets what when it comes to revenues,” says Goode, “It’s still very much up for grabs. That, at the moment, is a definite constraint on the widescale adoption of any mobile payment scheme.”