Technorati Tags: payments
The business model stuff remains interesting because it is still evolving and banks and operators are still working on the combinations of technology models and business models that will make sense. Are they co-operating or competing? Surely they must do both: co-operate to get the basic infrastructure in place and then compete on the sevices offered. Easy, isn’t it?
One question that will undoubtedly be asked is why people like me keep going on about NFC at all! It’s because we know it’s going to be very, very important. Take a look at what is going on in Korea, where the operator KTF is going to insert NFC-capable Universal Subscriber Identification Modules (USIMs) into handsets to allow a payment terminal to communicate with a payment application on the USIM via the handset NFC. This also means that payment applications (eg, in this case a MasterCard) can be loaded over-the-air (OTA) into customers phones. When customers want to change their handsets, they can simply move their USIM to the new handset and all of their payment instruments go with them.
This is all great stuff, but a cynical person might well note that the KTF announcement is part of a South Korean mobile payment initiative to implement the GSMA model, but then go on to read in the small print that neither the KTF/MasterCard nor the similar SK Telecom/Visa projects will actually use NFC technology when launched because standard NFC handsets supporting the new SIM cards won’t be available until at least next year. Instead, the operators plan to use other contactless technology to try out the concept. Now, I think that’s actually a good idea. In fact, we’re doing exactly the same on one of our projects in the UK. By adding inexpensive but limited contactless technology to handsets, the oeprators and their partners can get to work on the terminal and acceptance infrastructure, start assessing customer response and begin refining business models so that as the NFC handsets come into the shops, the operators can take advantage of the new opportunities right away.
Banks are not waiting around either. HSBC, for example, have started yet another NFC trial with MasterCard in the US. HSBC’s credit card unit, which has more than a million contactless cards already in circulation, is running a trial with 200 employees despite the fact that not a single NFC handset is available to US consumers yet. This situation is also reflected in ABI’s downward revision in NFC penetration figures for 2010. They now think that only 350 million or so NFC phones will ship in 2010, 23% of total shipments. It’s taken a while for the operators get comfortable with how the technology will be deployed: as has been discussed here before, they want payment, ticketing and other applications to be stored on the SIM to ensure they get their fair share of the NFC revenue, but as I’ll be discussing in the workshop, this may not be the optimal structure. Apart from anything else, it may reduce competition and that’s never a stimulant for innovation.
My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]