Banks and mobile operators to go head to head for NFC mobile payments business

Banks and mobile network operators are set to go head to head in a bid to control the market for NFC mobile payments services, according to a new research report published today.

“NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash,” says Sarah Clark, editor of NFCW and author of the new report. “What hasn’t yet been decided, however, is who will win the battle to provide consumers with their new hi-tech mobile wallets.”

So far, banks and operators have worked together to run field trials of NFC technology but, the report predicts, the emergence of new ways to add near field communication technology to existing mobile phones means they will soon find themselves in competition for control of this important new market.

“New products are now available that enable NFC functionality to be retrofitted to current mobile phones. These will enable banks to deliver NFC services to their customers without the involvement of mobile network operators and this has fundamentally changed the balance of power between banks and operators,” Clark explains.

While a collaborative approach between banks and operators may work in some instances, ‘NFC: The Road to Commercial Deployment‘ predicts that most commercial deployments will have only one lead player. And that lead player will not necessarily be a mobile network operator.

“Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field,” says Clark. “Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market.”

“We now expect a competitive market to develop between mobile operators and banks in each market,” Clark adds. “Here, overall leadership will not be determined by what business the company is currently in. Instead, it will be based on their overall business strength, on how well they execute their NFC strategy and on the alliances that they put into place.”

Strong banks, for instance, will be able to make deals with weaker mobile network operators. And strong mobile network operators will make deals with weaker banks so that, ultimately, who ends up as a lead player in each market will depend not on whether they are a bank or an operator but on key factors such as:

  • The strength of the company’s existing presence in its core market.
  • How loyal its customers are.
  • The level of risk it is willing to take in terms of investing in the deployment of NFC services.
  • How successful it is in developing an attractive business proposition for potential key service providers and how quickly it manages to sign them up.

Although another year of field testing will need to take place before the widespread introduction of commercial NFC services can begin from early 2011, the trials this year will be different to those that have gone before. “This year’s trials will not be simple technical tests,” says Clark. “Instead they will be pre-commercial trials, designed to enable NFC service providers to finalize their business plans.”

The UK, France, United Arab Emirates, Singapore, Taiwan and Korea will be the first countries to introduce NFC commercially, the report predicts, beginning in 2011. The US, Canada, Spain, Germany, Italy, Norway, the Czech Republic, Romania and Australia are also expected to be early adopters of NFC.

‘NFC: The Road to Commercial Deployment’ examines the international market for near field communication technology from 2010 to 2014. It is published by SJB Research, a UK company specialising in analysing the market for emerging technologies in the mobile and payments fields.

The report provides detailed guidance for banks and mobile operators looking to introduce NFC successfully and for companies wishing to offer NFC-based services to their customers. It includes an analysis of the technical and business challenges that still need to be resolved and explains how mobile operators, banks, handset manufacturers, industry suppliers and key potential NFC service providers will resolve those issues during 2010.

‘NFC: The Road to Commercial Deployment’ explains the key factors that will decide which companies will become the mobile wallet market leaders and details what the first NFC services will need to offer in order to succeed.

The research report is available to purchase today. Further information and online ordering facilities are available at

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