Mobile Payment Magazine

NFC Technology in Smartphones Spurs Commercial Vialbility of Mobile Payments

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The near field communication (NFC) market has moved from an ‘innovator’ to an ‘early adopter’ phase and from trial development to the first commercial roll out.

The key driver for the market is the wide adoption of the NFC solution in mobile phones, as without massive number of NFC-enabled mobile phones in use, the market will not be able to realize its immense potential.

According to industry analysts at Frost & Sullivan, NFC-enabled mobile phones will reach 863 million units in 2015. At this time, NFC-enabled mobile phones will represent more than 53 per cent of the overall market.

A recent report from the company entitled :NFC: When Will Be the Real Start?” states that in 2015, NFC will clearly be the most-used solution for mobile payment, and analysts expect that the total payment value for NFC globally to reach approximately $180 billion in 2015, while the NFC payment value in the EU is expected to reach $67.55 billion.

Frost & Sullivan forecasts a five-year compound annual growth rate (CAGR) of 118 per cent between 2010 and 2015.

“There are two possible business models for the NFC market; the first one is based on a memory rental model where the NFC application will rent the memory space used by its application and the second is a pure rental model coupled with extra cost per use where the application will pay a cost per year with a given number of actions,” explains Frost & Sullivan Global Program Director Jean-Noël Georges. “When this number of actions on the application such as update, patch, read and write is reached, extra costs are charged to the application provider.” Frost & Sullivan anticipates the second model to be the most applicable. The pure rental model will probably be the most widely used in future.

“Different secure elements for NFC methods have allowed different technology players in industries such as telecoms operators and electronic device manufacturers to establish their own payment infrastructure,” remarks Jean-Noël Georges. “This lack of harmonization has been an obvious restraint for the NFC industry.”

For nearly a decade, the NFC solution has been facing political and commercial problems. Most industries involved in NFC trials did not want to share the substantial revenues generated by this solution. Illustrating this point was the commercial discussion between banks and network operators, neither of whom wanted to share revenues. At the beginning, each wanted to force the other to adopt their business model. At the end, after network operator acquisition of banks and financial company acquisition of network operators, they were forced to admit that cooperation was the best compromise.

The NFC market also has the potential to create revenues for the entire NFC ecosystem. Even if it seems that purely hardware–SIM card and NFC controller–revenues will decrease, the gain will still be really important.

However, most technology providers have been able to offer new services directly linked with NFC. Handset manufacturers, trusted service management system providers and marketing and commercial NFC service providers all stand to benefit.

“Many marketing companies are already involved in the NFC ecosystem,” concludes Jean-Noël Georges. “This is a good signal because, in the past, marketing companies were involved in new technology roll-outs only when the transition occurred from purely trials to first commercial deployments.”

More information: NFC: When Will be the Real Start?

Source: Frost & Sullivan

mFoundry Named Entrepreneurial Company of the Year by Frost and Sullivan

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The mobile banking and payments industry in the United States faces many challenges, including positioning mobile banking as a strategic differentiation tool, integrating multiple categories of mobile financial services in a coherent framework, and the challenges of a one-size-fits-all-strategy.

Other challenges include offering a consistent experience across all banking modes, allocating resources towards pursuing new opportunities by taking a long-term view of the market potential, establishing strategic agreements with the traditional financial processing organizations to leverage their strong capabilities in enabling banking and payments, and providing in-depth reporting and feedback to the customer financial institutions (FIs).

Recently, Frost & Sullivan analyzed the mobile banking market, and has awarded mFoundry with its Entrepreneurial Company of the Year award for the company’s strong performance in the past 12 months and continued execution on highly differentiating growth strategies.

“mFoundry has emerged as a preferred provider of mobile banking and payment services in the U.S. mobile financial services markets,” notes Frost & Sullivan senior analyst Vikrant Gandhi. “What sets the company apart from competitors is its ability to continuously evolve in line with the changing needs of the customers and seamlessly update its platform with minimal disruption to its installed base of users.”

mFoundry has adopted a few highly effective growth strategies to achieve success. Firstly, it provides a capable, scalable and secure set of offerings targeted at different types of FIs (both large and small) with a clear, phased roadmap for associated mobile banking and mobile payment services.

The software offers one of the most comprehensive sets of analytics and reporting capabilities. Next, mFoundry has established the largest partner network in the industry by partnering with leading financial processors, credit card associations and other financial powerhouses – resulting in an average of more than 15 new customer additions per month. This also allows channel partners to rapidly deploy mFoundry-powered mobile banking solutions among their customer base

Most importantly, the company demonstrates a willingness and ability to refine its go-to-market strategy to keep pace with the rapid pace of evolutions of the mobile ecosystem – for instance, it continuously offers support for next-generation Smartphones and emerging devices to ensure a broad coverage for its customers (the FIs). Today, mFoundry works with more than 265 banks, credit unions, and issuers in the United States and continues to rapidly increase its customer base for both mobile banking and mobile payments services.

mFoundry has several innovations to its credit. It powers the Starbucks mobile gift card payment application in the United States, which is the largest such initiative of its kind. This has given the company tremendous credibility as it is the only m-banking company that has a live mobile payments solution of this scale in the United States. Other innovations that are in trials, or are already commercially available, include rich analytics, mobile remote deposit, mobile peer-to-peer (P2P) payments, near field communications (NFC) implementations, and others.

“The roadmap for the competition’s services in mobile banking and payments is not yet clear, and mFoundry is clearly a leader when it comes to providing innovative, high-potential, growth-oriented mobile financial services,” asserts Gandhi. “The fact that leading financial processors are willing to partner closely with mFoundry is a validation in itself, and speaks volumes about the company’s aggressive pursuit of excellence on the product, marketing and sales fronts.”

According to the company, mFoundry provides value to customers in multiple ways. It enables banks, credit unions, and issuers to start using the mobile channel with ease and get comprehensive reporting and feedback to understand and fine-tune their offerings on an ongoing basis to achieve the best results. The company also provides FIs with avenues to offer a wide range of banking and payment services to all customers. Finally, mFoundry offers multiple deployment options as well as solutions that are modular and extensible platforms to mobilize the future mobile banking and payment services.

Be it mobile payments, analytics, configurable console-based implementations, or others, mFoundry has always been known as the ‘company to watch’ in the U.S. mobile banking and mobile payments markets. Its ability to introduce successful next-generation mobile financial services before others makes the company a key enabler in this space and the worthy recipient of the 2010 North American Frost & Sullivan Award for Entrepreneurial Company of the Year in mobile banking.

Each year, Frost & Sullivan presents this award to the company that has demonstrated Entrepreneur Spirit by devising a strong growth strategy and robustly implementing it. The recipient has shown strength in terms of innovation in products and technologies, leadership in customer value as well as market penetration and speedy response to market needs. in short, the award looks at the emerging market players in the industry and recognizes their best practices that are positioned for future growth excellence.

Frost & Sullivan’s Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.

Asia-Pacific Mobile Payments to Double in Five Years

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Mobile payments (m-payments) in Asia-Pacific are expected to record transactions worth more than two-fold from 2009 revenues of US$1.6 billion in five years, according to Frost & Sullivan. The company estimates that in 2015 m-payments could exceed billings of US$3.6 billion at a CAGR (compound annual growth rate) of 14.8 percent (2010-2015).

Frost & Sullivan industry analyst Shaker Amin attributes this growth to technology innovations and operators’ initiatives – particularly with NFC (Near Field Communication) – as well as rising consumer demand in both the developed and emerging markets.

New analysis from Frost & Sullivan, 2010 Asia-Pacific Mobile Payments Outlook – 18 Asia-Pac nations including Japan, finds that contactless payments via the NFC channel will increase in popularity to account for 23 percent of all m-payments in 2015, from only 12 percent last year.

via Frost & Sullivan