The fact that current SIM designs are not able to support the stringent levels of security required for contactless payments is bringing mobile operators into direct conflict with banking organizations, is areas like revenue sharing, he explained.
'It's just a matter of all parties throughout the ecosystem getting a share of the revenue streams and still remaining profitable.'
Control issues aside, mobile operators are also struggling to see viable methods of extracting value from the provision of contactless payment services. While the use of NFC in cellular handsets for contactless payment schemes shows great potential from a customer and transaction provider perspective, the business model for taking a share of revenue from NFC-based mobile payments is complicated from an operator's perspective. For one thing, it is not likely that NFC would generate much traffic and revenues over cellular networks through the provision of simply payment services.
Revenue beyond payment
Philippe Staib, founder and executive chairman of Payzy Corp, a Bangkok-based developer of mobile payment products and services, points out that 'straight payment is not sexy.'
He says the industry needs to create a business case that can extract revenues to accommodate existing payment margins and an additional one for the operators.
'If you cannot create an application and extract income above payment, then things will not start.'
Carlaw, however, says that cellcos' view that they need to recoup the cost of adding NFC to phones through the provision of contactless payment service alone is short-sighted. He says significant revenues will be generated from services such as ticketing, access control, online mobile banking, service discovery and connection enablement, all of which build upon the core characteristics of NFC.
That said, he noted that cellcos must be careful not to try to extract too much out of the transaction value chain, and should look instead to generate revenues from hosting applications and from the traffic generated by application downloads and associated banking services.
While many suggest cellcos play a vital role in pushing NFC into commercial use and in dictating the production of the volume of NFC handsets, others say support from the merchants and retails like 7-Eleven and Walmart is equally important to make NFC mobile payment services a success.
'Payment is about merchants and retailers. It's not the brand of the operators or the banks,' Staib says. 'They are the one that are going to push it and the one that would have physical contact with customers.'
But to create momentum from retailers, the industry needs to add value or create a business case for retailers, in the same way one is required to convince cellcos to move toward NFC deployment, he says.
'The retailers would like to set this type of payment if you could bring them something, not only a lower cost, but additional services into their marketing research, or anything that will increase their turnover and customers.'