SMS trumps NFC for payment

Rachel Loke
14 May 2009

While almost 70% of consumers involved in various NFC trials globally indicated they liked using their phones to make payments, most said they wanted a wider choice of merchants accepting NFC payments.

This positive consumer attitude, however, has not led to widespread deployment of NFC payments.

\'Behavioral change in consumers always takes a long time. Especially if consumers have started to trust something and in this case, card payment, it will take time to build their trust in new mobile payment,\' said Mohammad Khan, president and founder of ViVOtech, at the panel discussion on \'The future of contactless mobile payment\' at Cards Asia in Singapore last month.

This of course raises the tricky issue of whether uptake is hampered by a lack of participating merchants or by the interest in the service itself, which is holding back merchant interest.
Austria Card marketing director Max Paul said the slow take-up of NFC could be attributed mainly to the lack of a viable business model between the banks and telecom operators. After his presentation on \'Introducing a universe of contactless payments\', he explained that the diverse needs of the global market would required a clearer definition of the target segments. On top of that, standardization and interoperability have to be addressed to bring about greater convenience.

ABI Research forecast in a March report that m-commerce transacted via non-NFC methods would reach $1.6 billion this year, while m-commerce conducted via NFC will be minimal. Dan Shey, ABI Research practice director, said the failure of the NFC to meet earlier expectations was not a technology issue but one of unclear business models.

NFC deployments are also being challenged by the downturn.

\'The economic crisis is hampering developments to overcome the various business case and consumer challenges. In my view, depending on when the economy turns around, NFC will be a mid-term target for wide adoption in two to three years,\' Rick Hsu, managing director of Collis Asia, told Telecom Asia.

While NFC isn\'t top of mind, other non-NFC platforms are fast filling up the gap for mobile commerce.

SMS banking in Indonesia has experienced strong adoption, said Amirul Wicaksono, e-banking group head of the consumer banking division at Bank Negara Indonesia. The bank had 500,000 registered customers for SMS banking service at the end of 2007. The number grew to two million in 2008, and the bank plans to add another million by the end of the year.

Wicaksono said that the ease of conducting a transaction was the key reason behind the high acceptance of mobile banking among its customers, providing them with \'control over their banking activities any time, anywhere.\'

Dialog Telekom has worked closely with the central bank in Sri Lanka to bring mobile commerce to rural communities since it can significantly reduce the need to travel long distances to reach banks or pay bills.

Dialog\'s manager for the mobile commerce group Druvi Sirisena sees mobile commerce being used much more in the payment of utility bills compared to payments over the retail counter. This, he said, is likely due to the mindset of consumers being more used to using cash and credit cards at retail outlets.


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