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The Green Sheet Online Edition

March 23, 2009 • Issue 09:03:02

Mobile commerce popular, NFC lagging

New data from ABI Research projects the non-near field communication (non-NFC) mobile commerce industry will see $1.6 billion in transactions in 2009, while the total money transacted in a mostly fledgling NFC industry will be minimal.

Yet, while NFC has been slow to catch on, insiders generally agree it's only a matter of time before the service takes hold. In the payments industry, NFC primarily involves mobile phones acting as debit or credit cards at the POS.

"Mobile Internet shopping is the largest piece of the action," said Mark Beccue, ABI Research Senior Analyst. "Thanks to red-hot smart-phone adoption, an increasing number of subscribers are shopping at mobile commerce sites such as Amazon and eBay."

The trend of bustling mobile Internet commerce may foretell a similar explosion in the NFC market, said Stephen Ospalak, a Principle with technology consultancy Green Management Group and former Vice President of the telecommunication company Telus.

"I think [NFC] will manifest itself, or become a commercial reality in the next few years," Ospalak said.

Why the delay?

Ospalak noted that the technology for NFC has been available for some time and is already used widely in Korea and Japan. But he said discord surrounding its deployment - compounded by the economic downturn - is a likely reason behind the delay of its arrival in other major markets.

"There's a whole bunch of usual reasons right now given the state of the economy why some technologies are going to take longer than others to be deployed," he said. "Deploying new technology is only good if you have the ability for massive adoption and deployment.

"If manufacturers of the technology, the inventors of the technology and the people who license the technology do not agree or did not ubiquitously adopt it, you've got a fragmented deployment that makes it hard."

Another possible factor is the development of non-NFC technology that functions similarly to NFC applications, making the need for the latter less pressing. According to Brent Samuels, a Manager for the payments industry consulting firm First Annapolis Consulting Inc., some terminals allow POS purchases with cell phones through the use of product codes.

"Payment technology solutions are being integrated every day so that NFC's functional difference gets smaller and smaller," he said. "There's better user interface for someone to make a purchase at the physical point of sale. It's less than ideal, though; it doesn't directly tap your phone and requires more of a back and forth."

Ospalak said that, expansive as the non-NFC market already is, the adoption of NFC will boost mobile commerce across the board by making mobile phones an automatic payment option. "I think it will generate a pull," he said. "It will draw more people to mobile commerce, whether it be NFC or through the direct networks. Either way, I think people will be trained by the environment around them." The Green Sheet, Inc.

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