Payment and transportation: vectors of development for NFC?
NFC & Mobile Payment
Recently, IDATE has published its report on "NFC & mobile payment" which presents the current situation of the mobile payment and mobile NFC technology markets. It analyzes the prospects for the market from a technical and economic point of view, by looking at challenges facing the economic models in key areas, including: automation, commerce, advertising, public services and transport.
"One of the major problems for NFC on mobile devices is how to define viable business models for a particular type of application in which the different stakeholders can find some level of financial balance", comments Julien Gaudemer, project manager for the NFC study. He insists:"In numerous initiatives, obstacles often lie in the difficulties local stakeholders encounter in defining a stable cooperation framework for offering services to users."
Complex business models
A different business model often exists based on application type (essentially payment and transport) and geographical region. Relations between stakeholders can vary from region to region. The types of stakeholders may also vary (different operators from one country to the next, for instance).
Compared with traditional payment methods and transport ticketing (credit/debit cards or NFC travel cards), the business model for NFC applications is different. More stakeholders are present in the ecosystem. This is explained by the fact that mobile usage requires the presence of certain players: manufacturers of mobile devices, mobile operators and SIM card manufacturers, primarily. Alongside these are other stakeholders, such as TSMs, most of which were previously smart card manufacturers who converted the value of a physical product into an intangible service. This ecosystem mainly differs from non-NFC mobile payment in that there are fewer technical issues and the conflict between stakeholders is not as fierce. Some players, such as chip or mobile device manufacturers, do not even enter the arena.
The NFC mobile ecosystem therefore comprises a multitude of stakeholders, each jostling to get ahead in a particular application. This is mainly the case with payment applications which can generate substantial revenues and consequently attract many businesses. Some stakeholders in this ecosystem have invested fully in NFC technology and in rolling out initiatives, while others seem more cautious, particularly Web giants such as Apple, Facebook and Amazon.
Competing technical architectures
The fact that the ecosystem comprises a multitude of stakeholders, and since some have some clearly chosen a technical architecture (SE type) that is most financially viable for them, conflicts arise between them. These technical architectures only affect so-called “secure” applications such as payment and transport.
Operators fully support SEs in the SIM card since it enables them to generate revenues from renting secure space on the SIM card. Service providers are more opposed to this architecture since they are seeking to minimize costs and have as few intermediaries as possible. This is the case for Google, which bases its Google Wallet on an SE built into the mobile device.
Manufacturers of mobile devices are caught in the middle:
The same is true for manufacturers of NFC chips and SIM cards who are looking to please all of their potential customers, and who must therefore support initiatives based on the SIM-card, as well as on other types of SE to avoid focusing on a single market segment.
Consultant at IDATE
> Visit our blog to read the full article.