Mobile Contactless Payments - $36 Billion In Payments By 2011

At a global level, activity in the mobile phone contactless payment market today is still negligible. For the past two years the only bright point has been the FeliCa service in Japan, which has provided a model for the speed with which services can take off if the right players and the right structure are put in place. Strategy Analytics estimates that FeliCa will drive $900 million worth of payments in Japan during 2006.

Although greater levels of collaboration between banks, operators and payment networks (e.g. American Express, MasterCard and Visa) are required for mobile contactless payments to emerge in the US and across Europe, momentum is gathering, with numerous mobile phone based contactless payment trials planned. These will involve the major stakeholders and should help determine how services will be implemented.

As Senior Analyst, Nitesh Patel, states, “Handset vendors Motorola, Nokia and Samsung are playing a large part in enabling the proximity payments market by pushing Near Field Communications into their handset portfolios aggressively over the next 18 months. On the other hand, AMEX, MasterCard and VISA are driving contactless terminals into merchant outlets.” Despite these moves, consumer behavior will take time to change.

Vice President, David Kerr, adds, “We believe that it will take time to generate traction even once services are commercially deployed. Consumer attachment to existing payment methods, combined with concerns over the security of phone-based systems, as well as competition from alternative contactless devices like plastic cards and key fobs, will slow adoption.”