Sunday, June 17, 2012

Contactless Payments in Emerging Markets: Can Mobile Leap Frog Developed Markets Once Again?

Much has been made of the disappointing growth in mobile contactless payments and near field communication in developed markets. Issues such as sunk cost in existing point of sale infrastructure, business models between operators and banks, and the maturity of handsets and embedded near field communication (NFC) chipsets have presented challenges that have yet to be completely overcome. Contactless cards themselves have struggled to gain huge traction, primarily due to the lack of acceptance in developed markets, and industry players have been slow to look at using phones as contactless acceptance points. Initiatives such as Isis and Google Wallet in the United States, and bridging solutions for mobile contactless including secure micro SD card have provided some solutions for pilots and trials, but it would be fair to say there has not yet been a significant commercial success in mobile contactless in a developed market (with the exception of Japan, and to a lesser extent Korea). Which makes the announcement of Apple’s Passbook in iOS6 all the more fascinating, but that is a blog for another day.