Why Should NFC Be Harder to Ignite than GPS – Capgemini’s NFC World Congress Critique

What's Next In Payments®
2:07 PM EDT October 3rd, 2011

Fantastic weather and panoramic views provided the setting for the “NFC World Congress – Business and Strategies for the NFC Market and Ecosystem” in the French Riviera last week. The importance of Nice as host city cannot be overstated since it was the first of nine French cities benefiting from €420 million in federal seed money to enable what will comprise a third of the French population for NFC services. Conference Chair François Lecomte, Mobile Contactless Services Forum, set the stage by underscoring the keys to success as ubiquitous user interface while not over-worrying the business model.

Anne Bouverot, Director General of GSMA, headed off an array of prestigious speakers from mobile operators, banks, governments, transit agencies, consultancies and solution providers, noting that NFC is the third “magic moment” for mobile, following phone calls and mobile internet. Thierry Millet from Orange, described the virtuous circle of innovative services and creative usage, but stated that “the traditional approach doesn’t work, nobody can go it alone, we need global vision of collaborative stakeholders.” Orange, one of the participants in Nice’s “Cityzi” NFC program, can confidently demonstrate this virtuous circle approach in Nice, in which the number of enabled consumers grew from 1,000 to 150,000 within six months.

Dr Annabelle Gawer, Imperial College Business School, posed the question, “Why is NFC so much harder than GPS?” The NFC “Field of Dreams” espoused at this conference was “put it on the handset and the apps will come.” But of course, MNOs have the tricky decision to prioritize all the possible new features. Nick Norman made a prediction based on a recent study conducted by his firm, Consult Hyperion, that the tipping point in the UK at least, will occur in 2013. And all those apps that will come were described by Dr. Nav Bains, GSMA, as a “day in life” of NFC, including taking your blood pressure, starting the car, paying for parking, acting as boarding pass and passport, opening your hotel room and exchanging business cards.

Tom Gregory, Barclaycard, and Jay Chinnadorai, Everything Everywhere, discussed Orange and Barclaycard’s joint deployment and lessons learned from the UK’s first commercial NFC service: being first is great PR, customer experience is critical and can never be compromised, device is more important than realized, transaction values are higher than on contactless cards, usage is much higher than planned. Three quarters of consumers who activate the service became frequent users.

The third impressive NFC use case is in Japan. Guest of Honor Dr. Akio Shiibashi, East Japan Railway, discussed how its Suica services changes everyday life. They have 16 million daily riders, 36 million cards, 23 million daily transactions, with 85% of riders using chip cards. As of 2006, the service is deployed on smart phones as FeliCa Osaifu Keitai (wallet phone). Their system is designed for extreme speed, at less than 100 milliseconds per person, to ease subway congestion. It is interoperable among 170 transit operators at 4,300 stations and on 24,000 buses, and Suica e-money is accepted at 150,000 retailers. The devices are used for apartment keys, bus fare, convenience store purchases, office keys, vending machine purchases, parking, coin locker, top-up, and ecommerce. In the 10 years since it was first deployed, there has not been a single case of counterfeit.

My presentation on “NFC: Next Frontier for Commerce? Exploration of Business Models and Market Entry Strategies,” compared mobile payment approaches – integrated NFC, microSD, stickers, bar codes, cloud payments and SMS – and highlighted NFC’s distinct advantages of better reliability, transaction speed, security, ease-of-use, wallet functionality and value-add applications. The growth of mobile money highlights the first-mover advantage – a “wait and see” attitude risks losing the payments franchise. The growing momentum of full-scale mobile offerings and underlying triggers signal the presence of a viable business case. A strong mobile offering needs an ecosystem that has carefully been customized to the unique market environment. Stakeholders must choose a strategic direction among the four available partnership models: MNO-centric, bank-centric, independent third-party-led, or collaborative. The true value from mobile payments will initially be found in less tangible value streams, such as understanding of customer behavior, and cultural transformation to enable entrepreneurial, collaborative approaches.

My take-aways from the conference? NFC is an exciting technology that has the potential to change our lives for the better. Collaboration remains the key to success.


Deborah Baxley is a Principal with Capgemini Financial Services Consulting. She is a recognized expert in the payments industry with 20 years consulting experience in 14 countries. She possesses in-depth experience in mobile payments and credit cards. She is an officer on the Smart Card Alliance Payments Council, co-founder of One Million Acts of Payments Innovation, advisory Board Member at Brighter Planet, socially responsible company helping manage and mitigate carbon emissions using cutting-edge analytics linked to payment cards, and Certified Smart Card Industry Professional. She is a frequent keynote speaker and prolific author on topics of mobile and advanced payments innovation.

Deborah can be reached at Deborah.Baxley@capgemini.com.


Related Content

 

1 Million Acts of Payments Innovation: Capgemini on the Intersection of Developed and Developing Markets

World Payments Report 2010: Payments Volumes Resilient in the Crisis

Changing the Game in Cards

Rewards in Real-Time, Mobile is Making Its Move

Comments
Also by This Author
What's Hot
News
Bloomberg TV: David Evans Skeptical Over Future of Bitcoin
Alternative Financial Services
Zuckerberg: Facebook’s Focus On Ad Revenue, Not Payments
B2B Payments
Is A ‘Nuclear Blast’ About To Hit New York’s Procurement World?
B2B Payments
New Trade Finance Solution Hits Europe
View All Articles ››
You May Also Like
Company Spotlight
Different mPOS Strokes for Different mPOS Folks
International
Digital River Offers A Sneak Peak At Mobile eCommerce Trends
Mobile Commerce
Trustwave Buys Cenzic To Beef Up App Testing Capability
News
Bloomberg TV: David Evans Skeptical Over Future of Bitcoin
Cool
Smartphone Magnetism: Visa Invests In Loop
Company Spotlight
The MasterPass Master Plan
Alternative Financial Services
Zuckerberg: Facebook’s Focus On Ad Revenue, Not Payments
View All Articles ››