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NFC sea change leaves mobile operators frozen out

The global value of mobile and wearable contactless payments is set to reach $95 billion annually by 2018, up from around $35 billion last year. According to Juniper Research, the emergence of a range of connected wearables has piqued the interest of NFC stakeholders. Watches, wristbands etc will be in the vanguard of these developments, although the sector will take several years to reach critical mass. While nearly nine million Apple Watches had been shipped by the end of 2015, these numbers were dwarfed by NFC-capable iPhones. As a result, wearables as a whole will not account for more than 2% of non-card contactless payments by value in 2018.

The report also questions the longer term prospects of wearable devices preloaded with credit, such as Barclaycard’s bPay range, arguing that they represent a greater security risk than those linked to credit or debit cards and protected by a secure element.

Meanwhile, there has been a sea change in the NFC ecosystem, with several vendors now following in the footsteps of Apple and embedding secure elements within the smartphone. This approach further weakens the contactless prospects for mobile network operators, which are effectively being cut out of the value chain. Although Samsung is the only other OEM to date to launch an own-brand contactless payment service, Xiaomi has filed patents for such a service, while both ZTE and Lenovo have begun rolling out eSEs (embedded secure elements) in selected handsets.

Research co-author Nitin Bhas says: “Most operator-led pilots and commercial ventures have now closed down. Apple’s entry into NFC gave the industry a much needed boost, and could well be seen as the tipping point for the technology, but at the same time it sounded the death knell for the mobile operator projects.”

By Scott Thompson

 

 

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