Mobile Payments to be mainstream in 2011

With some much talk (and hype) surrounding NFC and Mobile payments, it looks quite possible that m-payments will enter mainstream in the Western world in the forthcoming year. Though mobile payments have become norm in developing countries like Kenya, Senegal and India, its yet to catch on in UK and the USA.

Here are some interesting facts from MobileBeyond:

• The mobile transaction market is so huge it offers room for multiple players. Yearly worldwide electronic transactions total $7-$10 TRILLION
• Competitors are generally local to each country or region leaving plenty of open territory for mobile payment service and technology companies. Companies that win in their markets will be those that understand customer needs.
• PayPal in the U.S., which has traditionally catered to merchant accounts, most likely will adopt a similar mobile strategy. (Both Obopay and PayPal are service providers–not technology companies like Fundamo in South Africa that provides software solutions for service companies.)
• “The competition is cash”–not the other players in this market space
• In five to ten years, mobile payments will achieve high adoption among consumers in developing and developed countries.
• Brazil, Russia, China and Mexico offer growth opportunities for players that understand these markets
• According to Portio Research, by 2011 mobile commerce payments are estimated to climb to $86.6 billion
• Nielsen predicts 27% of all U.S. payments by 2012 will still be cash

To get an idea, there are already multiple m-payments providers in Kenya. Leaving out the gians like Google and Paypal, there are other local providers like M-pesa, Pay-Zunguka, Pesapal and Zynde.

The following are the developments in UK from Computer weekly:

Some forms of mobile payments already exist. Phone applications like PayPal Mobile support person-to-person (P2P) payments. SMS-based transactions are used for car parking tickets and mobile commerce allows online shopping through mobile phone browsers.

Contactless cards are also in circulation for credit cards, transport tickets and are used in some food stores. The industry is looking next at near-field communication (NFC) mobile handsets. NFC allows 'tap-and-go' style payments using mobile phones at in-store terminals by incorporating contactless card technology into handsets. Alternatively, micro-SD cards with NFC-enabled chips can be inserted into mobile phones.

The Global System for Mobile Association (GSMA) has launched a Pay-Buy-Mobile project to enable consumers to pay for goods and services via their mobile phones. "By storing a consumer's credit or debit card within the SIM card and employing NFC technology, the mobile phone can be passed near a contactless Point Of Sale (POS) terminal to complete transactions," said Nav Bains, GSMA's senior director of mobile money.

GSMA has been collaborating with standardisation bodies; the European Payments Council, EMVCo, which manages card specifications and smartcard infrastructure standards body, Global Platform. The consortium is developing the Trusted Service Manager requirements document and a certification process to accelerate the commercialisation of mobile NFC services. But some experts believe NFC is a long way from a mass market roll-out in the UK.

The biggest breakthrough in the mobile payment market have been in developing countries, providing bank services via mobile phones for people who have traditionally not had bank accounts. Visa Europe recently launched Europe's first micro-SD based mobile payment systems in Turkey. But it is unclear when such a system will be introduced in the UK. says Juniper Research senior analyst, Howard Wilcox.

The number of contactless terminals in the UK is approximately 26,500 and the UK Card Association predict 14 million contactless cards will have been issued with contactless functionality by the end of 2010. "We're not expecting to give a launch date any time soon," continues Swain. "Globally, there's a lot of discussion but the UK is one of the only areas where we already have the infrastructure that would accept contactless mobile payments," he adds.
UK-based mobile banking firm, Monitise, has also recently launched a joint venture with Visa in India to accelerate the delivery of mobile financial services such as banking, bill payments, mass transit ticketing and mobile top-up to Indian customers. More than infrastructure, Monitise group strategy director, Richard Johnson, believes banks and mobile network operators need to work together. "Banks are where most people keep their money. It's about mobilising bank accounts rather than creating new accounts with network operators. Tap-and-go really requires collaboration," he says.

Industry expert consortium, Mobey Forum, hopes to bring banks, mobile network operators, acquirers and merchants together to build the relationships needed to progress the mobile payments industry.

Gerhard Romen, Mobey Forum marketing chair and director of mobile financial services at Nokia, believes the NFC trials have proved the consumer demand and, by 2011, all of Nokia's new smartphones will be NFC-enabled. "Once people work together, it'll provide simplicity for the user" he says. "A phone with NFC can do more than just behave like a card - it has a display, keyboard and internet connection - and becomes more interactive," he adds.

Today we have credit, debit and, perhaps, contactless cards. Tomorrow banks and mobile network operators hope to provide a mobile wallet. The next step will be introducing tap-and-go into the mainstream market and, despite slow progress, industry experts are increasingly certain it will happen "soon".

From eWeek:

Google and Apple are both making moves to ensure smooth financial transactions on their mobile platforms.

Last week news bubbled up that Google and PayPal were brokering a deal to let the search engine use the e-commerce service as a payment option for applications purchased through Google's Android Market.

Apple, meanwhile, hired an expert in near field communication (NFC) technology as its new product manager for mobile commerce and has published a number of NFC-related patents in recent months.

Google's e-commerce infrastructure is poor compared with that of Apple. Users may only purchase applications for their Android smartphones from the Android Market in 13 countries.

By way of comparison, consumers may purchase apps from iPhone's App Store in 90 countries all over the world. PayPal would be a welcome addition to Google Checkout and credit cards as payment options in the Android Market.

Gartner has said the market for mobile apps will be $6.2 billion this year, making it an obvious sector for Google and Apple to attack with gusto.

From San Fansisco Chronicle:

Bay Area businesses like Bling Nation and eBay Inc.'s PayPal division are rolling out products that allow people to hand over money to stores, restaurants, coffee shops or friends with the tap of a mobile device. No credit cards, checks or cash are necessary.

Meanwhile, reports suggest that other major companies, including Apple Inc., AT&T Inc. and Verizon Wireless are planning or negotiating to provide similar services.

"What I see is all these distinct initiatives coming together and merging at some point in the not-too-distant future," said Aaron McPherson, practice director at IDC Financial Insights. "All together, they add up to significant change."

Bling Nation, a Palo Alto startup founded in 2007, is among the furthest along in this emerging field, with more than 1,000 retailers nationwide accepting its payment system. The company provides so-called Bling tags, or small stickers, that affix to the back of a mobile phone and transmit data using a wireless standard known as Near Field Communication.

When users tap the tag on a proprietary reader at participating retailers, it pulls money from their PayPal account. For security, users have to enter a personal identification number for purchases over a certain amount, or when transactions occur at an unusual frequency or location.

Merchants pay for or rent the reader and are charged 1.5 percent of the total of every transaction, which is well below the average transaction rate for accepting credit cards. The additional advantage for merchants is that they can analyze customer data in a more fine-grained manner than is permitted through the credit card system. This allows them, for instance, to target sales offers to regular customers or those who haven't been into the shop in a while.

"They enjoy cheaper fees and analytics that can help them issue coupons and make more money," said co-founder Meyer Malka, adding that the advantages are turning businesses into proselytizers on Bling's behalf.

A little more than a month ago, the company began an aggressive push in partnership with PayPal to expand its footprint in downtown Palo Alto. It included giving away thousands of tags preloaded with $20 in credit to customers. There are now more than 50 retailers in the city accepting the payments.

As I mentioned last week, with heavyweights like Nokia, Apple and Google all coming closer to NFC and M-Payments, it should be a winning formula for the end consumers. We will possibly see more use of m-payments in the developed world. Lets not mention about security just yet.

Things our phone will do in next 10 years

Interesting article in Cnet on "10 things your mobile will do in next 10 years"

1. Wallet: This would be quite cool when available. Have been hearing about this for years now. Apparently very popular in Japan and S.Korea where people are not using credit cards anymore and instead using Phones.

A much better idea would be to have a universal recognition kind of chip which i can use as Credit card, Smart Card for Trains (In london we have Oyester cards) and then i can use this for accessing company door, garage door , etc. This would be a real killer app but doesnt look like will happen in near (or far) future

2. Internet: In December, ABI Research said that almost 50 million people used social-networking sites on their mobile phones. That number is expected to grow to 174 million by 2011. It would be cool to be able to browse using your phone. Mosst of the sites i use (including mine) are not mobile friendly and this is the thing that is turning people off the net.

3. Location: Already too many phones supporting GPS and A-GPS. The chips are becoming cheaper with cost of around $5 so the manufacturers should have no problem. In future we will get disscounted packages where we will have to receive adverts which would be location specific. Nokia has some applications which can compete with TomTom for getting directions, etc.

4. Search: Hardly anything needs to be mentioned for this.

5. TV: Have written enough on Mobile TV already. IMS Research forecasts that by 2011 there will be more than 30 million mobile TV subscribers in the United States. The firm also predicts that almost 70 million handsets capable of receiving mobile TV will be shipped in the U.S. in 2011.

6. Simplified surfing: From the Cnet article

Ever notice how many clicks it takes to find the one thing you're looking for on your phone? It's worse than counting how many licks it takes to get to the center of a Tootsie Roll Pop. But handset makers and mobile operators are
hard at work trying to make phones easier to navigate and simpler to use.

The upcoming iPhone from Apple is a perfect example of how user interfaces will be improved. Apple fans are confident that the company has come up with another slick and intuitive
design, just as it did for the iPod.

One aspect of the iPhone's interface that has been publicized is its use of sensory technology to detect when the device is rotated. This allows the phone to automatically render pictures on the screen in portrait (vertical) or landscape (horizontal) format. That allows the user to determine which format is best for viewing whatever is on the screen, be
it a Web page, video, or photo.

In the future, motion-sensing technology, similar to that used in the Nintendo Wii game console, will also allow people to navigate their cell phone menus or the mobile Internet
with a flick of their wrists.

But motion sensing is just one piece of the puzzle. Operators such as Verizon Wireless are redesigning their content menus
to reduce the number of clicks users must endure to find what they want. Ryan Hughes, vice president of digital media programming for Verizon Wireless, said he believes that user interfaces will be customizable so that users can decide
for themselves which applications will be displayed on their phones most prominently.

Motorola is already offering a customizable interface on the
Razr 2, which the company claims will make searching for contacts, accessing applications, and messaging much easier.

7. Brainier radios: Maybe in future SDRs (Software Defined Radios) may become more common and popular and yes the technology will become feasible. Also multiple radios on the chpset would mean Handovers will be possible from 3G to WiMax, Wifi, etc.

8. Personal Cell: Everyone seems to be talking of Femtocell. Where we will have a small 3G base station in our home. We could use it for Voice or High Speed data. No need for the POTS and use mobile for everything. This will still take some time as the operators dont fully understand the benefits of offering cheap data.

9. Perfect Camera: Today roughly 41 percent of American households own a camera phone. In fact, you'd be hard-pressed to buy a phone today that doesn't have a camera. By 2010 more than 1 billion mobile phones in the world will ship with an embedded camera, up from the 589 million camera phones that are expected to be sold in 2007, according to market research firm Gartner.

10. More music on the phone: Mobile phone users around the globe are expected to spend $32.2 billion on music for their handsets by 2010, up from $13.7 billion in 2007, according to Gartner. This can only happen when Music Video/Audio becomes cheaper though. Personally i would prefer listening to FM Radio rather than music but i am not sure how much demand there would be and ofcourse the operators dont gain anything.