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What's keeping mobile payments from going mainstream?


Published: 21 March 2012

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Smartphones have gone mainstream -- yet making payments with them might not do so for another few years, according to a March 2012 survey from mobile messaging and commerce services provider Sybase 365. The survey found that most mobile executives don't expect mobile payments enabled by near-field communications (NFC) to take off for another two to five years.

High hopes for NFC
NFC involves communication between a merchant's card reader and a customer's credit card or phone. If both are enabled with NFC technology, the customer can wave the card or phone in front of the card reader. The two devices exchange payment information, and the money is deducted the customer's

The payments industry has had high hopes for NFC technology. Because the same technology is used whether the customer uses a credit card with an NFC chip or a phone with an NFC chip, some experts predicted that NFC card payments would pave the way for smartphone payments.

Mass adoption still some way off
The Sybase 365 survey, however, suggests that the road to widespread adoption of NFC-enabled mobile payments will be longer than hoped. Sybase 365 polled mobile industry experts from a number of countries during the GSMA Mobile World Congress in Barcelona. In particular, they wanted to know what sort of timescale experts were placing on the mass adoption of NFC mobile payments -- and find out which obstacles were hindering progress.

More than four-fifths (81%) of respondents said they did not believe NFC mobile payments would become mainstream for another two to five years, with less than 10% expecting widespread adoption within the next 12 months.

Obstacles include security concerns and poor coordination
When asked about the barriers to rapid adoption of mobile payments, 38% of respondents said consumers' doubts over the security of mobile transactions would be the main obstacle. There are also concerns about the current lack of industry collaboration, with 38% of survey participants citing the need for coordination among merchants, mobile operators, payment processors, banks and mobile payment application developers.

"Material advances for mobile payments will only come about when banks, operators and retailers can converge on a business model," said John Sims, president of Sybase 365, in a statement. "And with it [will come] true industry interoperability, leading to a widely embraced mobile payments system."

When all the stakeholders do start working in tandem, experts predicted, customers will flock toward mobile payments. In some parts of the world, mobile payments via SMS are already flourishing -- and, if the industry can create an even faster, easier process using NFC technology, it will flourish as well.

See related: UK consumers 'fearful of mobile payments'; Boku and MasterCard team up for mobile payments

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