The world’s largest mobile phone operators have backed a standardised payment system that could see mobiles phones used to pay for everyday items, similar to a swipe card.
The GSM Association announced that 45 of the world’s top mobile phone companies have committed to implementing SIM based payment systems based upon the Near Field Communication Standard (NFC).
NFC technology is a close proximity data exchange system that has long been tipped to replace credit cards and cash payment systems. It is already in existence through contactless credit card payments in the UK at outlets such as Pret-a-manger, but has failed to take off as expected, especially in the mobile phone market.
A finalised international standard with handset and SIM specifications will almost certainly accelerate the adoption of NFC, and see an end to credit cards. Many companies, such as Apple, have stated that the lack of a unified standard has hampered development of NFC in its devices.
The banks have acknowledged that as contactless payments are on the rise, and are already working on the infrastructure to meet the challenges the medium produces.
ABI Research says that by 2016 85% of all new point of sale terminals shipped in 2016 will be NFC-enabled, meaning that ideally consumers should be able to pay for purchases in the majority of big chain stores simply by waving their smartphones near the reader.
"[NFC] will enable a wide range of innovative and exciting new services and applications, such as mobile ticketing, entertainment services, secure access to hotels or cars, loyalty schemes and couponing, among others," says Franco Bernabè, Chairman of the GSMA and CEO and Chairman of Telecom Italia Group.
Google Wallet, which stores credit card details on an Android phone, and can be used for contactless payment with MasterCard Paypass terminals, has been in action since September. Apple had been rumoured to be including a built in NFC in the iPhone 4S – but has now gone down the software route also, using a barcode system. It is expected to launch its Google Wallet competitor next year, but has not ruled out NFC in the future.
Outside the mobile phone space, Intel and MasterCard have announced they are looking at an NFC option for the new Ultrabook, which should allow users to verify online purchasers. Transport for London (TfL) has also announced that passenger will be able to use mobile phone and card NFC payments on the London Underground from 2012.
American payment services company VeriFone, who worked on Google’s Wallet, has been buying up competitors in the space, including Swedish electronic payments company Point for €600 million this week, and Hypercom in August for US$420 million (plus debt).