The growing diversity of alternative payment methods suggests the stakeholders are scrambling to establish a lead in preferred payment form. The telecommunications and financial and payment industries are leading the drive to implement smart card technology that will transform users payment habits.
Thats the verdict of the analyst, Frost & Sullivan, which says that with the likely commercial deployment of Near Field Communication (NFC) in 2011/2012, there will be a renewed initiative from the financial and payments industry to enable secure mobile payments. The industrys demand for more complex banking and payment cards that result in end-to-end solutions of products and services will further boost the overall revenue of smart card vendors, the company says.
According to Frost & Sullivan Analyst, Yiru Zhong: As users payment habit trends become more entrenched, they will spill over to other regions, enabling lagging countries and regions to leapfrog traditional payment methods and provide smart card vendors with a new avenue of revenue potential.
Poland, as the first country in the Central and East European region to introduce proximity cards by banks and mobile operators within the last two years, is a good example. The newest methods include the ING Bank sticker that can be affixed to a mobile phone or any personal mobile device and a module in Laks watches introduced recently by Bank Zachodni WBK. Both methods are an enhancement for proximity cards that have already been introduced for use in MasterCards PayPass networks around the country.
The telecommunications industry is pushing for NFC technology as the dominant means for mobile payment, relying on the ubiquitous mobile subscription to overcome underbanked society issues and to capture new ways in which businesses can reach out to customers.
With expectations that NFC-enabled phones will come on stream in 2010 and commercial deployments (in) 2011/2012, we anticipate a fight for a dominant payment form between the two industries to buoy the smart card sector, says Zhong. After all, both industries will require the necessary services and solution backups to ensure a secure seamless payment transaction experience for merchants, users and middlemen.
Ultimately, however, these developments suggest that form is less important than transaction volumes, the analyst says, and the recent example of the sticker payment card shows that it really serves to increase transaction volumes. Because volume generation is critical at this point, smart card vendors should make this process as easy as possible for their banking customers. Frost & Sullivan maintains that functional convergence is a significant end user driver for smart cards, and the extension to other capabilities is the next obvious step. Not only will its successful acceptance allow lagging regions to leap over traditional payment methods, but it will also provide smart card vendors with a new source of revenue potential.
The smart card industry should demonstrate its full range of products and services that enable their banking customers to increase their value to their end user customers and businesses for additional services such as marketing and customer analytics, concludes Zhong.
If you would like to learn more about Frost & Sullivan Smart Cards programme or obtain information on Frost & Sullivans recent report, Money in Mobile European Transactions, send an email to firstname.lastname@example.org with your full name, company name, title, and contact details.