When I saw last week’s latest NFC payments trial announcement by the GSMA, I have to confess my immediate thought was - So what? Another day, another contactless payment trial.

In 2006 I estimated that by 2011 mobile would facilitate $35 billion worth of contactless transactions, which has clearly been wildly off the mark! I hold my hand up and admit that I underestimated how slowly it would take to roll out mobile contactless payments. Despite this, it remains my opinion that handset based contactless payments will eventually support billions of transactions, driven mainly by strong convenience motives. Ever decided not to bother buying a snack or a magazine at a newsagent after seeing the length of the queue? Well, contactless payments should mean faster movement of queues; less waiting and greater likelihood you will complete your transaction. Importantly for businesses it will scale down cash handling costs. Yes, there are some competing contactless instruments, like contactless cards, but why bother thumbing through several cards in your wallet when you can just whip out your phone and be on your way?

The technology implementation of contactless payments on handsets has been agreed on by operators and device vendors through the GSMA Paybuy initiative. Furthermore, facilitating contactless payment is part of the strategy of leading payment companies (banks and credit cards) like MasterCard, and Barclays. So what’s preventing full deployments? Operators are waiting for the handsets from vendors. The handset vendors are waiting to see when retailers upgrade their terminals to accommodate contactless payments. Meanwhile, merchants won’t invest in contactless technology until they see evidence of wider deployments of contactless payment instruments, so we're in a deadlock situation. To their credit (pardon the pun) banks and major credit card companies are taking the lead by distributing and marketing contactless payment cards. Over time this will lead to growing adoption of contactless infrastructure among merchants and remove one of the barriers to take off.

However, critical business model issues still need to be resolved. Operators want compensation for subsidising these new payment instruments into the market and they are in a position of control because payment applications will reside on SIM cards issued by them. Within an established ecosystem for payment accommodating an extra few mouths to feed will remain a key challenge, and an area which we intend to investigate further in up coming reports on contactless payments later this year.

Nitesh Patel

Spiderman (née Peter Parker) and Harry Obsorne. Julius Caesar and Marcus Brutus. Apple and Google. Each of these great friendships inevitably turned into a rivalry. The battle for the consumer’s mobile soul became more complicated on January 20th as rumors abounded that further acrimony between Apple and Google, the former bunkmates, has led Apple to consider Microsoft’s Bing as the iPhone’s default search engine. Take a moment to let that sink in. Apple partnering with its rival Microsoft – certainly with noses tightly clenched - to challenge the enemy du jour, Google. The mobile market certainly makes for strange bedfellows. Beyond just posturing, the possibility of Bing coming to the iPhone shows Apple is serious about its divorce from Google but it could just be an interim step for greater Apple control of its platforms. 1. Google Services. A number of iPhone users – unwilling to pay the annual fee for MobileMe use Google services, particularly Google Sync to keep e-mail, contacts, and calendars always up to date from iPhone to cloud to computer. If Apple is serious about limiting Google’s footprint they should make MobileMe free and hasten the conversion of Google users to MobileMe users. Failure to do so, combined with the possibility of greater disconnection from Google services could convince some Google users to adopt Android. But a free MobileMe not only prevents this, it gets users further invested in the Apple ecosystem. 2. Apple Control. Maps. Search. The processor. Streaming music. Apple still partners with a number of companies for its device and service, but it has also been on an acquisition binge. Could this be the beginning of greater control for Apple to ensure a wholly differentiated experience? Acquisitions of PA Semi, Lala, PlaceBase, and Quattro certainly indicate it more Apple control could be the future. Could an Apple search engine even be on the horizon? 3. The Tablet and other platforms. All service/OS providers want greater control over the user experience. Google is releasing an entire OS, Chrome, to extend its control to more platforms. Apple will not want to cede valuable property on iPhone, iPod Touch, or the iPad/iTablet/iSlate/iTenInchOLEDTouchscreenMacBookTouchPro. Looking at the broader picture – offering improved embedded services such as Maps while also allowing users to download other best of breed applications will ensure an improved, but differentiated experience. It seems therefore that partnering with Bing could be an interim step, another defensive move to relinquish any lingering grip Google has on the ‘out of the box’ Apple platform and eventually lead to a more wholly Apple experience and an improvement to the Apple ecosystem. But if Apple doubles down with its own services it must remember an important lesson Spiderman was once taught before he could defeat Harry Osborne’s Green Goblin – with great power comes great responsibility. -Josh Martin