Mobile payments go back to NFC

In such circumstances the expected value chain (MNOs, TSM, banks and financial institutions) was threatened by software vendors, making the mobile payment ecosystem a fragmented market.

In 2013, the growth of NFC SIM cards was over 100%. Frost & Sullivan expects that unit shipments of NFC- and LTE-SIM cards will maintain high double-digit growth rates over the coming years. While this growth will have limited impact in the overall size of the SIM card market, it will represent an opportunity for smart card vendors to compensate the lack of growth of the low-end SIM card segment.

The ability to capture new users is crucial for service providers. But most existing service highlights are based on its value added services and convenience, cost or confidence. Confidence of payment services is main issue for the consumer. Even if it is transparent, security is fundamental for the system. Perceived confidence will be directly inherited from a strong security mechanism and a substantially low level of fraud and risk. At the moment, service providers are not seeing security as the major driver for success. Such attitudes may be a risky gamble, but the payment industry has already taken this option many times.

Jean-Noël Georges, Director, ICT Global Programme, Frost & Sullivan, comments: “Frictionless and convenience are the most attractive features that mobile payment solution should have as a basis. Security should be transparent for final users.”

Cloud-based payment solutions are threatening other payment solutions but cloud-based approaches could also impact mobile banking. Again, service providers, in this case banks, will not be reluctant to switch to cloud solutions as long as the service provides flexibility and value added services provide a competitive advantage. If banks have already invested in a cloud-based solution for payment, it will narrow the gap for them to move to mobile banking using the cloud as well.

2014 year was an exciting year for the payment industry, specifically for new initiatives and announcements. Banks and financial institutions are now looking to solutions that will allow a huge client adoption, which is probably possible by leveraging a hybrid approach by using cloud-based, tokenisation and secured elements.

Frost & Sullivan forecasts that in 2015 the number of secured element will reach 621.1m units globally.