August 20, 2013
Contactless payments is one of the proximity mobile payment methods and is primarily based on NFC technology. NFC is the latest short-range wireless connectivity technology offering simple and intuitive communication between electronic devicesBanks, mobile network operators, technology vendors and merchants are the key stakeholders, with many of coming together to implement NFC technology and are undertaking trial runs.
While NFC has applicability in many sectors. One of the key success areas for NFC payments is expected to be in transit, public transport, tolls and situations where large volumes of transactions need to be completed by a tap and go. Globally NFC will replace contactless cards like Clipper (in US) use in public transport etc. Also globally Google, PayPal, ISIS (3 US carriers) and others are trying to integrate payments, loyalty and discounts into one offering.
In India proximity payment systems like NFC are just beginning to appear. The approach of the players is to work with banks/telcos and role out NFC based payments to the merchants through them. That way large scale adoption can happen. iKaaz is the first mover and apart from that Power to Pay NFC tags from ITZ Cash Card Ltd., in cashless micropayments. It has been piloted in IIT Bombay and is expected to be rolled out on a bigger scale.
With few pilot and test projects implemented, NFC based m-payments is in infancy stage in India, although leading smartphone manufacturers have launched NFC-enabled smartphones. Awareness regarding NFC is growing but lack of RBI norms for NFC payments, non- existence of PoS terminals accepting NFC payments remain major hurdles in adoption of NFC – based m-Payments in India.
LTP view: NFC can be useful in unattended payment scenarios like transit. NTT Docomo has been very successful in Japan where NFC started from the Transit system, and in several European countries it is used at parking lots