Over the past twelve months the payments industry has been awash with talk of NFC; when will it become mainstream and what will it look like?  It is unsurprising then, that much of the mobile payment talk at Mobile World Congress this year has looked at the topic of NFC and the impact this contactless revolution will soon have on our lives.

As many who have travelled in Asia will be aware, in Europe we are actually behind the times when it comes to NFC.  In a seminar yesterday run by Japanese tech company DoCoMo, talk was of the world’s first international NFC trial between Japan and Korea and their e-wallet offering, the Osaifu Kentu service. 

The success of the Osaifu Kentu service, with its 37.5 million users, of which 10 million transact daily, goes some way to painting a picture of how far Europe still has to go on the contactless journey.  These users make on average 5-10 taps every day, primarily on local transport, shopping and gaining discount vouchers, using the 1.6 million POS acceptance points available.

These are staggering figures, which go to highlight the potential impact of NFC.

This session also highlighted that NFC offers us far more than just payment capabilities; in fact, we may well be missing a trick if we continue to see NFC solely in terms of payments.  In Japan, NFC mobile technology is also used for ticketing, hotel room keys and a whole host of other functionality. The most common example I’ve heard this week has been of combining an NFC-enabled card with personalised loyalty-based shopping offers, allowing consumers to obtain and use discount vouchers accordingly to their actual spending habits, a model that is already being used in the USA.

It is clear that NFC has potential to offer significant benefits for consumers, and yet globally just 0.8% of payments terminals and just 0.5% of phone handsets have NFC capability.

Given the estimates made today that the UK is between three to four years behind Asia in our payments evolution progress, one has to question why this is the case.  Thierry Millet, Orange's VP of Mobile Payments and Contactless Services suggested that a lack of interoperability is the barrier which continues to slow adoption of NFC in all of its different guises.

In my final MWC blog, I will be looking at the issue of interoperability in the mobile payments industry and discussing how mobile operators and financial service providers can collaborate on standards and processes surrounding NFC and mobile payments.