All over the world governments, financial institutions, and merchants are taking measures to reduce the use of cash. Digital money is set to become the norm for low value transactions. At present, this goal is partly being achieved through the use of card-based proximity payment methods. However, to be truly successful digital money needs to evolve beyond a mere payment method into a source of benefit for individuals based around value-added services. This can only be attained through the use of mobile devices.

The number of contactless cards is set to reach 396 million by the end of 2011, equaling just 6% of all cards in circulation, and few of these cards offer value-added services other than links to loyalty schemes. By contrast, there are approximately 5.1 billion mobile users worldwide and this is set to reach 7.1 billion by the end of 2015. The scope to develop applications that enhance people’s lives in ways that go beyond payments is significant. ARCchart estimates that the number of users accessing services and buying goods using NFC-enabled devices will total 588 million by 2015.

This report examines the emergence of digital money from the perspective of the convergence of card-based proximity payments to the use of NFC-enabled mobile devices. Business models are identified which examine how companies can benefit from the deployment of NFC in mobile devices, generating opportunities beyond those associated with traditional transaction type activities, such as ticketing and retail.

ARCchart believes that 2011 will be the year when reality hits and industry participants finally acknowledge the challenges that need to be overcome to fully commercialise NFC. Internet companies such as Apple, Google, and Yahoo are best placed to take advantage of this technology. Incumbent players in the telecoms market are at risk of being left out.

Topics of coverage include:

• Organisations behind card-based and NFC-enabled mobile digital money services
• Security considerations for protecting user transactions
• Design options for integrating proximity payment and services functionality into mobile handsets
• The disruptive forces that Internet players will have on incumbent players
• The ecosystem for card and NFC-enabled mobile payments
• Company profiles of selected leaders in mobile NFC payments
• Recommendations on strategy for the various mobile NFC stakeholders
• Revenue projections for mobile NFC-enabled services
• Market size and forecasts

Companies and organisations mentioned, discussed or reviewed include:

American Express Apple AT&T Avea Barclaycard Bouygues Telecom Caffé Nero Cardis China Unicom Consult Hyperion Directel Garanti Bank Gemalto Google HP Hypercom

KDDI Korea Telecom LG London Underground MasterCard McDonalds mFoundry Microsoft Morrison Motorola Nokia NTT DoCoMo NXP O2 Orange PC World

RIM Sagem Sainsbury Samsung SFR SK Telecom Softbank Sony Ericsson Starbucks Telefonica T-Mobile TwinLinx Verizon Visa VIVOtech Vodafone

Answers and opinions are provided with respect to the following essential questions:

• What is digital money?
• How many contactless cards vs. NFC-enabled devices will ship in 2015?
• Why has NFC failed so far?
• What portion of smartphones will be NFC-enabled by 2015?
• How many people will have access to contactless payments (card and phone) by 2015?
• How will the digital money market evolve over the coming years?
• Where are the opportunities for application developers?
• When will digital money start to appear in commercial applications?
• Which companies are going to emerge as winners/losers in the digital market?