The idea that mobile phones could become an extension of a person’s wallet or purse has now become a reality. The industry has settled on the use of Near Field Communication (NFC) technology as the most suitable way of transforming mobile devices into a payment method. This allows for the development of proximity payment solutions, whereby mobile devices can be used in a similar fashion to other contactless payment methods. Examples of these include PayPass and PayWaves, contactless cards from, respectively, Visa and MasterCard. Transit operators, for example, can use handset-based proximity payments to achieve savings through a reduction in their operating costs. The processing cost of an electronic transaction is around 40% cheaper than that for a paper ticket.
This report examines the emergence of handset proximity payments and ticketing. It discusses the impact this will have on the mobile industry and identifies the ecosystem of players, which includes the financial companies, network operators, handset vendors, technology companies, transit authorities and the various standards bodies. The handset proximity strategies of selected companies are also reviewed. We believe, on the strength of trials and pilots conducted in 2007, that in 2008 device manufacturers will begin to ship NFC-enabled handsets in earnest. We forecast shipments to increase at a CAGR of 338% for the period 2008-2012, culminating in shipment of 504 million devices in 2012.
ARCchart believes that a large proportion of passengers who travel with the major transit operators worldwide will adopt NFC handset-based ticketing services. The report concludes with a schedule for ARCchart’s view of likely timelines for the roll-out of NFC and handset payment systems, as well as providing forward looking recommendations for network operators, handset vendors and financial companies.
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