Blog: NFC Still Top Dog at GSMA Mobile World Congress (March 2013)

By Sirpa Nordlund, Mobey Forum

So, where were you in the last week of February? If, like me, you work in the mobile industry, there’s a fair chance you visited Barcelona for the GSMA Mobile World Congress. Over three days, 72,000 visitors from more than 200 countries and all corners of the mobile ecosystem descended on Spain’s second city to promote, discuss and debate the future of the mobile channel.

In terms of ground-breaking announcements, the exhibition did not reach the dizzying heights of previous years. Most stories focused on technologies and solutions already established. The notable exception, however, came from Visa and Samsung, which announced plans to roll out Visa payWave on an embedded secure element (eSE) in Samsung’s next generation of handsets. This news is significant. Some financial institutions have said the mobile payment ecosystem has stalled in part due to the costs associated with delivering services via the UICC (universal integrated circuit card), a mobile network operator (MNO)-controlled SE. This is one of the first major attempts to introduce a mobile payments solution where a handset manufacturer and payment scheme roll out and administer a service entirely at their own expense, independent of an MNO.

But big questions remain. It’s important to acknowledge that Visa has its own mobile provisioning service, but this will only relate to the payWave service. Who will manage the authentication keys that activate and personalize the eSE? To date, this has been the role of the MNO. Who will wield the power to grant and block access to the eSE? How will secure updates be managed? What other kinds of apps are likely to want a piece of the action? This is a story that will run and run, not least because it squeezes MNOs out of the mobile payments value chain and you can be sure that they won’t be going quietly. If, in protest, the MNOs choose not to support the distribution of Samsung’s handsets, a new delivery channel will need to be established to get the devices into the hands of consumers.

Visa is playing hardball on other fronts, too. In the week following the show, Spanish bank Bankinter made an announcement that detailed the trial of a mobile contactless payments solution that works with any EMV-compliant contactless point of sale terminal. The solution bypasses the need for an SE, can handle transactions when the device is both online and offline, and uses a one-time password, two-factor authentication technology to secure the payment. This announcement signals that Visa is working closely with service providers, such as transit operators and banks, in addition to device makers in order to support the development of alternative payment solutions.

All that said, it’s clear that this year NFC remains the current mobile payment technology of choice, as was evidenced by the newly launched “NFC Experience,” which saw 10,500 attendees test NFC technology for themselves.

From my perspective, the mobile financial services sections of the conference represented the wait-and-see attitude that is characteristic of the ecosystem at present. The same players were there, talking about the same applications and use cases to the same audience. As with all events of this kind, the countries synonymous with innovation in mobility, such as Korea and Japan, were well-represented. But why are they so far ahead? At least part of the reason is practicality. These markets are served by only one or two MNOs and banks, making the business of testing and rolling out new technologies a relatively simple task compared to the numerous integrated and competing infrastructures serving the major Western markets, such as Germany, the U.K. and the United States.

The recipe for success in the Western mobile payments market is complex and can’t be cooked alone. Stakeholders must come together to develop services and business models that answer consumer needs, remembering always that any security breach will be a show stopper. NFC, in particular, may only get one shot to impress. If consumers feel at all uneasy, they simply won’t engage. Overall, the entire consumer awareness of the technology is low, and companies committed to NFC will need to drive their value propositions to market aggressively in 2013 if they are to ensure NFC is not usurped by alternative, cloud-based solutions.

Sirpa Nordlund is executive director of Mobey Forum, a bank-led industry association devoted to driving mobile financial services. She spent 10 years at Nokia, where she held several management positions and was involved with the business development of NFC. Nordlund is based in Helsinki and can be reached at [email protected].

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