A new study from San Francisco-based Javelin Strategy & Research predicts a floundering mobile payments market until merchants, payment networks, financial institutions and carriers bridge their services. Calling the contactless payments ecosystem a series of islands, the study says there is little-to-no mutual realization of value among the various constituents.
The report indicates that the success of contactless solutions depends on some disruptive factor or wide-scale deployment that bridges the gaps and allows for value creation among all constituents.
The report, entitled “Contactless/Mobile Payments Ecosystem: Solutions Must Bridge Islands of Value to End Market Stagnation,” says that until this bridging occurs, NFC and the evolution of mobile payments will flounder in the U.S. market.
“Efforts to deploy contactless and mobile payments solutions have suffered from conflicting value propositions among various constituents, specifically merchants, payment networks, card-issuing financial institutions, and wireless carriers,” said Javelin President James Van Dyke. “Consumer awareness and behavior changes are also necessary.”
Some key findings of the Javelin report include:
Smartphone ownership will be a key driver in consumer adoption of more robust mobile activity, including mobile payments.
Current smartphone owners show a much higher propensity to use contactless cards and are more likely to extend this into mobile payments usage.
As ecosystem players realize the value of NFC beyond the payments, the path to value from large-scale deployments of NFC solutions will become clearer.