Report: Contactless payments will take off as chips are embeded in phones
28 June, 2007
category: Contactless, Financial
In its latest Mobile Payments Forecast Report, Javelin Strategy & Research reveals how contactless cards and mobile phones will function together to change the way Americans and retailers conduct purchase transactions. Javelin sees enhanced mobile phones as the way to introduce electronic payments capability to a larger number of consumers, integrating new contactless capabilities to provide increased control and convenience. Chips embedded in consumer mobile devices will replace payments cards and will spur 30 million additional users over the next 5 years, according to the report. Javelin identifies the need for networks and issuers to motivate wireless carriers to support mobile proximity payments, in order to conveniently bring advanced payments capabilities into the mainstream.
Javelin Predicts Contactless Cards and In-Store Mobile Payments Initiatives Will Languish Until Chips Are Embedded in Mobile Devices
Contactless Adoption to Reach 50 Million by 2012 as Payments Networks & Card Issuers Motivate Carriers
SAN FRANCISCO–In its latest Mobile Payments Forecast Report, Javelin Strategy & Research reveals how “contactless” cards and mobile phones will function together to change the way everyday Americans and retailers conduct purchase transactions. Javelin sees enhanced mobile phones as the way to introduce electronic payments capability to a larger number of consumers, integrating new contactless capabilities (which transmit payment information through the airwaves rather than via swiping a card’s magnetic stripe) to provide increased control and convenience. Chips embedded in consumer mobile devices will replace payments cards and will spur 30 million additional users over the next 5 years. This will build on today’s mostly “closed loop” contactless payments, which are already being adopted for functions such as tolls and mass transit. Javelin identifies the need for networks and issuers to motivate wireless carriers to support mobile proximity payments, in order to conveniently bring advanced payments capabilities into the mainstream. According to Javelin President & Founder, James Van Dyke,
“Banks and technology companies are working hard to make contactless cards available now, but contactless in card form is an insignificant train stop en route to the important destination of mobile payments. Bottom line, Javelin believes that these two separate business initiatives (contactless cards and mobile payments) must merge into one now, in order to make both a reality.”
Within the new report, Javelin identifies carrier revenue models for contactless implementation in order to spur carrier interest. Mobile payment platforms, consumer in-store cards and electronic payments growth are dependent on the continued availability of higher-functioning handsets. These handsets will provide further motivation for merchants to accept contactless and will allow consumers to adopt technology that replaces wallets with cell phones (so-called mWallets or Wireless Wallets). As consumers begin to utilize their handsets for financial activity, financial institutions will be able to engage in more real-time, two-way communications with account holders. As stated by author and Senior Analyst Bruce Cundiff,
“When making a purchase with this combined function, consumers will no longer need to fumble past a phone when looking for a wallet, and the card-less payment phone can be found or even turned off by making a simple phone call.”
Mobile payments will ultimately allow more consumers to conveniently and rapidly make purchases electronically, rather than through slow and inconvenient methods. This dynamic evolution away from card, cash, and check payments comes at a pivotal time, with many top US payments firms currently involved in major changes to their equity structure.
For More Information
For additional information on Javelin’s mobile research reports, please visit http://www.javelinstrategy.com/mobile or call (925) 225-9100 x 26 for details.
About Javelin Strategy & Research
Javelin is the leading provider of independent, industry-specific, quantitative research and strategic direction for payments and financial services initiatives. Javelin conducts rigorous research and analysis to create successful strategies related to financial institutions, payments firms, technology vendors, merchants and billers, regulators and other policy-makers, associations, and consumer or business end-users. Javelin can be found on the web at www.javelinstrategy.com.