Contactless transactions offer an exciting new way to conduct business, one that has some real potential for improving the bottom line at retail and similar businesses. But the sheer number of contactless transactions being carried out in the marketplace is set for a very big rise indeed, if a new report from Juniper Research (News - Alert) bears fruit. According to that study, the total number will see a huge jump between now and 2018, and the sheer size of the jump will likely make businesses take notice.
According to the Juniper Research study, this year the number of contactless transactions in the field is just over three billion. Substantial by any reckoning, at least until the projections are considered. By 2018, the number of contactless transactions is set to exceed fully 9.9 billion. That's a pronounced jump, and what's leading it is a combination of two factors.
The first factor driving the big number climb is the rise of host card emulation (HCE), a platform that can turn apps into what amounts to virtual smartcards. When used in conjunction with near field communication (NFC) systems, HCE can remove the need to include a secure element (SE) in the device that's using the combination as a payment mechanism. That can reduce the time-to-market involved in getting such a platform ready for public use, and likewise can also help to calm those concerned about security in the HCE concept. With both MasterCard (News - Alert) and Visa coming out in favor of such a system, the likelihood of this being a safe platform from which to work is indeed a good one.
Beyond that is the second factor: Apple (News - Alert)'s iWallet. Now likely to arrive on the scene in late 2014, the iWallet will offer a competing yet equally safe alternative. It's set to use Bluetooth Low Energy (BLE), along with a second air interface, to drive its transactions, and that's the kind of thing that would bolster both use and further awareness of use by virtue of access to the huge Apple market.
There's a downside here, however, for the mobile operators. The same advantages that give banks and similar payment mechanisms the added security and ease of use in turn can leave mobile operators out in the cold. As described by the report's author, Dr. Windsor Holden, “With the emergence of HCE, the operator role at the heart of the NFC value chain is no longer sacrosanct. Banks can now go it alone and as a result the scale of the operator opportunity is significantly diminished.”
Note that key point: diminished. Diminished, not removed. Diminished, not eliminated. There are still opportunities here for astute network operators to step in and offer services, specifically branded to a device or a carrier that provide the extra value that make the banks' solutions and the like inferior by comparison. The key takeaway, naturally, is to offer value. While there will indeed be plenty of competition in this industry, from a variety of sources, there will always be room for those who can do the job better than the competition, providing a better value than the rest.
Just how the mobile operators can do that is somewhat unclear—perhaps a better connection to mobile alternatives like streaming video and the like—but there is room to be had, with some due consideration. Contactless payments are set to be a huge market, and those who want a slice of it will need to keep value first and foremost in future planning.
Edited by Cassandra Tucker
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