NetworkIP Blog

Last week Juniper Research released a new report forecasting the growth of the Mobile Payments Market through 2013. The study projects that purchases using Near Field Communications (NFC) enabled phones coupled with money transfers are likely to total $600 billion globally by 2013. Howard Wilcox, the author of this report, points to the continued growth in mobile subscriber penetration & the availability of exciting & easy to use services as the driving forces to this type of growth.

Wilcox concluded that today’s mobile market is mostly dominated by the purchase of digital good such as games, ringtones, & music. The new opportunities in this space will include the future of NFC, mobile money transfer (MMT), & the purchase of physical goods via the mobile device. The report suggested that the Far East & China, western Europe, & North America will represent more than 70% of global MMT gross transaction value by 2013.

In order for this market to mature at the rate suggested by Juniper we’ll need to see a number of things fall into place. The good news is that the mobile operators can now support the bandwidth & speeds that these mobile payment applications will require. Also, mobile operating systems such as Symbian, Apple, & Windows Mobile are now open for us to develop these new mobile payment applications.

So what pieces to this puzzle are we still missing?

The mobile device manufacturers such as Nokia, Samsung, RIM, & Apple need to begin releasing new phones with NFC technologies built in. Without these devices in the market, retailers will not begin updating their existing Point of Sale (POS) infrastructure to accept contactless payments. Once released, the device manufacturers will need to make these new mobile NFC enabled devices affordable. Unless people are purchasing these new mobile devices, the retailers will still be reluctant to update their existing POS solutions.

Beyond the mobile devices & the POS infrastructure consumers need to be educated. Consumers must understand how these new mobile payment solutions will work, the value in using these solutions, & most importantly the consumer needs to be convinced that these solutions are safe & secure. There have been far too many reports of identity theft for consumers not to wonder how this solution is safer than what they are using today.

For those of us partaking in this new market the sky is the limit. Of course we still have some obstacles to navigate & it’s going to require platform providers like NetworkIP, mobile device manufacturers, mobile service providers, retailers, application developers, & the banking & credit card companies to all work together.

Last week’s Democratic National Convention (DNC) was interlaced with contactless & mobile technology from beginning to end.

First Data kicked the convention off by introducing their new GO-Tag; an innovative electronic sensor that is small enough to transform any device into a contactless payment solution. The GO-Tag which was distributed in the form of a small button at the DNC allowed the 5,000 lucky journalists & delegates who received them the ability to “purchase” free snacks & drinks by tapping their GO-Tag button on electronic sensors at concession stands installed throughout Denver’s Pepsi Center. In a recent BusinessWeek article, Michael Capellas, First Data’s CEO, is placing a major bet on the fast-emerging world of mobile electronic commerce. According to the article, the GO-Tag project is one of five new ventures that Capellas has launched since he took over First Data. The other four projects include information analysis, customer-loyalty programs, fraud detection, & consumer-behavior prediction. The article went on to say that Capellas believes that mobile commerce could add more than a $100 million to First Data’s revenues in 2009.

Then there was Senator Barack Obama who announced Joe Biden as his vice-presidential pick with a text message. Nielsen Mobile described this text message based ad campaign as “the single largest mobile marketing event in the U.S., to date.” Nielsen estimates that 2.9 million U.S. mobile phone subscribers received the text message launched by Obama’s campaign. Obama supporters can still sign-up for future text messages from Obama’s campaign by texting “GO” to short code 62262 (spells OBAMA). Supporters can even subscribe to specific types of information updates by texting specific keywords such as “HEALTH”, “EDUCATION”, etc. For more information about Obama’s mobile campaign you can visit Obama’s web site & while you are there you can even download wallpapers & ring tones for your mobile phone too.

Delegates attending both the Democratic & Republican National Convention also made good use of their mobile phones for communicating events from the convention. They sent & are continuing to send text messages to services such as Twitter which in-turn distributes these messages from the convention to their “followers”. These same people are also shooting short video, audio, & taking pictures with their mobile phones & then uploading them to their blogs as mobile blog entries (”moblogs” for short).

These are just a handful of examples on how contactless & mobile technologies are being used in larger scale mediums such as our current presidential election & more importantly these two technologies are increasingly becoming a part of our everyday landscape.

My summer conference schedule so far includes the Prepaid Press Expo in Las Vegas in August & Mobilize in September in San Francisco.

NetworkIP is a regular at the Prepaid Press Expo. We’ve supported this event for many years now & it’s a great opportunity for us to get out & share with our clients what we are up to, what trends we see occurring in the prepaid industry, & what we plan to do to ensure our clients can take advantage of those new trends.

This will be our first year attending Mobilize, in fact I believe this will be the first year this show is held. We have the highest respects for the folks at GigaOm & believe they have pulled some of the brightest people together for this conference. We’ve been following the mobile space & working more closely with partners in this space this year. This event is sure to shed some light on where things are heading, or at least where we think this space is heading. With more mobile devices becoming open & network speeds increasing this is an exciting space for us to be involved in.

About the Prepaid Press Expo:

The prepaid industry has grown in three distinct branches – calling cards, wireless, and gift cards/alternative payments. These three diverse sectors converge at the retail level, but are still approached as different industries. No trade event today features the convergence…until now!

About Mobilize:

Mobilize is a conference developed by award-winning technology writer Om Malik to inform the entrepreneurial community about the opportunities present in the next phase of the mobile web. Working with Om on the program is GigaOM’s resident technologist Surj Patel.

Industry-leading speakers will share their unique perspectives with Mobilize participants to guide them through the emerging opportunities in the next phase of the mobile web. We will feature the best technologies, the best thought leaders and the most innovative and inspiring startups.

A wonderful article by Christopher Breen of Macworld.com pointed to how the 3G iPhone is sure to change the way in which retailers market & we consumers choose where we eat & shop. As stated previously, I was quite disappointed that the 3G iPhone will not include support for Near Field Communications (NFC). However, with the combination of 3G & GPS you’ve still got something pretty special.

The idea of walking down the street past a store & a coupon for example appearing on your phone from the very store you are walking past is so much more a reality than it ever has been. If there isn’t a name for this type of marketing might I suggest Location Based Advertising (LBA).

Take this example a step further & imagine the coupon that was just zapped to your phone is of interest to you. You choose to redeem the coupon from your phone which leads you to a purchasing page. You select & pay for you item all through your phone. You now walk into the store to pick up the item you just purchased.

For some, this example may scare you & for others I’m sure you’d like nothing more than to be able to purchase everything from your phone. Imagine the time this approach will save you & the convenience factor. And for retailers the potential to market to consumers who can take immediate action is priceless.