Visa is renewing its push into near field communications (NFC) technology, encouraging investment in the young market in a bid to accelerate adoption of the mobile wallet in the US. The technology allows smartphone customers to complete a ‘wave and pay’ action in shops, restaurants and other retail centers where terminals are installed that can read NFC chips in mobile devices, rather than swiping credit cards. The firm says it plans to encourage investment in infrastructure to underpin mass adoption of mobile payments over the coming year. Visa’s partnership with the Isis consortium of major network operators will pitch it into direct competition with the likes of Google’s digital payments venture, as competition begins to heat up in the fast-moving market.
“As NFC mobile payments and other chip-based emerging technologies are poised to take off in the coming years, we are taking steps today to create a commercial framework that will support great growth opportunities,” says Visa global product head, Jim McCarthy. The firm has partnered with carriers AT&T, Verizon and T-Mobile, along with other major credit card companies including Mastercard, American Express and Discover to concentrate on digital payments. Traditional payment providers are facing increasing competition from newcomers such as eBay’s PayPal. The payments firm is already causing a stir in the fledgling market with reports that it could record USD3bn worth of mobile payments by the end of the year.
Visa’s global mobile product head recently told Reuters that the firm expected NFC technology to become widespread over the next 12 months, although this is out of line with other predictions. Despite big forecasts, mass adoption of NFC is not expected to drive mobile payments into the mainstream until 2015, he says, although research from KPMG suggests it could happen within two years. Investors will be vindicated by separate predictions that one in five smartphones will support the technology by 2014.
There is a tempering of initial scepticism that market hysteria would not translate to consumer uptake, with reports that the technology will power USD50bn worth of digital transactions by 2014. A recent Gartner study found that global users are set to soar nearly 39% to surpass 141m this year, but analyst Sandy Shen warns that these forecasts should be treated with caution, given that the market is still undeveloped.
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