Value of NFC lies beyond mobile payments, says Nokia

Nokia is dismissing the mobile industry’s focus on payments powered by near-field communication (NFC) technology as “naive”, saying that the true value of NFC lies elsewhere. Speaking at an event at the LSE, the firm’s VP of industry collaboration, Mark Selby, says that there has been “herd-like behaviour” towards mobile payments and hinted that competitors and other industry players are fuelled by greed, rather than innovation.

“We started seeing a lot of people who were getting awfully excited by rather naive Excel spreadsheets which basically said – how many transactions in the world are there? If we were to take a percentage of every transaction, how much is that worth?” he says. “If [these people] worked from maybe 10% or 15% penetration, the number that comes at the end of this Excel spreadsheet is very, very big and so people got excited.”

Nokia, which has so far been conspicuously quiet in the mobile payments market, though it does manufacture NFC-enabled devices, says that it will champion ‘open NFC’ whose applications, unlike mobile payments, do not require users’ personal data. Nokia has recently launched an NFC website which demonstrates NFC-powered functionality such as photo-syncing or sharing contacts – however, there is no mention of NFC-powered payments, and the firm is noticeably absent from the list of device manufacturers supporting the Isis mobile payment system in the US, a joint venture between AT&T, T-Mobile and Verizon.

“When we see new technologies, there is almost a herd-like behaviour,” says Selby. “The debate has been around mobile transactions. Nokia has been involved in NFC trials, commercials, pilots for a number of years. We came to the conclusion that 68% of the value to be realised from NFC was going to be realised from what we term ‘open NFC’. This is the application of the technology which requires no data whatsoever relating to an individual.”

Where Google, Square, PayPal and wider cross-industry players have championed NFC, to some degree, as a driver of mobile payments adoption, it seems as though Nokia’s priorities may be elsewhere in terms of pushing adoption. “The more we focus the discussion purely on the payments side, the more we run the risk of missing the opportunity for people to see value and get familiar with [NFC],” says Selby.

More widely, Nokia is struggling against its competitors, posting losses of EUR368m (USD521.6m) in Q2 this year as it feels the bite of Apple’s iPhone and rival devices running Google’s Android OS. The firm’s relative lack of focus on the NFC-powered payments market may further highlight its lack of innovation in the smartphone space and widen the gap with its competitors – though Selby defended Nokia’s strategy, citing research from Intersperience which claims that only 17% of UK consumers would be happy to make payments on their phones using NFC. However, perception of consumer reluctance towards mobile payment adoption has not stopped estimates of overall mobile payment revenues from soaring, with Juniper predicting that the market will hit USD670bn by 2015.

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