Despite bold moves on mobile payments, long haul ahead

NFC wireless payments get a boost from Android, BlackBerry and three ISIS wireless carriers, but adoption remains a concern

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Research In Motion co-CEO Jim Balsillie also said this week that future BlackBerry handsets will support NFC.

Apple is rumored to be planning to add NFC to a future version of the iPhone.

Nokia has long supported NFC phones and ships the new C7 with an NFC chip that needs a software upgrade to work. Samsung has a trial of an NFC phone under way, Egan said.

But analysts noted that NFC adoption also depends on having more NFC readers installed in stores and subway stops, at substantial cost, for further adoption.

Still, Egan said the ISIS, Android and RIM announcements will accelerate interest in NFC after years of logjams among banks, credit card companies, mobile carriers and retailers over how they will collect and share credit card data and payments for purchases.

Even with Android and BlackBerry phones equipped with NFC chips as early as 2011, it will take much longer for NFC readers to be widely adopted, analysts said.

Some contactless credit card readers, already installed at 230,000 retail locations and fast food restaurants in the U.S., can be upgraded with software to read NFC phones, Egan said, but even those readers have not been widely used thus far.

And even if there is a large volume of NFC-ready phones and readers, a supporting network infrastructure with solid security is needed, Egan said.

"The announcements of NFC in handsets is meaningless without the rest of it, including agreements between parties, infrastructure, processing procedures for data, security and reconciliation of accounts," he said. "That's already well established in the credit card world. There's a large laundry list of very important components that extend well beyond the NFC build-out."

The ISIS joint venture could be more important than the decision to include NFC chips in smartphones, Egan said, because it represents a "solution to the sense of frustration that mobile operators have with both the banks and the large credit card processors like Visa and MasterCard, who have been unwilling to negotiate over fees."

Carriers vs. the banks?

In recent years, Egan said, when it comes to mobile payments, MasterCard and Visa have taken the view that they would "engage in their own ecosystem, which is with their banks, but the wireless carriers are now saying, 'I am as big as you are, and I'm tired of waiting and tired of negotiating and will pick up my toys and play somewhere else. I'm doing it my way.' "

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