Convergence of Market Factors Creates Opportunity for Mobile Phone Payments at the POS

Convergence of Market Factors Creates Opportunity for Mobile Phone Payments at the POS

Princeton Junction, NJ, April 13, 2005–A convergence of market forces and technical advances is driving increased interest in using more capable mobile phones for payment at the physical point-of-sale. This confluence provides opportunities for the United States mobile and financial industries.

A new Smart Card Alliance report, “Mobile Payments at the Physical Point-of- Sale: Assessing U.S. Market Drivers and Industry Direction,” provides an in-depth discussion of the business opportunities, market trends, and alternative technologies and payment models for mobile payment implementation.

“The new news is that mobile phones and other mobile devices are now being used to pay for products at a physical point of sale (POS),” said Randy Vanderhoof, executive director of the Smart Card Alliance. “The increasing availability of new, more capable mobile devices and new payment technologies that make such transactions possible offers benefits to both consumers and businesses.”

Also covered in the report are the mobile payment implementations that have been deployed worldwide; the technology and payment model that are likely to be used in the U.S. market; the potential impact of the current financial industry contactless payment programs; and the opportunities and challenges for implementing mobile payment in the U.S.

The United States represents relatively uncharted waters for mobile payment, with only a few pilot projects for physical POS purchases underway. “The interesting development in the U.S. market is the launch of the American Express, MasterCard and Visa contactless payment programs,” says Vanderhoof. “These programs are proving the value of contactless payment to consumers, merchants and issuers and the ISO/IEC 14443-based contactless technology being used in these financial programs can also be built into mobile phones so that they can be used as payment devices at the physical POS.”

“Finally, retailers, banks, and service providers understand that mobile and contactless payment initiatives offer business opportunities to extend their brands, capture market share, reduce costs, increase revenues and improve processes,” added Vanderhoof.

The Smart Card Alliance has an active Terminal and eTransaction Infrastructure Task Force. Individuals from 18 organizations in this Alliance Task Force were involved in the development of this report. Lead contributors included representatives from American Express; Atmel Corporation; Axalto; Catalyst Business Partners; Hypercom™; IBM; Infineon Technologies; JCB International Credit Card Co.; OTI America; Smart Commerce, Inc.; Sony Electronics Inc.; SMART System Technologies, Inc.; Visa USA; ViVOtech, Inc.

The report, written for executives and managers, is available from the Smart Card Alliance online store at http://www.securetechalliance.org. All Smart Card Alliance reports are available to members and government employees at no charge.

About the Smart Card Alliance

The Smart Card Alliance is a not-for-profit, multi-industry association working to accelerate the acceptance of smart card technology. Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. For more information please visit http://www.securetechalliance.org.

Hypercom is a registered trademark of Hypercom Corporation.

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