NFC-Enabled Proximity Mobile Payments Nearer to Reality According to New Smart Card Alliance White Paper

NFC-Enabled Proximity Mobile Payments Nearer to Reality According to New Smart Card Alliance White Paper

Princeton Junction, NJ, September 10, 2007–In a newly-released white paper, the Smart Card Alliance concludes that proximity mobile payment–because it leverages the well-established infrastructure of the financial payments industry, and because it is based on Near Field Communication (NFC) technology and the ISO/IEC 14443 standard–will become the mobile payment technology of choice for consumers using mobile phones for retail payment transactions in the United States.

The findings and conclusions derived by the Smart Card Alliance Contactless Payments Council are presented in a new white paper: “Mobile Payments: Leveraging NFC and the Contactless Financial Payments Infrastructure.” The white paper discusses what is necessary to implement and deploy proximity mobile payment systems, the relevant technical and business issues from the perspective of the various stakeholders (for example, mobile operators, the financial industry, end-users, providers and vendors) and outlines the potential opportunities and barriers that may impact its market adoption.

Today’s consumers increasingly value convenience–services or features that they regard as “useful to me.” Mobile payment pilot projects and implementations carried out here and outside of the United States have shown that consumers value the convenience of using their mobile phones for payment at a physical POS. One forecast predicts that mobile phone-based contactless payments will account for over $36 billion of worldwide consumer spending by 2011, while another indicates that by 2012, some 292 million handsets–just over 20 percent of the global mobile handset market–will ship with built-in NFC capabilities.

Several factors are driving mobile payment deployment according to Randy Vanderhoof, executive director of the Smart Card Alliance. “Consumers are adopting wireless data services, including contactless payments, very rapidly,” he said. “Within North America, the financial industry has rolled out more than 21 million contactless payment cards and devices and over 50,000 merchants are putting in place the point-of-sale infrastructure that accepts contactless payments. Next, mobile hardware with NFC technology, can leverage these experienced contactless payment customers and the POS terminal infrastructure used by merchants to accept contactless payments cards. Finally, mobile operators, merchants, banks, and other service providers recognize that mobile payment initiatives offer business benefits and market differentiation.”

“The addition of proximity NFC technology to mobile phones in combination of contactless financial payments offers opportunities for convergence and compelling business value to all stakeholders,” Vanderhoof concluded.

The white paper describes the current proximity mobile payments landscape and discusses the needs and roles for all stakeholders involved. According to the paper, with proximity mobile payments:

Mobile operators can:

  • Attract new customers and market more feature-rich handsets
  • Reduce customer turnover by adding valued-added services
  • Add revenues from data services related to payment

Financial services providers can:

  • Reach new customers and offer new, differentiated payment services to existing customers
  • Increase their credit and debit card transaction volume, replacing cash sales

Merchants can:

  • Increase the number of customers making contactless payment transactions
  • Speed transactions resulting from customers using mobile handsets
  • Improve customer convenience and loyalty

Participants involved in the development of this report include: Bank of America, CPI Card Group, Discover Financial Services, First Data Corporation, Giesecke & Devrient, Gotham Financial Services, Hypercom®, IBM, IfD Consulting, INSIDE Contactless, MasterCard Worldwide, Mobile Candy Dish, NXP Semiconductors, Oberthur Card Systems, VeriFone, Visa USA, ViVOtech.

The white paper is available at no charge from the Smart Card Alliance Web site at

About Proximity Mobile Payments

Proximity mobile payments leverage the financial industry’s contactless payments infrastructure. An NFC-enabled phone is provisioned with the consumer’s payment account (i.e., credit or debit card) issued by the consumer’s trusted financial institution. The application and payment account information are encrypted and loaded into a secure element in the phone.

To pay, the consumer simply brings the phone within a few inches of a contactless-payment-capable POS system and the transaction occurs. The phone uses its built-in NFC technology to communicate with the merchant’s contactless payment-capable POS system. The payment and settlement processes are the same processes used when the consumer pays with a traditional contactless or magnetic stripe credit or debit payment card.

Proximity mobile payments can be made at both attended POS locations (such as stores) and unattended locations (such as vending machines) that accept contactless payments.

About the Smart Card Alliance Contactless Payments Council

The Contactless Payments Council (/ pages/activities-councils-contactless-payments) is one of several Smart Card Alliance technology and industry councils. The Contactless Payments Council was formed to focus on facilitating the adoption of contactless payments in the U.S. through education programs for consumers, merchants and issuers. The group is bringing together financial payments industry leaders, merchants and suppliers. The Council’s primary goal is to inform and educate the market about the value of contactless payment and work to address misconceptions about the capabilities and security of contactless technology. Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects.

About the Smart Card Alliance

The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application 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. and Latin America. For more information, please visit