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US NFC payments market heats up — but advertising revenues will be the way to make it pay

OPINION: Almost from nowhere, interest in near field communication technology has exploded in the US over the last few weeks as key potential market players have begun to reveal their hands.

Mobile network operators AT&T, Verizon and T-Mobile are reported to be working on NFC with Discover Financial Services and Barclays. The US banks, on the other hand, are working with the Federal Reserve in a bid to come up with an NFC infrastructure that works for them and Visa is due to begin testing a microSD format NFC solution with US Bank later this year.

Online payments giant PayPal, meanwhile, has committed to a major move into the retail payments arena and is already field testing Bling Nation’s NFC-ready mobile payments system and Apple has hired an NFC expert as its new product manager for mobile commerce.

Attention so far has focused on the implications of all this activity on the US payments market. What’s really at stake, though, is far more than just a slice of merchants’ transaction fees.

What’s of most interest to these new entrants to the payments market — and to Google, Microsoft and others yet to show their hands — is NFC’s advertising potential. By linking a consumers’ transaction history to their current location, NFC offers the ability to deliver the kind of highly targeted, location based advertising solutions that marketers will pay top dollar for. And that could well turn out to be a market worth fighting over…

Sarah Clark, Editor

  • http://www.emvx.co.uk/ emv co man

    I agree with your opinion; a few months ago I think it was a question ‘if’ the US went NFC, now it’s a case of ‘when’.

    Which is good news – the extra market for NFC should bring the cost down; which should increase the market for NFC.

    Here in the UK I think the reluctance of the high street banks to embrace NFC will potentially put them in a weak position just as the world changes – I suspect they underestimate two things:

    * the capacity of the world to change – quickly
    * the capacity of the likes of PayPal to eat their lunch

    At the same time they probably overestimate two things:

    * their own ability
    * people’s loyalty to them.

    UK retail banks should consider what a Tesco/PayPal deal could do to their market share… and profits.

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