Cross-border NFC m-payment not relevant now

Summary:Industry players have more pressing issues such as introducing NFC-enabled mobile devices and signing up merchants to tackle before considering offering mobile payment services overseas.

Making payment using one's mobile phone while overseas has the potential to gain popularity in the future, but for now, such use cases play little to no part in maturing the overall near-field communications (NFC) industry in Asia.

Rachel Lashford, managing director for mobile and Asia-Pacific at Canalys, said cross-border NFC mobile payment services do not contribute much to the overall adoption in the market currently. This is because for many regional markets, domestic use of mobile payments is not yet an entrenched way of life, which must take place before overseas m-payment offerings can be introduced.

The partnership between Japanese operator KDDI and South Korea's KT announced in October is an exception and an example other markets can aspire toward, Lashford hihglighted. The deal would work as it leverages the existing high NFC usage among Japanese consumers and a well-established retail tourism model between both countries, she explained.

These conditions are not easily replicable in other regional markets in the short term, the analyst pointed out.

Besides, many Asian countries are just stepping up from the introduction phase of NFC technology phase into the growth stage, added Jafizwaty Ishahak, director of ICT practice Asia-Pacific at Frost & Sullivan.

Most NFC-based mobile payment services are still in their infancy because of the limited installed base of NFC-enabled phones , low consumer awareness and merchant adoption, she said.

Commercial projects are also largely still at the planning stage or initial pilot rollouts. So while there is no lack in key participants in the value chain, revenues for these players remains very low at this point, Ishahak stated.

Infrastructure not yet in place
These reasons are why the focus for the mobile industry is generally on making more NFC-enabled handsets available, roping in the participation of merchants and calming consumer fears over security with such payment methods, said Ivan Lim, director of corporate communications and investor relations at M1.

Citing Singapore as an example, Lim noted NFC-based mobile payment services were more widely available only recently and it will take some time before mass public interest and adoption kicks in. Thus, not many consumers here would even consider or demand cross-border mobile payment services now, he said.

Canalys analyst Lashford agreed, saying: "Operators have still not solved the issues across the region of high roaming fees and bill shock , and NFC mobile payment services add to the [to-do] list."

Optimism is building
That said, Peter Lovelock, director of Singapore-based telecoms and tech consultancy firm TRP, expressed optimism over the long-term prospects of cross-border mobile payment services. He noted momentum is building as carriers, handset makers, platform owners and service providers are actively pushing the NFC opportunity, and this directs a lot of attention to the technology and its usefulness.

Adding to Lovelock's point, StarHub's vice president of business strategy Yeong Mun-Ling said NFC roaming has great development potential in the region once an interoperable infrastructure that spans multiple countries is in place.

For that to become a reality, however, Yeong said close cooperation between entities from participating countries such as mobile operators, payment service providers, phonemakers, and public sector organizations will be needed.

Lim May-Ann, research director of TRPC, also pointed out that security concerns such as data theft will have to be ironed out too.

NFC technology is particularly susceptible to "drive by" data theft and malware attacks , and these threats could have "horrific" consequences given the amount of personal data people store on their mobile devices today, she explained.

Topics: Mobility, Emerging Tech, Tech Industry, Travel Tech

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Jamie Yap covers the compelling and sometimes convoluted cross-section of IT and homo sapiens, which really refers to technology careers, startups, Internet, social media, mobile tech, and privacy stickles. She has interviewed suit-wearing C-level executives from major corporations as well as jeans-wearing entrepreneurs of startups. Prior... Full Bio

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