A group of nearly 800 carriers is teaming up to work on a standardized mobile-payments system, in an effort to beat companies like Google and Apple in the lucrative sector.
The alliance, known as the GSM Association, or GSMA, will develop and implement near field communications, or NFC, technology, which will launch in select markets by 2012. NFC lets users buy items with a swipe of their smartphone at a special payment terminal. GSMA members include Deutsche Telekom, France Telecom, Vodafone and China Unicom, among others.
GSMA said it will develop mobile payment standards to ensure worldwide interoperability, so users can use their phone to buy goods around the world, regardless of operator network or device type.
“As we have seen, the adoption of different approaches to NFC will only serve to fragment the market,” said Franco Bernabe, chairman of GSMA and chief executive of Telecom Italia. “By uniting around a single standardized approach to mobile NFC and by collaborating across the entire ecosystem, our industry will continue to develop the compelling services that customers demand.”
Carriers are keen to enter the mobile payments market. NFC could potentially replace many cash registers and credit cards and make up a third of the anticipated $1.13 trillion in mobile financial transactions by 2014, according to IE Market Research.
But telecoms will have to compete with mobile companies such as Google and Apple, who are already investing resources into NFC technologies. Google sees mobile payments as a “mega-scale” opportunity, according to chief executive Eric Schmidt, who spoke at the recent Mobile World Congress in Barcelona. The Internet giant acquired startups like Zetawire, and already integrated NFC technology into its flagship Android smartphone, the Nexus S.
For its part, Apple has hired NFC expert Benjamin Vigier from mobile-payment startup mFoundry, sparking rumors that it is developed its own “iWallet” technology that could leverage the iTunes billing system. In addition, earlier last week, Research in Motion’s co-chief executive Jim Balsillie said that it is integrating mobile-payment services into its BlackBerry devices.
A concerted, coordinated effort by telecoms may not be enough to tackle the biggest hurdle in a large-scale adoption of the technology. Building the actual infrastructure that includes point-of-sale terminals and NFC equipment in handsets, along with software, security, and processing platforms, are all required and may be outside the purview of any one industry or company.