Commercial NFC rollouts 'years away'

The industry will need to convince consumers and merchants of the merits of yet another payment mechanism

The largest trial of Near Field Communications (NFC) in Europe suggests that commercial deployment of the technology will take years rather than months, according to mobile operator O2.

NFC allows customers pay for travel and retail purchases using contactless technology on their mobile phone.

Claire Maslen, head of NFC at Telefónica O2 UK, said that six months is a " bit ambitious for a commercial rollout", but that she "won't have a job with O2 if it takes five years".

Juniper Research telecoms analyst Howard Wilcox, author of a recent report on NFC mobile payments, said: "Trial results so far have been encouraging, but the industry as a whole will need to convince consumers and merchants of the merits of yet another payment mechanism on top of cash, cheques, credit and debit cards.

"They will also need to allay understandable (if unfounded) fears and scepticism about the security of mobile wallets."

The Juniper Research report also predicted that the top three regions - Far East & China, North America and Western Europe - will represent nearly 90 per cent of the annual $75bn market by gross transaction value by 2013.

Grumbles from the NFC trial participants included lack of handset choice, lack of places to top up the phone and an immature user interface.

Maslen admitted that the technology needed more development for the potential services which could be offered, explaining that "two or three big retailers need to come onboard commercially to tip the balance".

"We could launch technically now, but this technology has to be cross-operator which is what drove universal adoption of SMS," she said.

"It also has to have NFC hardware on the SIM and a better user interface to get the customer experience right."

The O2 Wallet NFC trial took place in London between November 2007 and May 2008 with 500 adults using a Nokia 6131 NFC phone to make retail purchases or travel on London's Oyster-based transport system.

The results showed that 90 per cent of the participants were "happy using NFC technology on a mobile phone" and that 78 per cent were "interested in using contactless services if available".

Convenience, ease-of-use and status were seen as the main benefits, according to the survey.