Financial Services

NFC – Channel to Mobile Payments

“NFC-Channel to Mobile Payments” -This written post was by Sheetal Sharma on linkedin on Sept 28, 2014. Idea was to depict the perception majority of the market which says Apple pay (NFC payments) is the repetition. Sadly since its coming from tech giant like Apple so it has to succeed.


Apple Pay – A Repetition With Noise

Apple has no prior experience or product in financial services domain but surely scratching their head to make some break through. Now adding artificial intelligence taste to it after gathering data for machine learning algorithms to learn and support their business.


Apple product has to succeed as there is no second option but ecosystem around is costly. To me its neither Mobile Money nor Mobile Banking its a middleware of both i.e. purely a mobile payment system. Traditional payments services providers, including banks as well as the well established big names like Mastercard, VISA etc have to wake-up, smell the coffee and innovate otherwise MNOs will “move their cheese”. Imagine what will happen when social media makes vibes into the payment space.

The biggest resistance to Apple’s move into the mobile payments space will come from banks and credit card companies who stand to lose significantly if Apple succeeds in moving a percentage of consumer purchases onto the iTunes platform.

As one industry analyst, Aaron McPherson, a research manager for payments at IDC Financial Insights, said

  • Apple does not care what banks think.
  • Why it should they?
  • What do banks have to offer it?”

Apple’s history of bucking carriers’ stranglehold on phone software has made banks nervous that their fate will be similar. They will be left out of Apple’s payments platform very soon.


Micro Payments – The Frequent Payments Hub

Mobile financial services industry consumers usually receive money once or twice a month as part of salary or fee but spending is done at least two to three times a day. Sometime even more then 5 times though. This method of spending is known as micro-payment/micro-spending.

IoTPutting in numbers, this can go into billions of dollars; an easy example: if we start charging 1 cent per transaction as commission for micro payments through NFC interface for food, drinks, snacks, petrol, tolls, souvenirs.

Any similar purchase we make and pay just one us cents for every transaction. As each one of spend minimum $5 a day (assumed at 40% of world population) then the total commission earnings will be to the tune of $4.3 billion per month. This market has clearly not been explored that well and this also goes straight into Mobile Money Market as potential plug.


NFC Primary Uses Cases

It would be very interesting to see in near future how the 1960 technology “Artificial Intelligence” will change this landscape. How deep learning will impact and fight with touch & go by introducing to smile & go. The main drivers behind the success of mobile money are the explosive growth in the number of mobile devices and the fall in the cost of computing power, which have lowered the barriers to new entrants in this field. Some of the benefits of NFC are as below.

  • Connect electronic devices, such as wireless components in a home office system or a headset with a mobile phone.
  • Access digital content, with wireless device such as a cell phone to read a “smart” poster embedded with an RFID tag.
  • 2 devices read and write to each other using NFC, touching two handsets together to transfer data like contacts or photos normally called as two-way communication.
  • Device reads and writes to an NFC chip. Touch and go concept like in apple case where touching apple NFC device on NFC reader or NFC POS to debit wallet or card for mobile payment balance written to the card normally.
  • Make contactless transactions, including those for payment, access and ticketing.

Mobile money (m-money) is quite versatile and can support a variety of services, in particular, person to person (P2P) money transfers, which are of significant value for emerging economies. The other key driver for this is the inaccessibility of banking services to the general populace mainly due to poor infrastructure and lack of trust in local banks by country fellowmen and companies.


Original post is here.


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