US 'not ready' for NFC

Posted by Emma Woollacott

So-called 'swipe and pay' systems like Isis and Google Wallet won't take off in the US for years, Gartner Group analysts believe.

In a report, the firm says that that the market for mobile payments is growing much more slowly than expected.

At first sight the figures don't look too bad. Worldwide mobile payment users will surpass 141.1 million in 2011, up 38.2 percent from 2010, says Gartner, with mobile payment volume forecast to total $86.1 billion.

But, it warns, the US is not really ready for systems such as Near Field Communication (NFC).

"In developed markets, companies are trumpeting the prospects of NFC without realizing the complexity of the service model," says Sandy Shen, research director at Gartner.

"We believe mass market adoption of NFC payments is at least four years away. The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards."

Things look a little better in developing markets, says Gartner. Money transfers and prepaid top-ups are here seen as killer apps, making it easier to send money to relatives and top up mobile accounts. This is most obvious, says Gartner, in Eastern Europe, the Middle East and Africa, where these two services will account for 54 percent and 32 percent of all transactions in 2011.

The finding is bad news for groups like ISIS, which earlier this week announced it had signed up American Express, Discover, MasterCard and Visa for its program.

A survey from MasterCard in May claimed that nearly two-thirds of young smartphone users would be happy to make mobile payments. However, it also found that two-thirds of older users wouldn't.