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InfoCom says NFC to drive m-commerce growth in East Asia

Published: 2011-09-19

Mobile carriers push m-commerce — In Southeast Asia, service affordability favours SMS-based payments — NFC can enrich m-commerce with location-based interactive advertisement.

Manila, Philippines — In East Asia, m-commerce has been fuelled by the increasing amount of payments through mobile phones and the growing demand for banking services. This results from InfoCom’s latest Innovations Spotlight, which analysed the current services available as well as local carriers’ plans for m-payment services. SMS-based or NFC-enabled, m-payment is gaining slowly momentum and is expected to accelerate in the next three to five years.

Carriers in Japan and South Korea have been the most active of the region. In Japan, after an early uptake of RFID-based m-payments, local mobile carriers migrate to NFC-enabled m-commerce; while in South Korea, carriers aggressively push towards NFC with the introduction of several services. Additionally, since early-2011, carriers of both countries have been jointly developing cross-border NFC services. Currently, NFC-based-commerce services are available only on 3G phones or smartphones and only to postpaid accounts with data plans.

Selected m-commerce services from mobile operators in Asia

In Southeast Asia, on the other hand, m-commerce services are mostly SMS-based, with Indonesia, the Philippines and Thailand leading in the region. The prevalence of SMS-based m-payments is due to cost considerations: average consumer spending power in Southeast Asia is markedly lower than in Japan or South Korea. Users are charged the service fee only per-use (i.e. when they send the SMS), without any monthly add-on fee; and the service does not require any specific phone to facilitate the transaction.

In Southeast Asia, SMS-based m-payment services are expected to persist as the most popular alternative. In some rural areas, they will probably even grow in popularity, as more and more microfinancing institutions collaborate with mobile carriers. In other Asian countries, though, carriers are expected to exploit NFC, principally thanks to its stronger security and authentication capabilities. The short-range characteristic of NFC makes it more suitable for secured transactions, which, through broadband, result very fast. Additionally, on smartphones, m-payments can be enriched with additional services. For instance, event ticketing associated with event information, schedules and digital maps to reach the venue. Or interactive location-based advertising services in cooperation with near-by retail stores. However, two aspects will be key to ignite mass-market adoption: the affordability of the service as well as the availability on mainstream 3G feature phones.

About Innovations Spotlight:

This extract is based on InfoCom Innovations Spotlights topic-focused papers on the impact of new technologies and new market changes in the telecoms, IT and media industries. The analysis displays InfoCom’s unique expertise as of monitoring and evaluating innovations for these industries. With 12 issues a year, users are best informed about compelling themes, which could impact their markets. If you wish to know more about Innovations Spotlights, do not hesitate to contact us. Talk to us. We listen.

About InfoCom:

InfoCom is a market research and consultancy company with over 20 years experience providing strategic analyses and planning assistance to stakeholders in the telecommunications, IT and multimedia industries. InfoCom’s independent and fact-based analyses highlight trends and opportunities, supporting decision makers to understand market dynamics in order to improve their competitive advantage.

Published: 2011-09-19

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