Myth 1: Consumers aren't prepared to pay or travel with their mobile
There is a paradox about mobile NFC. On the one hand, market surveys clearly show that consumers are reluctant to pay with their mobile phones. The main reason is a perceived lack of security. But there are also concerns about what happens if a phone gets lost or stolen. On the other hand, consumers who have already tested NFC payment love it. Gemalto has been involved in many commercial NFC deployments with partners around the world, which have achieved 90 percent satisfaction rates from consumers, with mobile wallets bringing additional value added services such as loyalty, transaction logs, top-up…. Therefore, the main challenge for financial institutions is to educate consumers about the security of the system.
Myth 2: Mobile payment via NFC isn't really secure
Mobile payment via NFC and Secure Elements (such as
Embedded Secure Elements and SIMs) is as secure as payment with a chip bank card. NFC mobile payment reuses the same logical and physical security mechanisms that are used for contactless cards, and brings additional security layers to comply with the need for post-issuance activation of payment applications. These new security layers are endorsed by the major payment network schemes.
Payment applications require certification from
Visa and MasterCard. These payment applications or
payment token equivalent are downloaded and installed in secure elements. The post-issuance process of installing, securing, and personalizing a payment application via a trusted service manager (TSM) in a secure element has been standardized by
Global Platform and therefore endorsed by the payment ecosystem. Finally, the platform managing the life cycle of applications, remotely, are hosted in secure data centers which are also fully certified.
The key mobile NFC security features:
- The Secure Elements that store sensitive data and apps are certified by the financial services authorities and are comparable with chip-and-PIN security.
- Consumers can choose to authenticate transactions by entering a PIN code on the payment application, and can opt to enter this for all payments, even very small amounts, providing them with complete control.
- The remote management platforms can instantaneously block any applications, in the same way banking cards can be blocked
In addition to the above, we also see mobile payment wallets developed by payment issuers without Secure Elements (Host Card Emulation - HCE). Those mobile payment wallets implement one-time payment tokens, together with software security layers, to secure the transactions.
Myth 3: If my phone is lost or stolen, it will be a nightmare to cancel or block all the accounts!
No, it won’t. It’s a very simple process that is usually handled by the mobile wallet issuer and it goes like this: if your phone is secured by a PIN code, no one can use it, nevertheless you can always contact your wallet provider so that it can block all the applications. Moreover in a large number of cases, mobile payment relies on tokenization, which means that the funding payment card is never compromised
Myth 4: NFC is not really mature
In fact, the NFC ecosystem is constantly growing, with more and more smartphones featuring the NFC capability. According to a
GSMA report into the mobile economy from 2015, there were 43 commercial launches of mobile NFC mobile commerce services during 2014, bringing the total number of commercial and pilot services to more than 300 to-date.
Juniper Research have also revealed that NFC handset adoption is growing. According to their Mobile & Online Ticketing Deep Dive Strategy & Competition 2016-2020 report from April 2016, they estimate that the total number of NFC-enabled handsets will increase from just over 740 million worldwide at the end of 2015 to 3.9 billion by 2020. Mobile ticketing is also growing in many areas from traditional transportation to air travel and events, and is being further boosted by the growth of wearables
Myth 5: If I had an NFC phone I wouldn't be able to use it anywhere
According to the same Juniper Research report, the deployment of PoS terminals is on the rise. Globally, there were around 68.5 million POS terminals in service and owned by payment service providers at the end of 2015, up by 8.1% on the previous year. This migration is backed up by international payment brands such as Visa and MasterCard and domestic schemes such as UnionPay in China. In addition, OEM giants such as Apple and Samsung have also entered the world of NFC payments with
Apple Pay and
Samsung Pay respectively. This is further accelerating the availability and awareness of such services.
Last but not least, in major cities, public transportation already has NFC infrastructure in place for contactless cards, and mobile NFC can leverage this infrastructure. Major cities already have widely deployed mobile NFC technology. For instance, Transport For London now accepts mobile payments, where the contactless bank card is integrated with the mobile ticket. And in Spain, mobile NFC transport services are rolling out in 18 cities. We are also witnessing the deployment of mobile NFC services in many other parts in the world such as Asia. Find out more on our dedicated pages,
Case Studies and
Myth 6: In 10 years from now, the mobile wallet will replace all the need for cash and contactless cards
It is hard to envisage what the market will look like in 10 years from now but it is clear that NFC phones and contactless cards will coexist. Mobile payment is designed for low-value transactions and is seen as a replacement for cash that still represents 80 per cent of transactions. More and more players are entering the field of mobile wallet apps, from network operator-led solutions such as Vodafone Mobile Wallet, to OEM wallets like Apple Pay, Samsung Pay. The trend is clearly for an increase of mobile payment means, and both contactless and mobile payment methods will grow over the coming years, eating up traditional ways to pay.
Myth 7: Mobile NFC: I’ve heard of it, but doesn’t sound real to me
NFC is already deployed in around 70 countries across the world including France, Spain, Germany, Italy, the Netherlands, Poland, Russia, Canada, Japan, South Korea, China, Singapore, and New Zealand. Moreover, major transportation initiatives have already been adopted in big cities across Asia and Europe.