NFC – the answer to mcommerce woes?

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Is NFC (Near field communication) the answer to mcommerce woes?

The FT on Friday seems to think so (Near field communication – the mobile phone that puts cash out of business by Ben King Dec 16 2005 – financial times – London ).

This blog draws on some insights from this article and adds some of my own thoughts to the uptake of NFC

Every time I use my ‘Oyster’ card – I think about how easy it would be to extend the same concept ‘beyond the London underground’. i.e. use the Oyster card to carry cash and pay for items.

The Oyster card (and other similar cards such as Octopus in Hongkong and suica in Japan use a technology under the umbrella called NFC (Near field communication) governed by the NFC forum

What possibilities does an amalgamation of NFC and the mobile phone hold? How will it boost mcommerce? Mcommerce has had a chequered history. Is NFC the answer to mcommerce woes?

So far, mcommerce does not seem to have taken off in most parts except oddly in places like Africa (and also of course Japan and Korea).

In Europe, the last attempt to create a ‘top down’ mcommerce body ended in disaster (Simpay).

But Simpay was only the latest disaster. There were many more previous attempts at mcommerce such as the mondex trials with BT , Dual chip phones as early as May 1999 in Helsinki.

Other scenarios were tried out – for example, collaboration between one Mobile operator and one bank (e.g. Postbank and Telfort in the Netherlands) or one Mobile operator and several banks (e.g. the Mobile operator TIM and Italian banks in Italy). Pure play vendors – such as Paybox who were solely in the business of providing a payment platform also were an option.

Ofcourse there are the more successful options such as premium SMS and SMS payment systems such as in Korea where you accept the transaction by SMS (but still use your credit card).

Still .. mcommerce is not mainstream though .. and that’s sad.

Will NFC change that?

Like many ideas, mcommerce has clear practical benefits to consumers and businesses but the incumbents(like banks and credit cards companies) are too deeply entrenched especially in western countries. The operators also cannot seem to agree on a standard.

At first glance, NFC seems to be yet another forum. If you remember the old days prior to OMA, there have been many previous attempts prior to simpay and many fora (many of which merged under the umbrella of the openmobile alliance .

Then, there was Bluetooth – full of promise but low on execution.

However, NFC may well gain from the Bluetooth experience. Its not enough to create a technology like Bluetooth and have some start-ups create applications. In most cases, these applications remain in the prototype stage. Its far more important to have a major non operator consumer body behind the execution (such as the London underground).

In the past, many thought that the operator was the logical choice. Clearly, that’s not happening except for some isolated cases. Even payment services like vodafone m-pay are useful for the operator’s customers only. It’s debatable how many people are using operator led payment systems such as m-pay

So, what is NFC?

Devices containing NFC technology are triggered by proximity(few centimetres). Think swiping your oyster card. Its possible to equip a phone with NFC technology for as little as three pounds. NFC operates in the 13.56 Mhz range.

As per the NFC forum web site

The vision of the NFC Forum is to enable users to access content and services in an intuitive way by simply touching smart objects and connecting devices just by holding them next to each other. To bring this vision to life, the NFC Forum invites all interested parties — companies from mobile communications, consumer electronics, chip manufacturing, computing, media and entertainment, telecom and payment services sectors — to join the NFC Forum and help further our goals.

Collectively, the NFC Forum’s members will develop and agree upon common protocols for basic links between devices, standards for interoperability based on common data structures and formats, specifications for device-independent service delivery, and more. The Forum will then work to promote these deliverables and the use of NFC technology worldwide. All of these efforts will support Forum member companies in providing successful products and services to their customers.

Currently, there are two technologies covering this sector felica from Sony and mifare from Philips.

The value proposition of NFC is to unite these two technologies

‘Unite’ means ensure that readers of felica can read mifare cards and vice versa. This could be VERY interesting

Obviously, the next step is to put in a mobile phone and all sorts of applications are possible.

Interestingly enough, NFC founding members include players from across the spectrum

Again, from the NFC forum website ..

As a group, the NFC Forum’s Sponsor Members represent the leading players in key industries in all the major regions of the world. The Sponsor Members are: MasterCard International, Matsushita Electric Industrial Co., Ltd., Microsoft Corp., Motorola, Nokia Corporation, NEC, Renesas Technology, Royal Philips Electronics, Samsung, Sony Corporation, Texas Instruments and Visa International.

i.e. this includes credit card makers, device manufacturers and others like Microsoft.

Missing in action are the operators. Some have pledged support – but overall it’s lukewarm.

Time will tell .. if NFC will be a success or yet another initiative which will not take off.

What do you think?

The mobile Internet will do more for Africa than live 8!


On a day when Africa is in the news .. here is a different perspective based on my own experience. It reflects my views – especially the ability of individuals to make a difference when they have access to knowledge.

I saw this phenomenon first in India in the early 90s when I was living in India. At that time, India was in the throes of a ‘cable’ revolution. Mind you, there was no ‘ministry’, which had sanctioned this. It was a grassroots phenomenon. I remember the local video shop owner suddenly started adding ‘cable’ to his offerings. And he was not the only one. Every colony(a group of buildings) had it’s own network. The legality of it all was suspect (although today it’s all pretty much corporate and legal).

The point is though, people were getting access to information(and this was not the government sanctioned media). Even in the smallest village – you could see ‘MTV’ – which was a bizarre phenomenon in some ways. More importantly, the villages had yellow PCO booths. So, you could call anywhere in the world.

Again more connections – more information.

This was early 90s. Today India is a force to reckon in technology

Is there a connection between people, technology and wealth?

I believe that there is … Which brings us to Africa ..

Lets contrast two bits of news.

A couple of weeks ago, Simpay ( collapsed.

Simpay was a European mcommerce initiative. Typically on a grand scale – top down – with the big operators all ‘solidly’ behind it. It collapsed like a pack of cards when one operator pulled out. The end was so quick that many did not believe it.

But mcommerce itself if far from dead.

And where does it survive?

You would not guess – but it’s Africa.

According to the feature( (no link exists – so I don’t know the author)

Although many Western research companies still stick to the idea that mobile usage remains the preserve of the relatively well off, many countries in Africa are showing through prepaid, handset sharing and the sheer desire to own a mobile despite having very little income, that mobile service can reach all parts of the populace. The great advantage for m-banking in African countries is that the conflicts between the stakeholders simply don’t exist in the same way as in Europe and the West. Most of those players have little or no current business in the area, and see m-banking as an opportunity, rather than a threat, to their business models.

The lack of existing vested interests(and for that matter an existing ecosystem itself) is creating a whole new value chain.

A company called celpay offers mobile phone-based virtual bank accounts with features like account transfers, bill payments, cash deposits etc. It has created a large retail base (shops, petrol stations etc) who will accept these transactions.(cellpay uses a solution from a South African company called fundamo

Also according to the feature

Celpay has also developed successful m-banking business services. This includes mobile phone-based order entry with cash on delivery payment functionality. Current users include Coca-Cola, breweries and a cement manufacturer. In DRC (Democratic republic of Congo) alone, there were over 80,000 transactions per day on the Celpay system in November 2004.

Read that last statistic again .. 80,000 transactions per day! – in the democratic republic of Congo!!

There is another big boom in voucherless topups

The agent simply enters the subscriber’s mobile number, amount of credit needed and the agent’s pin and the subscriber’s account is topped up.

The irony is .. the only other place where m-commerce is booming well is in the worlds most advanced markets for mobility – Japan and Korea. For example – in Japan, NTT docomo and Sony are running the felica trials

There are not many subjects where you can mention Japan and Democratic republic of Congo in the same context.

Ahh .. but you say .. Africa is not China(or Japan, or India or Singapore)

There is no culture of entrepreneurship.

That’s not quite true

According to GEM(Global entrepreneurship monitor) ..

Uganda has the highest Total Entrepreneurial Activity (TEA) of all countries participating in GEM 2003. The TEA of 29.2 indicates that almost every third adult Ugandan is an entrepreneur. In comparison, the World average is only 8.8.

So .. it’s possible

This leads me to make the statement .. the mobile internet(and m-commere) will do more for Africa than anything else(commendable as these efforts always are). In fact, m-commerce is just the medium. The real people doing the work are the people of Africa.

Soon, they will learn from the Philippines and get rid of governments that do not serve them. Information will be impossible to contain

If Bill Gates’ dream was to have a PC on each desk running Microsoft software .. then EVERY person in the world could well have a mobile device(although they may not have a PC)That could do wonders for many countries in Africa – both commercially and politically.