NFC-Enabled Mobile Wallets: More Press Releases and Pilots or a Bona Fide Payments Revolution?

Jan 19, 2011

NFC-Enabled Mobile Wallets: More Press Releases and Pilots or a Bona Fide Payments Revolution?


Javelin: U.S. Market NFC Business Model Must Align to Emulate Success in Japan

San Francisco, CA, January 19, 2011 – A new Javelin Strategy & Research report issued today —Mobile Wallets: With the New Mobile Network Operator Joint Venture Isis, Are Cards and Cash Ready to Go Mobile in 2011?”—contends that the landscape for near field communication (NFC)-enabled mobile wallets in the U.S. is slowly starting to resemble the mobile payments ecosystem in Japan, which has the most advanced mobile contactless payments services in the world.  With a flurry of press releases in November 2010, there is buzz about NFC-enabled mobile wallets in the U.S. market. Javelin believes the U.S. should look to Japan for lessons.

One of the major announcements in November was that of the joint venture Isis – launched by AT&T, T-Mobile and Verizon, which represent 75% of the U.S. wireless subscriber market – creating a breakthrough as the first mobile wallet supported by a common carrier platform. At the same time, the major card networks and leading FIs are driving efforts into alternative technologies – such as NFC microSD solutions – that bypass mobile network operator (MNO) control. Several large merchants such as Starbucks and Toys “R” Us are also deploying mobile payments solutions based on 2D bar code technology. “Commercialization of these pilots will require a willingness to innovate, collaboration among MNOs, FIs and the merchant community and long-term financial commitment by the various stakeholders in the NFC ecosystem,” said James Van Dyke, President and Founder of Javelin Strategy & Research. “Without collaboration and commitment, the market is left with a series of press releases with no teeth.”

The Mobile Wallets report provides an overview of the ecosystem and key issues affecting mobile wallet deployment in the U.S. It reviews the principal NFC strategic models – as well as current and potential solutions – for mobile wallet payments in the U.S., compares U.S. solutions to those successfully deployed in the Japanese market and reveals lessons that can be learned from Japan’s flourishing mobile contactless payments system.

Selected Key Report Findings – Mobile Wallets

  • One-third of iPhone owners report that they are likely or very likely to use mobile contactless payments solutions.
  • Consumers’ primary interest in mobile wallets is for price comparisons while shopping.
  • Nearly half of consumers are hesitant to use mobile contactless payments because they do not think it is a safe form of payment.
  • In Japan, mobile contactless payments typically replace cash transactions and range between an average value of $4 and $6.

“The U.S. can look to Japan as a model for successful mobile innovation,” said Beth Robertson, Director of Payments Research at Javelin. “In Japan, mobile wallets play a broad role in consumers’ lives.  An individual’s mobile phone might contain their airline boarding pass, help track their loyalty programs, unlock their home, pay for a taxi or soda out of a vending machine and be used to purchase items at a store. This wide array of functionality makes the mobile wallet an indispensable and integral piece of daily consumer life.”

The Mobile Wallets report is based on data collected online by Javelin from two random-sample consumer panels.  The report also incorporates executive interviews and reviews of both U.S. and Japanese mobile wallet vendors.

About Javelin Strategy & Research
Javelin provides superior direction on key facts and forces that materially determine the success of customer-facing financial services, payments and security initiatives. Our advantages are rigorous process, independent position and expert people. For more information about this or other Javelin reports, please visit www.javelinstrategy.com/research or contact Liz Travers at (925) 225-9100 ext. 31 or etravers@javelinstrategy.com.

Note: To arrange an interview with a research analyst and/or view available research (available to qualified members of the media), please contact Liz Travers at (925) 225-9100 ext. 31 or etravers@javelinstrategy.com.