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Telecommunications equipment industry

Mobile Payments on the Horizon: Nokia, MasterCard, and the Future of Transactions

Strategic Insights

— 1 min read

Nokia's futuristic advertising campaigns have long hinted at the role mobile phones will play in everyday life, including the use of mobile handsets for payments. With MasterCard backing the ISO 14443 standard for radio frequency identification (RFID) technology, the industry is poised to make this vision a reality. The technology, which has already been used in smartcards, is being adapted for mobile phones, enabling users to make payments by placing their handsets over a reader. This innovation could potentially bypass telecom operators altogether, as consumers use RFID-enabled handsets to make purchases without the need for traditional plastic cards or cash.

Key Takeaways:

  • Nokia's advertising campaigns have predicted the use of mobile handsets for payments, with MasterCard backing the ISO 14443 standard for RFID technology.
  • The ISO 14443 standard is a type of RFID technology used in most smartcards and is backed by Visa and MasterCard.
  • A proof-of-concept trial in the United States showed that ISO 14443 tags glued to the insides of Nokia handsets successfully enabled payments.
  • Sony and NTT DoCoMo are partnering to launch handsets with Sony's smartcard technology, FeliCa, while Motorola is testing ISO 14443 for potential incorporation into its handsets.
  • Finance industry research firm Celent Communications estimates that RFID payments will overtake traditional plastic by 2007, accounting for 8% of transactions.
  • The industry sees RFID-enabled handsets as a way to expand payment options for consumers, rather than encroaching on the territory of others.
  • Pre-paid cards built into handsets could potentially cut out telecom operators from transactions, as consumers charge purchases to their mobile phone accounts by text messaging a number.

Statistics:

  • Celent Communications estimates that RFID payments will overtake traditional plastic by 2007, accounting for 8% of transactions.
  • In 2007, credit card transactions are expected to account for 7% of transactions, while cash is expected to account for 84%.
  • The proof-of-concept trial in the United States used ISO 14443 tags glued to the insides of Nokia handsets to make payments.

Sources:

  • "Nokia commercial", as seen in the text (no date provided)
  • Richard Fletcher, senior vice-president of MasterCard's mobile and wireless centre, citing no specific date
  • Celent Communications report, "RFID Payments: The Quiet Storm" (no date provided)

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