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The Electronic Wallet Revolution is Still in No Man's Land

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According to a new Gartner report, worldwide mobile payment transaction values will reach $235.4 billion in 2013, a 44 percent increase from 2012 values of $163.1 billion, according to Gartner, Inc. The number of mobile payment users worldwide will reach 245.2 million in 2013, up from 200.8 million in 2012. Yet with all of this positive news, the electronic wallet revolution is nowhere to be found. One thing is for sure, NFC doesn't appear to be the solution in getting the electronic wallet off the ground.

Sandy Shen, research director at Gartner stated in the report that "We expect global mobile transaction volume and value to average 35 percent annual growth between 2012 and 2017, and we are forecasting a market worth $721 billion with more than 450 million users by 2017. Nevertheless, we have lowered the forecast of total transaction value for the forecast period due to lower-than-expected growth in 2012, especially in North America and Africa."


Near Field Communications' (NFC's) transaction value has been reduced by more 40 percent throughout the forecast period due to disappointing adoption of NFC technology in all markets in 2012 and the fact that some high-profile services, such as Google Wallet and Isis, are struggling to gain traction.


Gartner forecasts that NFC will account for only about 2 percent of total transaction value in 2013 and 5 percent of the total transaction value in 2017, although growth is expected to increase somewhat from 2016 when the penetration of NFC mobile phones and contactless readers increases.


Considering that the mainstream press is so enamoured by Google's Android and Samsung's everything, why can't the Android camp get NFC off the ground to kick-start the electronic wallet revolution?


While the electronic wallet revolution is expected to sweep the market when it arrives, one has to wonder what's holding it back at present. Is it a security issue that willl require adding fingerprint authentication to smartphones to assure banks and retailers that users are who they claim to be when making a financial transaction? Apple, Samsung and Blackberry are all pushing to build fingerprint scanners into their future smart devices. While this feature may assist them in gaining new Pentagon contracts, it could very well be one of the last missing pieces holding back the electronic wallet revolution.


Today, Apple was granted a new patent wherein it stated that "transferring information via one or more electronic devices in a simplified manner using NFC," yet added that "Transferring the data may take place using a peer-to-peer connection other than via NFC." In another patent specific to financial transactions, we find that Apple may in fact be considering alternatives to NFC. One of the alternatives was discussed in a 2012 patent. Additionally, Apple revealed in a recent granted patent that they've worked on a new secure digital handshake using security codes hidden in an iDevice's bezel and more.


The reason that I emphasize an alternative to NFC is because Apple's VP of Worldwide Marketing Phil Schiller stated after the release of the iPhone 5 in September 2012 that it wasn't clear that NFC was the solution to any current problem.


Does Apple have a key component that will satisfy the banks to get the iWallet to market? Is it that NFC just isn't secure enough for financial transactions? Is the iWallet revolution stalemate due to political maneuvering between the banks, traditional credit card companies, new financial players like PayPal, the wireless carriers and device makers? All of the initiatives to date have failed to catch on in the market and Google's Global leadership in operating systems and devices has utterly failed in delivering a sound solution to get everyone on board.


While today's Gartner report throws around a lot of data, there's still no clear insight as to how the electronic wallet stalemate is going to end. All we know for sure is that NFC by itself appears to hold little weight in the bigger picture. If it did, we'd all have iWallets today. To date, Schiller appears to have gotten it right: it's not clear that NFC is the solution to any current problem. Then again, that's a hollow victory considering that the electronic wallet revolution remains in no man's land.


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David Lau

Wish to have NFC in the upcoming new iPhone (be 5S or 6) since NFC could allow us to do many new/cool things with iPhone. However, no payment use please unless finger print scanner is ready.

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