A thriving digital commerce market is a key pillar of the digital economy. With the increased use of smartphones and tablets, digital commerce has become an important focus for banks, merchants, transport operators and other vertical markets. Digital commerce has progressed since China Unicom first piloted the Cqpass transport wallet six years ago, and now has the ability to offer secure payments, authentication and identification services, loyalty and couponing, transport and ticketing, and access control. The focus for digital commerce in 2014 is innovation and scale, with mature SIM-secure technology continuing to roll out in new markets and expanding customer adoption in established markets.
New markets announce mobile commerce services each week, such as recent announcements from Poland’s NFC Pass and Sweden’s Fidesmom. Services in more established markets are becoming more sophisticated, such as in Canada and Korea, where there is renewed consumer interest in loyalty and couponing. The growing number of smartphones and deployments of contactless payment terminals combined with the widespread distribution of near field communication (NFC) SIM cards means the infrastructure needed for digital commerce is more commonplace. Together, these factors are creating a highly dynamic climate for digital commerce growth and success.
Hundreds of NFC mobile services have launched globally, including more than 50 live commercial SIM-secure NFC services. Most services have been led by mobile operators or have an operator as one of their lead partners, demonstrating their continued confidence and support of the technology. Uptake of NFC services varies by market, with the most popular NFC deployments based in Korea, China, France, Hong Kong, Japan, Italy and Turkey. The introduction of HCE into the Android Kit Kat 4.4 operating system has also increased interest in NFC technology, with markets such as Australia looking into HCE-based NFC services and a recently launch of HCE services by a BBVA in Spain.
However, NFC is just a small part of what is happening in digital commerce. Mobile wallets, mobile payments, transport ticketing, loyalty and couponing services, parking and other services are being rolled out using a wide range of technology solutions. Alongside NFC, increasingly popular solutions for mobile commerce include Bluetooth low energy (BLE), QR codes and barcodes, web-based software, proprietary products such as Apple’s Passbook and mobile point of sales services such as Square, among others. It’s almost impossible to list all digital commerce services globally— in Europe alone there are already more than 250 live digital commerce services.
The digital commerce ecosystem continues to grow as well, particularly in retail where merchants are announcing mobile services each week. In the US, pharmacy Duane Reade has is launching a pilot of BLE technology that enables customers to access discount offers and product reviews in-store. In France, fashion chain Comptoir des Cotonniers’ latest multi-million euro campaign combines NFC, image recognition and QR code technology in its advertising to provide customers with unique offers and product information. Merchants with more established mobile strategies are introducing more sophisticated products and services, such as US department store and retailer innovator Macy’s recently implementing solutions from Shopkicks in its stores to reward regular customers.
The growth so far of these services has been possible due to developments in underlying infrastructure. One main driver has been the availability of smartphones, which has enabled more sophisticated mobile services. IDC reported that in 2013, for the first time, more than one billion smartphones were shipped and smartphones now account for more than half of all mobile phone shipments. The latest industry estimates indicate more than 450 million NFC-enabled handsets are already in use globally and more than 300 million of these use SIM-based NFC. SIM cards with NFC are also increasingly available – the GSMA estimates more than 95 million NFC SIM cards were shipped to operators in 2013, with most already distributed to consumers.
Finally, contactless payment infrastructure is also rapidly being rolled out: the number of NFC-ready contactless payment terminals is already estimated to be more than 10 million worldwide, with Berg Insight predicting that the number will reach 46 million by end of 2017. These figures show that the availability of high-end handsets and contactless infrastructure hasn’t been a major obstacle to service uptake for some time – ecosystem players need to create compelling services for consumers and determine feasible business models for the ecosystem.
To make this happen, mobile ecosystem players need to work more closely. This will also help to ensure service interoperability, handset and operating system compatibility, and provide a consistent consumer experience and allow for continued innovation and increased adoption of these services.
The GSMA is taking an active role in bringing different players together to develop shared solutions and simplified specifications, work on common industry APIs, and disseminate information about best practice. Alongside mobile operators, the GSMA also collaborates with vertical markets to develop mobile value propositions. If you’re interested in the GSMA’s work in Digital Commerce, get in touch [email protected]. GSMA members can also join the Global Interest Group on Infocentre2