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The business development lead for Vodafone Group’s mobile payment solutions unit, which runs the popular M-Pesa mobile funds-transfer service in Kenya, said the telco has no plans to introduce NFC to the offer.

John Maynard, speaking at the recent Mobile Financial Services conference in London, said that he saw no need for NFC in places such as Kenya or other developing markets, where mobile-money customers mainly use their phones for peer-to-peer transfers, bill payment and top-up.

"If you look at NFC, NFC is the bit of technology that sits between two things that want to have communication," he said in response to a question. "That’s all NFC is. At the moment, we don’t need NFC."

Maynard later told NFC Times that Vodafone does not have NFC on the development roadmap to be part of its growing mobile funds-transfer services in Kenya, Tanzania and other developing markets in Africa and Asia.

Vodafone, which owns a 40% stake in Kenyan operator Safaricom, launched M-Pesa in 2007, and it has since become the showcase implementation for mobile-money services worldwide targeting unbanked people in poor countries.

Vodafone has 13.5 million registered customers for M-Pesa in Kenya, along with more than 22,000 agents and 300 bill-pay companies. The telco has another 6 million registered users and 5,000 agents in Tanzania, where it launched service in 2008. It also offers mobile money in other countries, including Afghanistan, Fiji and South Africa. The services record about 100 million mobile-money transactions per month in total.

But few of those transactions are retail purchases, Maynard told NFC Times. Nearly all are P2P transfers, bill payment and top-ups.

Retail is one area in which NFC might come into play with the funds-transfer services. Small merchants could install terminals to accept payments, perhaps made by consumers tapping cheap NFC phones. But Maynard said he sees no demand among merchants in Kenya.

"There’s no demand because (of) the cost of NFC reader infrastructure," he told NFC Times. He added that that could change, such as by turning NFC-enabled phones into low-cost point-of-sale terminals.

The vast majority of merchants in poor countries accept cash for transactions, including in Kenya, even if M-Pesa is changing the way Kenyans transfer money. And consumers seem to feel comfortable paying cash.

Vodafone isn’t shunning NFC in industrialized countries, Maynard added. Payment at the physical point of sale is one of the most anticipated applications for NFC in these countries, and Vodafone’s branch operators in Western Europe are working on NFC at their own pace, he said. Vodafone operators in such countries as Germany and Netherlands, in fact, plan rollouts by next year.

Sticker Offer for Developing Markets
But Shailendra Pandey, a senior analyst for Informa Telecoms & Media, expects some of the proliferating mobile funds-transfer services in developing countries to adopt NFC in five years or more.

"I see India happening in less than five-plus years," he told NFC Times. "I wouldn’t be surprised also in Latin America if we saw those emerging markets leap frog developing markets."

NFC might be on the roadmap for Nokia for some of the low-cost devices it sells in developing countries in Africa and Asia, where it has a large market share, he said. The handset maker announced its own mobile-money service, Nokia Money in 2009, targeted at poor countries with large unbanked populations.

One vendor, South Africa-based Fundamo, which provides mobile-money technology platforms for 50 mobile financial services deployments, including 27 in Africa and the Middle East, last month introduced a passive contactless sticker and point-of-sale terminal offer at the Mobile World Congress in Barcelona.

"NFC is next logical step," Richard Bailey, Fundamo’s CTO, told NFC Times.

Customers could attach the sticker to the back of their phones and would tap to make purchases. But the sticker, which is tied to the user’s mobile-money account, could also be used to identify him for other services, such as paying bills, making airtime top-ups or even depositing or withdrawing cash from agents. The sticker could reduce the steps required of the agent, including the need to enter the user’s phone number.

Bailey said he is seeing demand in Malaysia and Indonesia for using the contactless sticker to complement money transfers, though Fundamo has no implementation or trials yet.

With its proposed system, after a consumer taps on a contactless reader with his phone, the sticker identifies him through the Fundamo server, which matches the contactless sticker serial number with the customer’s mobile-money account. The server sends a payment request back to the customer’s phone, with the name of the merchant and purchase amount. The service prompts the consumer for his PIN, which gets verified over the network.

But the problem is that the contactless point-of-sale terminals, made by Fundamo partner accells, cost nearly US$100 apiece. That is hard to justify for most merchants, who might only be street vendors.

Bailey said he believes there would be a business case to cover the cost of terminals.

"In developing markets, consumers are used to paying for transactions," he told NFC Times. “Mobile-money consumers pay for the transaction. We think that (terminal) devices could be funded by day-to-day operations. We’ll need to figure out how the initial funding will come."

Another challenge for the stickers is the fact that in many poor countries, families share the same phone, but have different mobile-money accounts, which they access by inserting different SIM cards into the phone. This could create a problem with only one sticker on the phone.

'Tsunami of Change'
Carol Realini, founder and CEO of fund-transfer company Obopay, noted that while NFC technology is “very powerful,” for payments, it will take at least three more years to roll out in the developed world. During that same period, mobile-money services are projected to grow by more than 10 times in transaction volume. There are 1.5 billion people fully banked in the world, but billions more with mobile phones.

"So in the next three years while NFC is incubating, I think we’re going to see a tsunami of change coming from the wireless money space," said Realini, speaking last week at the International CTIA Wireless show in Orlando, Fla.

Of course, Realini hopes her company handles a sizable share of that business, if it comes to pass. And while mobile-money services roll out across more developing countries using strictly network-based funds transfers, NFC is not likely to follow anytime soon. NT