Near field communication—NFC—will begin to replace traditional wallets and purses starting in 2011, according to research by SJB Research.

Banks and carriers will look to make money from the introduction of the contactless mobile payments technology, the report predicts, and are set to go head-to-head in a bid to gain control of the market. NFC technology will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash.

“NFC is going to have a really important impact on the mobile marketing space as it arrives, but many people are still not aware of the technology yet,” said Sarah Clark, head of research at SJB Research, Monmouth, Wales, Britain. “NFC technology has been under development for a few years, but it’s been slower to take off than some people predicted.

“Particularly in the payments space, people got very excited about it,” she said. “There were a few breakthroughs in 2009, and I expect that NFC will come to market next year, with launches in certain regional areas.

“It will grow out from there, and I’m confident that 2011 will be the year that NFC technology becomes a reality for people.”

SJB Research specializes in analyzing the market for emerging technologies in the mobile payments field.

Internationally known
Britain, France, United Arab Emirates, Singapore, Taiwan and Korea will be the first countries to get the new mobile wallets, the report predicts.

The U.S., Canada, Spain, Germany, Italy, Norway, the Czech Republic, Romania and Australia are also expected to be early-adopters of NFC.

Businesses ranging from retail and travel to fast food, consumer goods, tourism and entertainment are all expected to be affected by the arrival of NFC services.

Government and educational service providers will also be impacted by its arrival.

Consumers with NFC-enabled phones will be able to simply touch their phone to a smart poster or product label containing an RFID chip to sign up for a loyalty program, collect a money-off mobile coupon, download a trailer for a new movie, access the latest travel information or go straight to a product’s Web site to read customer ratings and reviews and compare prices.

Social status
Social networks will also get a major boost, according to the report.

With an NFC phone, consumers can friend someone online when they meet them in the real world by simply touching their phones together.

Or they can touch their phone to a smart poster as they go into a restaurant to automatically update their Facebook status and get an offer coupon from the venue as a thank-you for telling their friends that they are there.

Commuters will be able to store their travel pass on their phone and mobile versions of airline boarding cards, hotel room keys and even passports will make it quicker and easier to get from place to place.

Paying bills will become much simpler, too. Simply touch two NFC phones together to transfer money to a friend, buy a drink or pay for a service.

No more rummaging around for the right change, card, keys or paperwork and no more having to text current location to friends—with NFC everything can be handled by consumers’ mobile device, Ms. Clark said.

Mobile security
NFC is a highly secure technology, according to SJB Research.

Consumers will be able to instantly lock all the mobile wallet services on their phone if it is lost or stolen and then get them automatically transferred onto a new phone as soon as it arrives.

They will also be able to use their phone to make payments even when the battery is flat.

The mobile wallet is coming
There is no doubt that NFC will have a huge impact on the mobile industry, helping retailers close the loop from mobile marketing to processing sales.

However, what has not yet been decided is who will win the battle to provide consumers with their new hi-tech mobile wallets.

Decisions made in 2010 will be critical in determining which carriers, which banks, which industry suppliers and which service providers become the leaders in the field.

Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers, according to SJB Research.

The winners could be banks or carriers, or even a new entrant to the market.

“To date, quite a lot of field trials that have taken place between banks and mobile operators, both of which have important roles in this space,” Ms. Clark said. “They have been talking together to find a way to launch these services commercially via a partnership, but it hasn’t really worked so far.

“To get a technology service like this off the ground, you need someone to get behind it and drive it forward,” she said. “There is a competitive situation coming up as both banks and operators see the opportunity to generate profit and create a new business line—they’ll be going head-to -head in direct competition.

“Retailers and marketers that are willing to sign up early and talk to banks and operators now can get good deals from whomever they decide to use and be the first to launch these services.”