New Perspectives on Payment Systems: Near Field Communication (NFC) Payments Through Mobile Phones

Introduction

Payment systems have been altered in recent years due to changes in the economy, technological developments that have taken place on the Internet, the proliferation of social networks, and increased use of mobile devices. These systems have adapted not only to a highly digital and mobile free reality, but also to a new business climate. Previous payment activities that merely met consumer needs through e-commerce, now facilitate business transactions anywhere, anytime, for anyone.

One of the most important aspects in the development of electronic commerce is the payment system that is used to complete financial transactions. The main payment tool used for Internet purchases, according to the B2C eCommerce Report from the National Observatory of Telecommunications and the Information Society (Urueña et al., 2012) is a bank card (67.7%), distantly followed by exclusively electronic payment platforms like Paypal (11.6%), payment on delivery (10.7%) and bank transfer (3.9%), However, it is true that an increase in the use of exclusively electronic payment platforms is expected. Indeed, according to numerous studies, mobile payments will soon become the payment system of the future (Bourreau & Verdier, 2010).

However, according to recent studies (Tecnocom, 2012, INE, 2012), while electronic or online payment systems have experienced significant growth, they have not met initial expectations (Prabhaker, 2000; Ropers, 2001; Anil et al., 2003; Liang & Wei, 2004). This is mainly due to user confidence doubts (Sorkin, 2001), the complexity of the systems, privacy concerns (Hwang et al., 2003) and a lack of security (Behrens, 2001), among other reasons.

Despite this, “netizens” who made ​​online purchases in 2011 spent, on average, €828 representing an increase of 88% in the average expenditure since 2003 (Urueña et al., 2012). However, other statistics indicate that there is still a lot of growth potential for e-commerce (B2C), as according to Eurostat, in 2011 in the European Union, 31% of people shopped online in the last 3 months. In Spain, this number was only 17%, while in countries like the UK and Denmark e-commerce penetrations were 60% and 54% respectively (SAR, 2012). Therefore, we conclude there is undeveloped potential for these tools both in Spain, and abroad.

In addition, other facts also indicate that mobile devices have become a key component in digital purchases. Recent studies from eMarketer (2013) suggest three trends that together reflect the future of the mobile market: (1) the increasing number of smartphone buyers whose behavior affects every trade channel, (2) the increasing number of smartphones buyers who enjoy the immediacy of buying through their phone and are expected to generate about a third of mobile commerce sales this year, and (3) the rapid increase in the purchases of tablets, which are the medium for the most mobile commerce sales in the U.S. Therefore, the implication is that as consumers buy smartphones and tablets e-commerce sales levels will grow and more consumers will use these devices to pay for purchases.

Currently, sales via smartphones represent over 10% of all transactions on eBay in the UK. In the United States, in 2013 tablets are expected to account for 9.4% of electronic retails sales and smartphones for 5.3% (eMarketer, 2013), indicating the growth potential posed by these new forms of commerce and payment in future society.

For these and many other reasons mobile payments are considered by many experts to be one of the most promising applications in this sector, considered as the star app or “killer” application of mobile phones (Hu et al., 2008; Ondrus et al., 2009; Ghezzi et al., 2010).