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ORLANDO, Fla. — The number of contactless payment cards in the United States has nearly doubled in the last year, but the buzz was about mobile payment and near-field communication during the opening day of the joint Smart Card Alliance annual meeting and CTST conference.
 
"Consumers loved it," said Steve Davidson, product manager of mobile-commerce initiatives for Cellular South.
 
Cellular South recently completed a mobile NFC payment pilot with 100 consumers. 
 
Davidson said participants ranked security as their No. 1 preference or lean toward mobile payment, even ahead of payment speed and convenience. That's because Cellular South required a PIN entry, or a fingerprint-biometric verification, on the mobile handset to make a payment. 
 
The pilot took place in Jackson, Miss., and Memphis, Tenn., from April 2007 to September 2007. 
 
Citigroup's Josh McKay, senior vice president of Citi Mobile Financial Services, agreed consumers want more mobile-payment options. 
 
"When we tested it in New York City, we saw the same thing," he said. "People who saw it asked where they could get it."
 
Presenters also addressed the tough questions that must be answered before mobile NFC payment becomes a reality, starting with the business case for both mobile operators and banks. 
 
One point of consensus: Consumers are looking for a mobile wallet with multiple applications. Cellular South's Davidson also sees a comprehensive mobile-commerce wallet as essential for a viable revenue model for mobile operators. He cited a range of possible revenue-generating activities, in addition to payment, such as: a wallet "mall" in the phone where merchants rent space; commissions on sales made through the phone; advertising revenue; and mobile-ticketing fees.
 
TowerGroup's Virginia Garcia said the main reason mobile operators are interested in payment is to fight churn, which is "horrific" in the mobile industry. 
 
For banks, on the other hand, the "motivation is new-account acquisition and finding a way to add value to their customer in a way the bank down the street doesn't provide," she said.
 
Citi's McKay reinforced that point. 
 
"As banks, we're interested in cash-transaction share, deepening our customer relationship and reducing churn," he said.
 
Not surprisingly, attendees also discussed how to enable a mobile-NFC-payments ecosystem that allows consumers to securely add banks into their mobile phones. 
 
Growth in contactless  
"In the United States, total open network contactless cards in circulation reached 35 million in 2007, nearly doubling from 19 million in 2006," said Ed Kountz, senior analyst for payments at JupiterResearch. 
 
Usage is on the rise, too, especially among younger consumers.
 
According to new consumer research conducted by Kountz, among 25- to 34-year-olds, 9.4 percent use contactless payment once a week or more. 
 
Mobile NFC payment is designed for compatibility with open contactless systems, so the growth in the contactless bankcard market is seen as an essential step in the path toward an eventual future for mobile payment. 
 
In addition to the mobile NFC and contactless payment tracks, the CTST conference also has tracks on identification and policy, security and access control, new technologies and smart cards in Latin America. 
 
The conference continues through Thursday.

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