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In the September-October 2007 issue of Wireless Design and Development Asia (WDDA), Goh Say Yeow, Executive Vice President of Sales and Managing Director, Asia Pacific, at INSIDE Contactless, shared his opinion on the opportunities and issues regarding contactless payment and NFC technology. Key issues back then include the landscape of the emerging ecosystem that will support NFC adoption, as well as the integration of NFC into mobile phones.

For this issue, WDDA caught up with him again for updates on the industry—the remaining technical and business challenges, key developments, and the future outlook of the NFC market. Excerpts:

What were the major changes that have occurred in the NFC/contactless market during the past 12 months, and where are we now in terms of NFC?
There was a big uptake in the United States market for contactless, which has leapfrog from Magstripe to contactless. I think by now there will be more than 70 million to 80 million contactless cards delivered at the banking segment alone in the U.S.—which is the largest worldwide. Although it is still a very small portion of the region’s 1-billion-card market, it is definitely a substantial growth.

In Asia, we are caught in a combi world—contact-contactless or DI (Dual interface)—due to infrastructure and legacy issues. It will probably take us longer and more cost in terms of converting from Magstripe to contact than to DI Contactless. But it has been progressing well, although not as much as what we envision. The momentum is much slower as compared to the U.S. market taking off on purely contactless Paywaves and Paypass direction.

One big milestone in the past year was the standardization in the NFC front, in particular, the Single-Wire Protocol [SWP], which was chosen. We also have a lot of traction coming from the GSM Association [GSMA], as a result of its "Pay-Buy-Mobile" initiative. Because operators are now endorsing this, handset makers, in return, are coming to us right now asking for samples, demos, and details of our NFC chips, contrary to what was happening two years ago where we were having difficulties encouraging these manufacturers to go into NFC.

At present, first- and second-tier handset manufacturers worldwide are now integrating NFC chips in their products. In Asia, we are very successful in North Asia, in particular Korea, China, and Taiwan—as most of the handset manufacturers and ODMs are situated there. We are expecting to see some commercial launches early next year. Hopefully, 2009 will be the year when NFC will really pick up.

Over the past year, what are the changes or differences that you see in the market demand for NFC and contactless?
One main development for NFC was driven by the GSMA’s Pay-Buy-Mobile initiative. In the past, we have been begging the handset manufacturers to integrate the NFC chips but to no avail. With GSMA’s initiative early last year, handset manufacturers are now being pushed by telecom operators to have NFC handsets. It has come the other way around. Handset makers are coming to us now asking for NFC chips for integration. As for payment world, US Contactless penetration and uptake is the key to Contactless successes.

One of the key drivers for the NFC will be the mobile handsets. What key issues are yet to be tackled in seeing NFC integrated into mobile phones?
If you talk about the applications today, I would say that, from a technical aspect, there are no barriers to it. It is now the business case or commercial aspects of it. If everyone—operators, banking, transportation, etc.—sees positively where their positions are, then we believe NFC will move in a very big way. But if everyone tries to be a little greedy with what they want from their areas of responsibility, then of course that will be a great barrier to make the commercial decisions click. This will be the final milestone. If everyone understands where they are coming from, to the benefit of the consumers at large, we believe that it will move a big way from here.

What are your views on multi-application or convergence of applications on contactless cards?
This is always our dream, and of course our vision, for the smart card—one chip and one card to be used for everything. It will come true only when everything falls into place. Today, the technology is already there to make it happen, in terms of convergence. It is more of the commercial aspect that is the challenge—whether they would want to work together to put everything into one.

How important is Asia in INSIDE Contactless’ business plans? Please give some light on the company’s activities planned in Asia this year?
It is definitely very strategic, although our contribution to the total revenue of INSIDE Contactless is not that much yet because we are still waiting for all these big things to happen. But we are definitely in a very strategic position to address a lot of handset manufacturers around this region; to start off with an NFC chip, and then with a dual interface chip that is coming out this second half of the year.

When do we expect to see some handsets that people can really use?
We would say that some handsets from tier-one makers and even the tier 2 will be available in second half of this year and early next year. And the rolling effect will take shape with more handsets to come for their new design as a standard feature.