NFC, the technology that can help turn a mobile handset into an instant, superpower payment device, has been long on promise but largely short on delivery. But today, the France Telecom-owned mobile operator Orange took a step that could see some of that potential realized: it has announced that it will initiate a nationwide deployment of NFC SIM cards across its home market of France, covering 27 million subscribers. Orange says that all new post-paid subscribers will be getting the new SIM, regardless of what handset they have; existing customers will need to request it. What this means is that any NFC-ready device with Orange’s new SIM in it can actually be used to make transactions — as long as a businesses has enabled the service.
The GSMA mobile carrier association first endorsed the NFC SIM solution back in November 2011 and this looks to be the first widescale European deployment of that — although there are other carriers, like China Mobile, who are already offering these elsewhere. Orange, meanwhile, has only been working on local services of NFC services that worked with a limited number of handsets (the UK’s QuickTap being one example).
Orange says it will be rolling this out in other markets, too: its footprint includes mobile operations in the UK, Africa and other countries in Europe, 33 countries in all with 166 million mobile subscribers, and it projects that the next markets to see NFC SIMs will be the UK, Spain and Poland.
This particular SIM solution comes from Gemalto, which announced its UpTeq product in February and it claims that it is the first NFC SIM to have the same level of security as a smart card or chip-based payment — the standard for card payments in Europe (where the magnetic strips on the back of the card are used significantly less than they are in the U.S.). Orange says it will work with Oberthur and Morpho as well for SIMs.
“Gemalto is the first supplier we’re working with for the deployment of NFC SIM cards at a national level,” said Thierry Millet, VP of Mobile Payments & NFC at Orange, in a statement. “Gemalto’s NFC solution is fully in line with our strategy to simplify and secure the use of mobile contactless services. We are committed to equipping our customers with NFC SIM cards and handsets. We are delighted to achieve a new landmark with this nationwide rollout towards our subscribers in France.”
The task now for Orange will be to sell the solution on to third parties like banks, retailers and public transportation operators for them to implement the solutions at their end.
This will require investments not only for processing hardware at the point of sale/transaction but also software investments to create the apps that will exist on the SIM to be used with the service: Orange says each participating merchant or other partner will get secure “space” on the SIM for their individual services and to store private data — “as within a vault,” Orange says in its statement.
There will also need to be more NFC-ready handsets put out into the market for this to work: Orange has confirmed to me that these SIMs will only “speak” to NFC services if the devices in which they are sitting have NFC capabilities embedded in them. For now that rules out the iPhone, among others. Orange says that it sold 500,000 NFC-capable handsets in 2011 in France and the UK; a number likely to be significantly higher this year as more of these roll out in the market.
Some analysts are skeptical about whether all the pieces in play — from merchants through to handset makers and of course consumers — will be working together in a comprehensive way any time soon. A recent report from Gartner estimated that that the mobile payments market is currently worth $172 billion worldwide, but that NFC will play a marginal role in that for some time to come. Jupiter research is more optimistic: it believes that around 25 percent of all mobile users in the U.S. and Western Europe will use NFC on their devices by 2017.