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    Contactless Payment System Spending to Reach $800M by 2011: Report

    NEW YORK -- Spending on the contactless hardware, software, and services market is poised to hit $800 million by 2011, up from just $260 million last year, according to "RFID Contactless Payments," a report from ABI Research here.

    NEW YORK -- Spending on the contactless hardware, software, and services market is poised to hit $800 million by 2011, up from just $260 million last year, according to "RFID Contactless Payments," a report from ABI Research here.

    Since they make retail payments and public transportation faster, contactless payment deployments are swiftly gaining in worldwide popularity, ABI Reseach said. But these two biggest contactless applications remain separate for the most part, limiting the uptake of contactless cards and slowing the transition of contactless payment technologies into cell phones.

    "The benefits of contactless ticketing and payments have already been experienced in deployments and test trials around the globe, but a common infrastructure will fuel more rapid adoption," said ABI senior analyst Jonathan Collins.

    Proprietary transportation ticketing, and open credit, debit, and e-purse payments tied to financial service networks are the main reasons for contactless transactions. Contactless transportation ticketing led spending on contactless hardware, software, and services in 2006, accounting for over four times the expenditure in the banking market; however, by 2011 card issuers and other financial groups are expected to spend three times as much as transportation providers.

    Technology and business issues alike have to be resolved before a single contactless infrastructure can be leveraged by card issuers and the emerging mobile phone contactless payment market, the report said.

    Contactless commerce uptake is occurring at different rates across regions, national markets, and market segments. In North America, open-system payments are causing contactless adoption, while in Europe contactless ticketing systems are the foremost drivers.

    "Already in both North America and Europe trial work is underway to allow bank-issued contactless payment cards to interoperate with contactless transportation systems, but significant work remains to be done," noted Collins.

    The report cites Japan and South Korea as locations where contactless technology is making the greatest strides, partly due to the fact that contactless payments have been constructed on the foundations of contactless transportation ticketing, with a highdegree of interoperability between the two payment environments, although within the non-standards-based environment of Sony's FeliCa system.

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