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Posts Tagged ‘NFC’

Battle at the POS Heats Up

November 13, 2012 in Uncategorized | Comments (0)

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In September of this year, mobile payments provider Square announced that it had raised $200 million. Investors included, among others, Starbucks Coffee Company—a surprise for many in the mobile payments industry, as Starbucks has been so successful with its own app.

The press release about the funding includes some impressive numbers. Last fall (2011), Square had about 150 employees and processed about $1 billion in payments (annualized). This fall, it has over 400 employees and processes over $8 billion in payments (again, annualized). Talk about explosive growth.

Square pioneered a new point of sale (POS) by allowing small businesses and consumers to accept credit card payments via their mobile devices. Several Square-like equivalents have popped up lately, including PayPay Here, iZettle in Europe and Tortuga in Asia.

Now it’s clear that Square is onto something new. Its Pay With Square app allows consumers to pay for purchases by simply telling the cashier their name. GPS and a few apps cooperate behind the scenes to take care of the rest—no credit card swipe required. (See my earlier post for details.)

Square’s success is certainly helping to fuel the battle at the POS not only in terms of where the payment is taken, but also in the method of payment. Back in May, Visa and MasterCard both entered the ring in an effort to defend their long-established market dominance. Each launched its own “digital” wallet service—not “mobile” wallet, mind you. Yet.

Visa’s solution, called, is made for online transactions. It stores your credit card, billing and shipping details, allowing you to pay for online purchases by providing only your email address and password to the merchant. It’s not tap-and-pay, but it’s a start. And the company says it plans to introduce the mobile aspect soon via NFC, QR codes or other technology that would allow tap-and-pay, scan-and-pay or something similar.

MasterCard’s answer is PayPass Wallet, which expands on the PayPass brand that does currently offer tap-and-go NFC payments (i.e. Google Wallet). The new addition, PayPass Wallet, is also geared toward online purchases, storing the necessary card, shipping and billing details and allowing you to check out faster, though via a special button on the websites of participating merchants (or in their mobile apps). And like Visa, MasterCard says it has plans to roll out to points of sale at some point in the future, but offers no specifics regarding timeframe or technology.

POS rookie Google Wallet continues to march on, working out the kinks, adding more credit cards, and steadily signing up merchants and users. One stumbling block continues to be the small range of compatible consumer devices. Isis, the NFC mobile payment joint venture between AT&T, Verizon and T-Mobile, just launched its pilots in Salt Lake City and Austin in October.

It’s an interesting battle to watch, and not only because of the different companies vying for control. Technology is developing so fast that NFC may already be yesterday’s news. We’re clearly still in the learning phase, with each solution providing valuable lessons for the next. Offerings are also moving from payment only to payment + additional value. And I think that “additional value” is the key to making mobile payments work. Check back soon for my follow-up post about how QR codes are entering the fray and may give NFC a run for it’s money.

Apple iPhone 5 Ignores NFC Hype!

October 10, 2012 in Uncategorized | Comments (0)

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Apple’s recent launch of iPhone 5 had one glaring omission: NFC.

The industry had been looking to Apple, hoping it would give near-field communication (NFC) a leg up by bringing the mobile payment technology to its large user base, and hopefully wrapping it within a great user experience.

So be it. It’s another hurdle for NFC of course, but it’s far from a death sentence. If Apple had put an NFC chip in iPhone 5, it would have simplified adoption, and been a clear play to own the secure element. The omission means that Apple is not planning to own any NFC secure element at this stage, so the question of who will remain unanswered.

Other device manufacturers are designing and releasing enabled devices—more than 60 phones are available now. Accessory manufacturers are launching NFC-enabled sleeves and cases that add the payment technology externally to iPhone 5 like what we have seen with the CBA Kaching application in Australia. (See this video for details.) Operators will still continue to push it onto the SIM cards.

Other banks and payment networks worldwide (Raiffeisen Bank International in Austria and the UnionPay network in China, for example) are also rolling out contactless payment services using external accessories or existing phones, and there are more plans and pilots afoot in France, Taiwan, and the U.S.

What was Apple thinking? My guess is that the company feels it has a stronger bid with mobile commerce through the 400 + million credit card details it has from iTunes. With that, why does the company need NFC? Besides, Apple is a closed shop. Always has been. I’m not sure why the news that it’s not supporting a global standard has been such a surprise.

Apple is continuing to do what it’s always done: enabling its own closed ecosystem, and going its own way.

NFC Accelerates Toward Its Roadblock

June 12, 2012 in Uncategorized | Comments (0)

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We’ve heard a number of announcements lately about new mobile near-field communication (NFC) devices. In April, someone leaked news about the Nokia Lumia 610 NFC, the company’s first NFC phone, due out in early Q3. The same month, Barclaycard announced PayTag, an NFC sticker UK consumers can attach to the back of their current phones, which doesn’t add NFC capability to the handset, but does enable consumers to tap their mobile, rather than a credit card, to pay.

At the same time, there are a lot of opportunities in the market right now for creating the ecosystem for mobile NFC, in the form of requests-for-proposals from banks, mobile operators and other third parties.

The mobile NFC market is obviously starting to accelerate, but it still struggles with the same fundamental issues. Predominantly, those revolve around where the secure element (SE) will lie, and who will own and control it. If the SE is going to be secured on the SIM card, the mostly likely choice is that the MNO will control it. If SE is built into the device itself, or memory card or other add on, that would open up the ecosystem to other players. At the end of the day, the only easier way to create the NFC ecosystem is for banks, MNOs, and handset manufactures to cooperate, and work out how to manage the secure element in all phones. As we know, however, this is unlikely

Because of this stumbling block, we’re still years away from having a widespread NFC payment ecosystem. Industry leaders seem to agree, as 81 percent of those we asked at Mobile World Congress earlier this year said they thought NFC would not emerge as a driver for mass adoption of mobile payments for another two-to-five years. Consumers aren’t queuing up for it either: out of more than six billion mobile devices in the world, only around 40 million (or 0.0067 percent) have NFC capability.

It can be frustrating to know that we have the technology for NFC, just not the business model. A few enterprising souls among us are forging ahead, using the tools they have to figure out their own contactless payment methods, from gluing their entire contactless credit cards to the backs of their phones, or removing the RFID chip from the cards using acetone and gluing it to something else—even fashioning bracelets out of the chips and wire as in this story.

Maybe in less than the time it takes banks, operators and other players to agree on who controls what, we’ll be onto the next technology, and it won’t have the same issues. Two to five years is long time in the mobile payments industry.

Mobile Payments: Marching On

May 23, 2012 in Uncategorized | Comments (0)

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Leading up to the CTIA Wireless Event in New Orleans earlier this month, there was some anticipation around a potential update on the timing for widespread availability of a NFC mobile payment deployment from Isis, the mobile payments joint venture between Verizon, AT&T and T-Mobile. Not surprisingly, it looks like we will have to wait a little bit longer to hear news about when we may actually start to see real progress in the availability of NFC. But as we march ahead on the mobile payments battlefield, we need to look beyond NFC and ask ourselves who are the key industry players in the mobile commerce war? And are they doing enough to educate consumers about the service’s security features and their benefits? The answer: probably not.

There’s been a lot of chatter in the media about whether NFC could be the missing link the mobile payments industry needs to achieve widespread adoption, but we’re not addressing the fact that mobile payments do exist without NFC, and are widely adopted all over the world. Americans tend to have a limited view of the world, so let’s take a look at our own market. Here, in the U.S., the mobile payments ecosystem is disjointed. In fact, it’s a bit of a mess.
This year we polled attendees at both Mobile World Congress in February and last week at CTIA to try and uncover what industry experts believe is holding mobile payments back. And in both cases, the overwhelming majority (76% and 71% respectively) of respondents cited that perceived security threats and lack of coordination among key industry stakeholders are the main obstacles to widespread adoption of mobile payments.

Security isn’t a threat to mobile payments adoption; it’s the perception that mobile payments are less secure than traditional payments. To date, the industry has failed to establish clear standards and ensure that everyone plays by the same rules.

Which players in the mobile payments industry are likely to succeed in facilitating widespread adoption of mobile payments? Almost half of our respondents at CTIA (47%) believe that financial service providers such as the banks and credit card companies are most likely to succeed in driving adoption rates.
There’s a clear disconnect between the service that mobile payment players are trying to deliver, and what consumers understand to be the value or benefit. Part of the problem with mobile payments in the U.S. today is that the credit card system works. There’s no flaw with plastic payments as they are, but in order to entice consumers to engage in a new way of doing things, there must be an added benefit.

This year’s CTIA survey results reveal that there’s still an unwillingness amongst consumers to pursue mobile payment options, and right now they’re not very optimistic the industry will be able to come together in the next year or so to deliver enough incentive to make mobile payments attractive enough.
NFC could very well become a universal standard, but it’s far from a sure thing. 84% of those polled at CTIA believe it’s still at least two to five years away. With all of the different providers looking to compete in the mobile payments space, they will need to find a way to come together, interoperate and make life easier for the consumer.

Plastic payments won’t be eliminated, but the industry will need to facilitate an extension of payments beyond the credit card, giving consumers more options. And consumers won’t consider the mobile option until the industry works together to develop standards and they understand the benefits. Until then, we’ll keep marching on.

NFC: Just Another Protocol

May 3, 2011 in Uncategorized | Comments (1)

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We’ve all been waiting a long time for near-field communication (NFC) capability on mobile devices. That’s the technology that enables mobile devices in close physical proximity to exchange data. It allows people to simply tap their phones on a sales terminal to pay for goods and services.

It sounds great, right? Many analysts have been saying NFC is the technology most likely to drive the growth of mobile commerce. But I don’t think it’s quite the Holy Grail it’s been built up to be. Don’t get me wrong; I’m glad to see new mobile payment methods in the marketplace. I think time will prove NFC to be just another protocol, just one way of many for consumers to use mobile commerce.

There are NFC pilots in the planning and rollout phases all over the world right now. Japanese and South Korean consumers are already making retail purchases with operator solutions built on Sony’s FeliCa platform. There are several pilots currently running in Singapore, and another in France. Operators in Germany, the Netherlands, the U.S. and the UK have all announced plans to roll out NFC-based payment systems between now and 2012. I’m sure we’ll hear about even more initiatives in the coming months. Without a doubt, over the next two years, we’ll see many of the pilots move on to commercial deployments.

Even with all the pilots, and phone manufacturers announcing they’ll put NFC chip sets in their devices (or we will see the NFC chips pushed via the SIM or a separate memory cards/stickers), the technology still faces a number of challenges to widespread adoption. Not every handset is going to be able to support NFC for many years and other alternatives face similar adoption issues in scale. Making the payment systems work requires the full ecosystem to come together, which means banks, mobile operators and merchants all cooperating and agreeing on terms, including who gets what and ownership of the customer!

And, as we’ve seen with the explosion of advances in mobile devices in the last few years, technology does not stand still. Something better could appear next year and render NFC all but obsolete.

All this adds up to a barrier big enough to block widespread adoption. We’ll continue to see it in closed-loop deployments for many years, but it won’t become the global standard, the only mobile commerce entry point. Consumers are already using other ‘remote’ mobile payments solutions via smartphone apps, SMS, WAP, and USSD protocols, for functionality such as peer-to-peer money transfer, remittance, bill payments, top up, and purchase of goods and services, and I think that trend will continue.

NFC is good, and it can easily compliment these existing protocols, but it’s just not the Holy Grail.

Do Consumers need NFC?

August 27, 2010 in Uncategorized | Comments (0)

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With all the recent announcements surrounding NFC in the last few weeks, including news of the cross carrier JV, Apple recruiting experts in this area etc., it has given me pause to wonder if we’re finally going to see some real adoption of NFC in the US over the next 2 years.

To answer this question we must start with the consumer benefit, as that will drive adoption (or not). Does the consumer need NFC? This is like asking do consumers need LTE or WIMAX – consumers need faster mobile broadband, they don’t care how technology delivers it. Near Field Communication is a radio frequency standard, not a consumer-facing payment type. What consumers really need is more convenient ways of making payments – although I think solving remote payment is more pressing than solving proximity payment issues. How many times have you not had quarters for a parking meter or failed to get crumpled bills into vending machines? Sybase 365 mobile payment implementations in Europe and Asia focus on a server-side mobile wallet, which can be triggered by a variety of mobile channels, SMS, Browser or Apps. We have not been waiting for NFC handsets and terminals to start offering consumers the benefit of paying by mobile. In the parking example, there is the added benefit that you can receive reminders and auto extend when time is running out on the meter. We are now starting to add NFC as an additional trigger method for remote and proximity payments, but in most cases the payment instrument remains server side in the cloud as it is for other mobile channels

In the US, where credit and debit and the terminal infrastructure is so established, do we really need a different way of doing proximity payments? Where mass transit is prevalent there is a case for NFC combined with payment card instruments stored locally on the handset (be it through sticker, SD or in handset). For speed through turnstiles, transactions and utilization can be driven by pricing (as London Transport does with Oyster on the Contactless card side). Outside of areas of mass transit, I struggle to see the user benefit or where we will see significant uptake. The convenience factor of tapping a phone vs. swiping a card (outside of mass transit) is not significant enough to change user behavior, so I remain somewhat dubious about widespread adoption. In fact the main clear benefit of driving payments from handsets is actually for the retailer rather than the consumer. A handset is a 2-way communication device that can receive offers and promotions in a way that a physical wallet cannot. However there are ways that we can entice consumers into opening up that 2 way channel with the retailer or brand that are not dependent upon NFC – based on our existing mCRM products.

At the end of the day, if our industry can find ways of improving remote and proximity payments via Mobile, we will see adoption, but we should see NFC as part of the enabling technology mix and not as the solution to push at consumers.