Many people in the mobile industry think mobile payments is not an “if” but a “when”. They strongly believe that mobile phones will become our wallet, replacing cash and plastic. But to date, no single mobile money system has gained the critical mass that it requires to make mobile payments as ubiquitous as Visa and Mastercard.
The challenge for mobile payments is that it is a solution in search of a problem. Most people are happy enough with their coins, notes and bank cards. Some would like to use their phone as a wallet, but others need to be persuaded by the merits of mobile payments.
And Gartner also raises concerns about whether Hong Kong and Singapore smartphone owners are actually at all interested in NFC as a payment method. SAP recently conducted a survey about what users would desire in a mobile wallet, and found that improving the retail experience was an important prerequisite to making mobile money attractive.
That does not mean cash and cards are irreplaceable: PayPal has become a major player in online payments because it brought convenience for both seller and buyer, and to a degree, some kind of guarantee of delivery of your items.
For an alternative to cash and cards to emerge in the real world (i.e. not online), it needs to offer something cards and cash cannot.
wallets of all kinds
Mobile payments was a key theme at MWC. Google let it slip that it was working with Sprint to install Google Wallet on handsets, which David Marcus, CEO of PayPal, was telling the Huffington Post that he doesn’t think NFC will succeed and consumers would be better off with PayPal here. (I wrote about this for live.orange.com at Le Web 12.)
But it was NFC that garnered the most column inches. The short-range technology allows a phone to communicate with another phone or terminal across a few centimeters, is fast, secure and doesn’t require a connection to the mobile network (the payment terminal can be connected via DSL or X.25). The GSMA estimates that there are 150 million NFC-enabled devices in use today and by 2017, 85% of all point-of-sale terminals will be fitted with NFC capability.
To fuel interest in NFC, the GSMA staged a massive trial of mobile NFC for payments, travel and venue entry. An estimated 6400 attendees tried it, including many press who were given Sony Xperia T handsets complete with a mobile wallet.
And yet, the iPhone doesn’t offer NFC, most Androids currently don’t, nor do most payment terminals support it. Perhaps we need to look to Japan or Korea to see how the technology can become more widely adopted. For instance, there is good case study on how South Korea has embraced NFC on the GSMA site.
NFC: swipe for parking, turnstiles, hotdogs and security
At MWC, SK Telecom demoed a workflow that uses NFC for more than just payments: NFC can also be used to download apps, ticketing and authentication. For instance, you download an app from your favorite football team and buy tickets for the game on Saturday within the app.
When you arrive at the stadium car park, you swipe your phone to start the parking ticket. You head into the stadium, going through the turnstiles with a swipe: your ticket is recognized and authenticated via NFC. You buy a hotdog at half time with another swipe, touching the vendors’ own NFC-enabled smartphone. When the match is over, you head back to the car park. Another swipe opens the gates, completes the parking payment and tells the stadium you have left.
Now, we can already buy tickets online without NFC; we can use QR codes to enter through gates and the credit card is still a pretty good method for cashless payment. However, if you can demonstrate that your new tool has benefits over the old one, people may adopt it. Being able to skip queues, not having to print tickets, being guided around the stadium, downloading the match day program within a few seconds…all seem more compelling that a standalone payment service.
That’s not to say progress isn’t being made in mobile payments. Mastercard announced MasterPass, while Samsung announced that it will pre-load the Visa payWave app on its smartphones, which will be integrated with Samsung’s NFC chip. This will let banks load payment account over-the- to a secure chip. If you are interested which phones can support NFC (although may not have the client software), here is a list of NFC certified smartphones.
So as this Orange infographic on NFC demonstrates, mobile payment needs to be joined up with authentication, authorization, communications and so on before it can be truly successful. With backing from the financial services industry, major operators and vendors (Apple is absent from this), I believe there is too much vested interest to let NFC fail.
image © Ben Chams - Fotolia.com
I've been writing about technology for nearly 20 years, including editing industry magazines Connect and Communications International. In 2002 I co-founded Futurity Media with Anthony Plewes. My focus in Futurity Media is in emerging technologies, social media and future gazing. As a graduate of philosophy & science, I have studied futurology & foresight to the post-grad level.