Some say NFC mobile payments will catch on slowly, even with Apple involved
Lag behind Japan, other countries relates to complexity, analysts say
Computerworld - Reports that the next iPhone and iPad could include Near Field Communication (NFC) technology have raised the prospect that many more consumers in the U.S. will soon be able to use their devices to pay for almost anything -- a candy bar, a subway ride, a parking space, or a bag of groceries.
But while flashing a phone near a station to make payments sounds easy, it really isn't.
If NFC mobile payments were simple, the technology would already be inside mobile phones and in wide usage in the U.S., some analysts have argued. The technology became available in 2004 and is used fairly widely in Japan and Korea. And it has been deployed in several European cities, mainly for transit systems.
So why is the U.S. late to the party? Aside from the actual wireless NFC software and hardware inside a phone, NFC-based mobile payments require a collection of systems and technologies, including an electronic transaction system -- or a collection of transaction systems -- to work.
Such transaction systems would function in a similar way to credit cards that are swiped for the user's information contained in their magnetic strips.
Before Apple came along, NFC also required banks, merchants, phone makers and wireless carriers to agree on transaction fees and technical specifications that allow interoperability between phones and receivers. In other words, there is a lot of politics involved with NFC.
One of the foremost analysts in electronic payments, Bob Egan of The Sepharim Group, has noted the logjam between the various parties interested in NFC over recent years. Egan said in a Twitter post last summer that he was thrilled to hear Apple had hired NFC expert Benjam Vigier, but has been cautious about NFC growth.
"NFC in handsets is meaningless without the rest of it, including agreements between parties, infrastructure, processing procedures for data, security and reconciliation of accounts," Egan said more recently.
Those factors are already in place in the credit card world, Egan noted. Even if mobile phones used for mobile payments double in number by 2014, as some analysts forecast, the total value of the transactions they make will only be 1% to 3% of all transactions conducted via credit cards or checks, Egan said.
Egan estimated there are 230,000 contactless credit card readers in the U.S. that can read credit cards with a smart chip installed. They are installed in the U.S. at fast food restaurants and retailers, and could be upgraded fairly simply to read NFC signals from mobile phones. But he said those devices have not yet been widely used.
- Isis CTO accuses retailers of turning off NFC and smartcard payment tech
- How apps are changing fast food
- Starbucks hits $1B in mobile payment revenues in 2013, analysis says
- Are we giving up on mobile payments already?
- Get a free smoothie for an NFC tap
- Facebook to test new mobile payment service
- Isis mobile wallet to roll out nationwide this year
- Google Wallet chief's resignation another bad sign for NFC
- RIM gets Visa approval for mobile payments via NFC
- Mobile payments adoption in U.S. could take years
- Gartner Magic Quadrant for Mobile Application Development Platforms As unprecedented numbers of enterprises build mobile applications, the mobile application development platform market continues to grow and evolve rapidly.
- The Total Economic Impact of IBM's Worklight Platform Mobile is the fastest growing consumer technology in history. As enterprises build apps to engage these new users they are facing increased complexity...
- Improve Your Mobile Application Security with IBM Worklight IBM® Worklight helps organizations extend their business across multiple mobile devices. It provides an open, comprehensive and advanced mobile application platform to help...
- Unlock the Value of Enterprise Mobility Download this guide and learn how to manage the secure deployment of enterprise mobile apps and data, while still encouraging the levels of...
- It's Chaos Out There Worried about your mobile apps? You should be; it's chaos out there. Check out this humorous video and see if you can recognize...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Mobile Apps White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!