NFC payment plans face detractors as tech comes to U.S.

Google Wallet is here, Isis Mobile Wallet is coming; both must convince skeptical Americans that mobile payments are safe

BARCELONA -- Mobile payment technologies are spreading fast, as Google Wallet is already available on NFC-ready Android phones, and Isis Mobile Wallet is coming this summer.

Apple's coming iPhone 5 is also rumored to support NFC, or Near-Field Communication technology, which observers expect would spark greater interest by Americans in making contactless payments for retail items and transit fares.

NFC capabilities from chip makers, smartphone vendors and others were on display at Mobile World Congress here this week, adding fuel to the mobile wallet fire.

But mobile payment technologies may be slow to spread, at least in the U.S., as polls show Americans are suspicious of NFC technology for security reasons, analysts note.

Backers of mobile payments, meanwhile, say that NFC technology is more secure than plastic credit cards, and that users would not be held liable for losses through theft or fraud.

The skepticism among Americans is at odds with widespread acceptance of using NFC mobile devices in South Korea and Japan and parts of China to pay for train rides and small retail purchases.

Some e-commerce companies don't see the need for NFC in phones to make purchases. For instance, Starbucks lets customers load dollars on a Starbucks card which is in turn loaded on a phone that interacts with traditional bar code readers to subtract payments.

And at MWC, eBay Mobile and sister company PayPal exhibited ways to make quick non-NFC mobile payments for things like clothes and lunch through a phone tied to a PayPal account.

"We believe you don't need NFC to pay for things by mobile," said Steve Yankovich, vice president of eBay Mobile, in an interview. "You can [pay for things by phone] already today. The 'n' part of NFC is 'near' -- why should I have to be near to pay?"

Yankovich acknowledged that NFC can be useful when passing quickly through a turnstyle to get on a train, but added that a smart card could work just as well.

EBay and PayPal support technologies that can do payments and more. The companies, for example, use imaging technology that's widely prevalent in smartphones to capture a picture of a product, not just the barcode, to find out what it is and where it can be sold.

EBay plans to reach agreements with a wide variety of retailers to use the technologies to help refer customers to the nearest store for a product scanned from a phone, receiving a small fee from the retailer for the service.

"If NFC shows up in a big way on lots of devices and point-of-sale terminals -- and that's a big if -- we'll work with it," Yankovich said. "We're already doing the promise of NFC right now, today, so to us it's not a threat."

Online Internet-based purchasing from PayPal alone grew from $750 million four years ago to $4 billion in 2011, said Hill Ferguson, senior director of PayPal's mobile division.

About 14% of all e-commerce sites have a payment tool from a mobile device, and some retailers are able to attract new customers through the mobile channel.

"There's a lot of opportunity in mobile commerce," Ferguson said.

At the conference, Google showed off NFC capabilities that use of Android Beam technology to go beyond mobile payments. For example, Google partner Wyse Technologies demonstrated file transfers initiated by NFC-capable devices.

Also, MWC sponsor GSMA showed how an NFC-ready phone could be used to unlock a car or start its ignition.

Nav Bains, GSMA's expert on mobile NFC services, said 40 carriers and members of the trade group support a plan to put NFC security on SIM cards. The supported approach would give users the ability to remove the SIM and use it in another phone, along with the wallet security information.

Other possible security approaches include embedding the security (known as the secure element) into a phone's hardware, or putting it on a phone's micro SD card.

Representatives for wireless carriers Telecom Italia, France-based Orange and South Korea-based KT appeared with Bains and endorsed the GSMA's SIM-based security approach for NFC phones.

To date, though, Americans are not widely acquainted with SIMcards, partly because Sprint and Verizon Wireless have large customer bases that use CDMA and have never used GSM phones with SIMs, noted Andrew Borg, an analyst at Aberdeen Group.

The question of how security is incorporated into a phone isn't expected to squelch growth of NFC payments in the U.S., but could play a role in how fast it gains popularity, Borg said.

Perhaps when Apple enters the NFC payments field, Americans will warm up to the concept, Bains and Borg said. But for now, Borg wondered, what will make NFC payments more compelling than other ways to pay?

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen , or subscribe to Matt's RSS feed . His e-mail address is .

Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center.

Copyright © 2012 IDG Communications, Inc.

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