Cashing in on Contactless?
You have to give the GSM Association points for being optimistic. They recently released something that said soon, as in like mid-2009, you may be able to use your cell phone to pay for stuff at your local merchant right here in the US given their support of a standard that will make communication between the NFC and the SIM card easy. They cite Japan as the test case for the success of this technology and growing consumer interest in adopting it.
I wish it were as easy as willing a new set of standards into the marketplace. Certainly, standards will help accelerate the development of phones that enable these contactless transaction to take place. But, that is only one half of the chicken and egg issue, probably not the hardest half and one that won’t be solved here in the US any time soon. Merchants have to be persuaded to install devices that make these transactions possible and 99% of them haven’t and won’t be likely to do so until enough consumers are running around with contactless phones and clamoring to pay with them. Don’t get me wrong, we think that the future of payments is mobile, but we’re not convinced that – at least in the US – it is via the contactless route. There are many other cost effective and practical solutions in the wings, that leverage very pervasive platforms, namely SMS and even 2d bar code, that we think are far more practical and just as effective. And the longer it takes for contactless to be deployed in the US, the more at risk it is for being the standard for mobile payments.
Ultimately, mobile will prevail, but not because we will be able to wave our phones at POS terminals, but because the mash up of location-based services, data analytics and payments will enrich the shopping experience and drive incremental sales to merchants. And, ultimately the most convincing standard for mobile will be the dollar signs that they can drive for merchants and consumers.
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Mobile, Payments, Technology
But surely, when paying in a brick and mortar store at a modern cash register like the ones we have in the western world, it is more practical “to wave our phones at POS terminals” than to send SMS or play with 2d bar codes? Both from the customer’s and the merchant’s point of view?
Also, about the possible reasons behind development of mobile payments, David Evans had talked about the development of transportation services available with the mobile, which might help other uses, such as payment.
Finally, the chicken and egg question for NFC payments with the mobile will certainly be affected by the same question with card contactless payments: if the contacless cards launched by millions by the american banks do not meet a real success, then we can indeed doubt that merchants will be motivated to keep the necessary hardware and software - and vice-versa. If it were a success for contactless cards (not obvious for the time being?), then the merchants might want to improve their equipment, and if a POS is ready for NFC card payments it should be easy to add the phone payment.