NFC is an interface, it’s not a business model. So when commentators said NFC was finished, they meant the telco-centric NFC business model was dead.
The rocky road to the mass market use of Near-Field Communication (NFC) technology has plenty of twists and turns. In the US, where it has an entirely different context at retail point-of-sale (POS) because no-signature stripe payments are so quick and convenient (contactless payments are no quicker, but when the US moves to PIN at POS then they will be) it has been a source of tension between stakeholders.
Adding to the turf battle now building over mobile payments, a few national retailers who are MCX members have begun turning off the ability of recently-upgraded payment terminals to recognize NFC payments or read smart credit and debit cards embedded with a chip[From Isis CTO accuses retailers of turning off NFC and smartcard payment tech – Computerworld]
I don’t doubt this is part of the ongoing battle between merchants and banks in the US but if you think about it, it’s the business models and not the technologies that are competing. MCX could perfectly well use NFC (in fact, it would surely be quicker and more convenient if it did) and banks could perfectly well use QR codes. What’s happened here is that the products have become bound up with the interfaces, and that’s why strategies have become confused.
MCX plans to sidestep any requirement that customers load up a Visa or MasterCard card to a smartphone, and will instead require them to make purchases with phones and barcodes directly from their bank accounts — a significant departure[From Isis CTO accuses retailers of turning off NFC and smartcard payment tech – Computerworld]
Look at how Target Red (the decoupled debit proposition) has taken off — as I understand it, Target Red is something like a fifth of the volume in early adopting stores and the analyst Gill Luria said (at BAI Payments Connect) that if this performance scales across MCX members it will take something like three or four percent of scheme volume in the USA — and was energised because it wasn’t subject to the same problems that credit and debit cards suffered in the Target breach. Now, taking an NFC handset and downloading a Target app that includes a Red card that runs over the NFC interface sounds (I’m sure) much more appealing to Target than simply adding NFC at POS for scheme payments. When you look at things from this point of view (seeing HCE, tokenisation, contactless POS, APIs and so on as components of a revolution at POS), NFC looks far from dead.
McKee expects Google’s HCE innovation to lead to an NFC renaissance in 2014,[From Isis CTO accuses retailers of turning off NFC and smartcard payment tech – Computerworld]
I’m sure this is true – in fact, it’s what we at Consult Hyperion told our clients some time ago – and it has been reinforced in the last couple of days because of remarks from David Marcus, the head of PayPal.
“I’m moving from being a massive skeptic of NFC, to being cautiously optimistic on NFC HCE take-up in very specific shopping use cases,”[From PayPal takes another look at NFC • NFC World]
I’m sure David would agree that what he was (rightly) sceptical about in the past was that NFC business model built around mobile network operator (MNO) infrastructure, not a quick and simple means to transfer data over a short range!