NFC Squares off with Mobile Payment Rival

by Matt Klassen on May 25, 2011

While the various mobile payment systems are all still largely in their infancy, many have touted near-field communication (NFC) technology as the clear winner. But like the tech battles of old between VHS and Betamax or more recently BluRay vs. HD DVD, there’s always a second choice vying for the attention of the public, and in the case of payment systems, that alternative is Square

Earlier this week Square, a company that is making a name for itself by allowing merchants with even the slimmest of profit margins to accept credit cards by abolishing expensive equipment and high fees, unveiled its newest idea, mobile payment tools that would allow customer and merchant to complete transactions with nothing more than a smartphone or tablet.

So as we all get set for the mobile payment revolution, I’ve adapted a quick comparison breakdown of both options available courtesy of PC World magazine:

Square: The Square system is a software-based payment system, requiring both merchant and consumer to have the appropriate complimentary software needed to complete the transaction. Square Register is the retail app, allowing merchants to process payments, while Card Case is the consumer app that acts like a mobile wallet, allowing users to use their virtual credit cards as authorized Square merchants.

Simply put, Square is akin to opening up a tab with a company, with purchases added to your Square account and processed at a later date.

NFC: Near-Field technology, on the other hand, is far more of a hardware-based payment system. It requires the merchant to have a NFC reader, no doubt an expensive piece of technology that allows the retailer to process the payment data from a consumer’s smartphone. On the consumer end, NFC users will need a smartphone equipped with the technology, allowing them to pay with the simple swipe of their phone.

So which one is better? Here’s how they break down in a few key categories:

Availability: We may have to call this one a tie. With mobile payment still in its infancy, you’ll be lucky to find a place where you can complete a transaction with your smartphone, be it with NFC or Square.

In regards to NFC, however, it may have trouble with its initial rollout for the simple fact that smartphones need to be equipped with NFC technology, and with a few scant options now available and a few more out by the end of the year, there simply aren’t enough phones to give the system mass appeal.

For Square, things are at least conceivably better, as it appears to be the more open environment, allowing anyone with any kind of smartphone to download the requisite app and start the mobile payment revolution.

Simplicity: Its here that I think we’ll find the overall winner, as issues with availability will have a limited shelf life. Using an NFC smartphone is much different than using a credit card, just swipe and pay. Square, on the other hand, has a steeper learning curve, requiring both merchant and consumer to adopt the Square technology. With consumers having to setup payment agreements with vendors and the like, it strikes me as simply more convoluted.

In the end, I have to say the jury is still out, as neither system has been implemented and neither has been adopted en masse. Moreover, both systems have their distinct advantages and disadvantages, with NFC requiring several hardware components and Square requiring usage of software that may be initially confusing. So who’s the winner? We’ll have to let the market sort that one out.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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