Is NFC Really the Future of Mobile Payment?

by Istvan Fekete on February 28, 2013

The buzzword this year for the Mobile World Congress seems to be “NFC”. Samsung, China Mobile, Visa and MasterCard have announced deals to boost the use of of this payment method, but there are some in the industry who believe that the technology at the centre of the move to mobile payments may fail to take off. Yes, I am referring to NFC.

The partnership between Visa and Samsung mean handsets will be shipped with a chip preloaded with Visa’s payment solution. VeriFone has announced it is offering its mobile payment solutions and management to China Mobile and the Bank of China. Also, MasterCard has presented MasterPass, its own mobile payments solution.

What all three have in common is that they all use or support NFC (near-field communications) technology, which has been developed over the past five years.
Market research company ABI Research forecasts 285 million NFC-enabled devices will be shipped this year, a number that is expected to hit nearly 2 billion in 2017, considering that nine of the top ten OEMs now have NFC-enabled handsets commercially available.

But there are a couple of interesting facts which shed light on NFC’s real potential: Apple’s iPhone 5 does not support NFC, and the company has no public plans to integrate the NFC chipset into its device, although this could be subject to change, obviously. Instead, Apple launched Passbook, an app that currently stores coupons, vouchers, tickets, etc., in one central place, but its Passbook patent hints toward much more complex features such as an iWallet.

Secondly, Samsung unveiled the beta version of its own Passbook copy, the Samsung Wallet app, which carries the same features of Apple’s aforementioned app. In an interesting turn of events — despite partnering up with Visa — Samsung’s app does not include NFC tap-to-pay features. When asked why they had dropped support for NFC, the company said that retailers prefer barcodes over NFC, because they don’t have to install any new infrastructure to support it.

Mark Hung, a research director at Gartner Research, told CNBC.com that firms have been clever in not having full dependence on this new technology.

“These companies are making a push for NFC, but at the same time they’re hedging their bets by supporting alternative technologies as well with other products,” he said.

In other words, the world’s two tech giants, who dominate the smartphone industry, are skeptical about NFC, which suggests that the buzz around NFC is maintained artificially. Yes, the method is already in use and global NFC transaction values are expected to reach $110 billion in 2017, but there is a long way to go.

Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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