Digital Transactions Authoritative, insightful and timely information for payments professionals
All eyes in the payments business these days are on mobile, especially on the potential smart phones have to change the way people shop for stuff and then pay for it in physical stores. So when talk turns to mobile payments in this context, it usually refers to a technology called near-field communication (NFC). That’s a fancy term for a system that lets people make payments and receive coupons at the point of sale by establishing a very short-range, two-way wireless link between their mobile device and a specially equipped terminal.
No doubt it’s cool technology—and an order of magnitude beyond not only the current mag-stripe regime but also the contactless-card song-and-dance that banks rolled out six or seven years ago with great fanfare and has, it’s fair to say, flopped.
NFC has a lot of backers, including the likes of Google and the country’s biggest wireless carriers. The former unveiled its system, Google Wallet, last May with a splashy piece of theater that included partners like Citi, MasterCard, and First Data. In September, it announced commercial availability and later said it was folding its struggling Google Checkout service into the new Wallet. The carriers, meanwhile, formed a consortium just over a year ago called Isis to push NFC. AT&T, Verizon, and T-Mobile, the companies behind Isis, have formed agreements with the card brands and plan pilots later this year in Salt Lake City, Utah, and Austin, Texas.
But there’s complexity undergirding that coolness, and progress with merchants, carriers, banks, and phone makers has been slow, to say the least. Instead, major retailers are looking at other means to streamline payments and deliver rewards. Home Depot is testing a PayPal system in five of its stores, and another 19 chains are expected to do likewise by mid-year. The system gives you a card, but also lets you pay with a mobile number and a PIN. It delivers offers and rewards to your mobile device and lets you change your funding source within two weeks of doing the transaction.
Meanwhile, Starbucks is running a barcode-based mobile-payment service in 9,000 U.S. locations. This slick system has made the coffee chain the country’s biggest retail mobile-payments impresario. And not to be forgotten is Apple, which now lets customers check themselves out at its 245 U.S. stores with an iPhone and their iTunes account. By the way, there are 225 million iTunes users.
A non-proprietary NFC may yet triumph over alternative technologies. But it’s becoming clearer by the day that merchants don’t want to wait to find out. They’re seeking—and finding—other ways that may well work just fine for them.
John Stewart, Editor
john@digitaltransactions.net
