NEW YORK (MainStreet) — What a difference a year makes for Near Field Communication (NFC) technology, once considered the beacon of hope for mobile payments to allow for short-range tap and pay smartphone technology.
But cue this month's BAI Payments Connect conference for bankers in Phoenix, Ariz., and those in the know have changed their tune.
“NFC may be a non-starter,” said Jim Marous, an executive at digital marketing agency New Control.
The remarkable fact: nobody disputed Marous.
It seemed so simple: Tap the phone on a reader, done--you’ve paid. The payment would be processed through an associated credit or prepaid card. But to survive NFC may have to go through feats of herculean proportions.
Everybody, from Google (with its Nexus phone) through Isis (the payments consortium of wireless titans: Verizon, AT&T, and T-Mobile), had tapped NFC as the secure way to let smartphone owners pay with the phone instead of a swipe of a credit card. A few years ago it seemed just a matter of connecting some dots, especially in infrastructure, before NFC became a marketplace reality.
Flashforward to 2013, and NFC is available on only a few dozen phones--meaning it is in few consumer hands--and it is not on iPhone. Nor is it, as far as anyone knows, on the iPhone roadmap for near-term deployment.
Merchant adoption of NFC readers also has lagged, with only a handful of national retailers (and few local stores) offering the capability. Even if you have an NFC phone, there is nowhere to use it to pay.
Thus the Marous skepticism and the mounting sense that NFC is dying.
But then there is the other side of this story, because - quiet as they may be - there remain NFC supporters, plenty of them.
In Barcelona, at the sprawling Mobile World Congress in late February, Diarmuid Mallon, an executive with SAP, surveyed attendees about NFC’s future; he found 28% of them still saw an NFC type connection as instrumental in nudging mobile payments into mainstream adoption.
Something like NFC plainly is needed, added Andrew Till, CTO at Symphony Teleca, a mobile consulting company based in Mountain View, Calif.
. He explained that if it isn’t NFC, it has to be something equivalent, because “we need a short distance payments enabler.”
And nothing else is in the pole position, sSo what’s the hold up?
“It’s not the technology," said Vishal Jain, a London based mobile analyst with 451Research.com. "The problem is with the stakeholders.”
The fight is about money and how it’s split. Every payment involves slivers that get divvied up among card issuers and financial institutions. With mobile payments, the wireless carriers’ dream is to insert themselves into that split. “The carriers are looking for technology that keeps them from being basic pipe,” said Till. And the scary poster children for basic pipe are wireline telcos who see a future that involves only continuing downward price pressures.
The wireless carriers want better, and their hope is to gain influence over payments made with cellphones.That's why Google Wallet, for instance, is not available on Verizon smartphones, even ones with NFC capabilities. Verizon wants a piece of the money pie, and Google, so far, isn’t paying up That carrier insistence has spawned s stalemate, not just among these two players, but throughout the nascent mobile payments industry.
Right now, the carriers are pushing their Isis wallet -- there’s a plot in Salt Lake City and Austin, Tex - and as that sorts out, little is happening on the NFC front.
“NFC isn’t dead but it is in limbo," said Ciaran Bradley, vice president of handset security at AdaptiveMobile, a Dublin, Ireland based company.
The NFC story could end there - but it may not. That is because there may be a backdoor route for NFC to gain wider acceptance with consumers and that might be through enterprise, according to Tom Zalewski, a sales executive with Atlanta-based CorFire, a company that builds mobile solutions.
CorFire’s idea: It is now selling businesses on using NFC as a tool for access control, perhaps paying in a company cafeteria, and as a continuing form of identity in a closed loop environment.
Already, too, NFC is gaining traction in transportation services where exact fare is required - London buses for instance. The value to consumers is enormous, and they don’t hesitate to use the technology.
There will be more such public transit use cases, said AdaptiveMobile's Bradley, and the upshot is that little by little NFC likely will infiltrate into our lives.
As users see that NFC in fact works, suggested CorFire's Zalewski, they will begin asking for it in retail. And when enough consumers are asking loudly enough for NFC, just maybe the warring stakeholders will get the message and settle their differences.