Are NFC enabled mobile payments the way to go?
I am usually very excited about any new developments in the NFC payments area but some recent news items and developments have dampened my enthusiasm a little. There were already certain roadblocks that hinder NFC’s widespread acceptance such as 1) lack of agreement over who owns the customer; whether it is the network provider, the bank or the device provider, 2) there are not enough NFC phones around to make it viable for merchants and 3) it requires significant investment on part of retailers to be NFC ready. Another factor not in favor of NFC enabled mobile payments is that they do not make online or card not present transactions any more secure than they currently are.
Recently, Verizon blocked Google Wallet app on Android NFC phones, Starbucks announced that it accepted about 26 million mobile payments and its mobile app did $110 million in loads in 2011 and Paypal, with its 232 million accounts, is launching a plastic card and will enable its customers to make payments at brick and mortar retailers by either using the card or a combination of phone number and a pin. These developments combined with the roadblocks mentioned above force me to think that NFC enabled mobile payments will not be easy to pull off. These developments also highlight that there are existing alternative payment solutions (that work!) which could be enhanced to be accepted at physical retailers. Though these solutions are not as secure as NFC methods for payments at offline retailers, I am sure that a solution can be found to mitigate the concerns.
So, did Google, Verizon, AT&T, Visa and Mastercard make the wrong bet on NFC? Well, I wish I had a crystal ball to answer this question. Notwithstanding the uncertainty, these big names jumping in the mobile payments fray have triggered competition which will lead to the much needed innovation in payment space.