The following is a guest post from Matt Krautstrunk – Content Coordinator at Resource Nation, a company that offers free tools, tips, and purchasing advice for business owners.
Mobile payment technology is generating about as much buzz as a typical Apple product release lately. NFC and mobile payment info is such a sexy topic, that just about every other day, we’ll see an article telling us to throw our wallets away forever.
But wait, you may want to hold on to your bi-folds because it may be another few years before we adopt mobile payments on a mass level. Added to the fact that one the leading platforms for mobile payments is “scaling back plans for mobile payments,” the future doesn’t look bright for mobile and near field communication. Isis originally planned to partner with Discovery and Barclays to create a full service mobile payment solution, but now they are creating a “mobile wallet.” The mobile wallet will act as a password protected account to store credit card information of users on a cell phone. Not the most ingenuitive feature, but it just goes to show us that mobile payments may be a thing of the future for a reason. Ultimately the success of mobile payment technology depends on three factors, retailers, carriers, and credit card processing companies.
Retailer Cooperation
Retailer adoption in the mix is crucial to the success of NFC operations. Isis found that retailers didn’t care to work with smaller card companies, like Discover. For adoption on the mass level, a major card company needs to step out of their box and pair with merchandisers.
Retailers may the single biggest wild card in the blend. Credit card companies and mobile carriers are salivating to offer this technology. It may simply be too difficult to establish a universal mobile payment method. Purchasing and installing equipment that accepts payments at the register seems like a great idea for retailers, until they are left with the bill, and a machine that nobody knows about. It’s just too risky and the ROI isn’t there yet for retailers.
Carriers
The mobile carrier’s role in the development and adoption of near field communication is somewhat murky. Each carrier has created a partnership, and there may be a difficult future for adoption if each carrier only is paired with certain credit card companies. Ultimately, the technology can’t turn in to a proprietary app, it must be offered universally by all of the carriers. It doesn’t make sense to only offer NFC’s to T-Mobile customers, because the balance will be thrown off and retailers will not be willing to participate.
Credit Card Companies
Visa recently tested out implementing NFC in SIM cards, and that might cut the carrier barrier to entry. The triangle of adoption comes down to credit card companies and how they can simplify the process. According to Wired, “Visa and MasterCard are so universal at this point that the barriers to entry for any new payment system are almost insurmountable,” IDC analyst Aaron McPherson told Wired.com in an interview last year. Isis had already enlisted the help of Discover Financial Services to start the venture’s payment system. But Discover is no Visa or MasterCard, and merchants weren’t keen on the idea of cutting out the two giants.”
Whether we will see fragmentation in the industry or not, it seems we are at least 2-3 years away from seeing mobile near field communication. The push pull, of what will work and what won’t is different for each part of the triangle. It will be interesting to see who ultimately gives in, because mobile payment technology could definitely benefit each of the three counterparts.
