Contactless payments are coming; there is no doubt about that.
Many predicted that 2011 would be the year contactless payments took off. Partnerships were signed and deals done, but outside of a few trial areas, primarily in London, consumers saw little evidence of the revolution. The pundits that predicted it would happen in 2011 are now revising those dates to 2012. It is certainly a question of when rather than if and more a case of why not now.
Widespread adoption is not hampered by consumers not wanting it; who wouldn’t want to wave their wallet over a terminal in their favourite coffee shop rather than having to root around for change or a card whilst carrying a bag, morning paper and/or laptop? Nor is it the retailers or payment systems providers; they have to change very little, ePOS systems already cater for additional connected devices to authorise transactions. Education of users is not the problem either; London’s underground carried nearly 25 Million customers a week leading up to Christmas. A large proportion of those will have used an Oyster card. The real problem is simply a lack of a clear strategy and technology.
There’s been a lot of talk around NFC, but Chris Skinner is right when he says there is much more to contactless than just NFC. NFC would seem to be the answer, but is it really the technology of the future or is a technology looking for a future? It is clearly a crucial component, central to many of the approaches being taken, but it isn’t the only solution. For instance, Square’s Card Case works by associating your card with a virtual tab at the retailer rather than an NFC chip, and Bump uses the geolocation of the two devices being “bumped” and a clever alogrithm to join the transaction up on the server, both are contactless solutions.
My view is that NFC should be the catalyst that ensures contactless payments really takes off, but it will take some innovative software to make it happen. There are plenty of ideas out there from bundled payment card and loyalty schemes at point-of-sale, to transport solutions that tell you the timetable and where the next bus is as well as holding your season ticket details. These are all simply extensions of existing systems to use NFC as the new technology. What is needed is a unqiue and compelling case for the industry and the consumer. I’m sure Apple, Google or Amazon have some great ideas, but are keeping them under wraps for the time being. Just because they are the big players doesn’t mean there isn’t room for someone else with an innovative idea.
Tags: contactless, NFC, payments
