Data Anxiety, 'Anemic' Carrier Support Lower NFC M-Payments Forecast

Even bullish cheerleaders for the smartphone-based contactless payment model are getting a little tired of waiting for this revolution to get started. Strategy Analytics, which in July said that NFC-equipped smartphone shipments had reached a worldwide “tipping point,” has revised downward its estimates of how many of those NFC phones will be dialed in to mobile payments. Analyst Nitesh Pital projects that 115 million NFC handsets will be responsible for spending $48 billion via these phones by 2017, down from an estimated 158 million phones spending $53 billion.

Consumers seem to love shopping with the mobile phones but are not necessarily embracing buying behaviors. Linking ad exposures and virtual shopping behaviors to in-store transactions, however, is the goal most retailers crave from their m-payments models. The data path mobile could provide is so delicious it is hard to resist finding some way to turn the phone into a payment mechanism.  

Despite the lure of big retail data, the various players have been near-hapless in the execution. Describing wireless operator support for NFC payments as “anemic,” the report cites many networks pushing back the rollout of contactless payments into the final quarter of this year or into 2014. The ISIS consortium of banks and carriers continues to run behind schedule in activating NFC payments, and an agreement between handset maker Samsung and VISA has produced no launches of new services.



At the same time NFC payments are sluggish, other makers of mobile payment solutions like LevelUp and Square are fragmenting the market, even if no single player seems able to show dominance. Strategy Analytics Executive Director of Media & Apps states, “The prospect of both Apple and PayPal launching alternative mobile payment solutions based on Bluetooth Low Energy (BLE), not NFC, and increasing interest in dynamic QR codes from PayPal, adds further uncertainty to the role of NFC in supporting in-store mobile payments. Therefore, the success of ISIS, the NFC-supported mobile wallet joint venture between operators AT&T, T-Mobile and Verizon is not guaranteed, despite its scale."

The report does cite China as a growth market for NFC payments. China Mobile has been supporting its NFC-activated mobile wallet.

ISIS announced earlier this month that it expected to roll out NFC payment support with a redesigned app in the coming weeks. The group claims the system will work with most Android phones with NFC built in. It also promises an iOS version that will use a phone case that adds NFC technology to the famously NFC-less iPhone.

Meanwhile Google Wallet, which started as an NFC payment project, has expanded to all Android 2.3 phones. And the Merchants Customer Exchange, the consortium of retailers like Target, Best Buy, Dunkin Donuts and Walmart,  plans to roll out an in-store payment solution that employs 2S bar codes and cloud-based services that don’t require passing a credit card number to the retailer.

The battle for mobile payments rages on, even if U.S. consumers are showing little inclination to use them. The bank, credit card, carrier and retail groups are all vying not only for a piece of the mobile payment action but the shopper data that comes with detailed transactional histories.  Industry analyst Richard Crone, founder and CEO of Crone Consulting, recently told smartphone news source Brighthand that this is a war over the user relationship, which is based in data. "Merchants want the 'big data' because it provides a pathway to a CRM (customer relationship management) model. That way, they can personalize the shopping experience and make it more relevant to the individual consumer," he said.

For retailers, the arrival of consumers wielding smartphones has proven a mixed bag. While many feared that so-called “showrooming” hijacked consumers in store to buy from cheaper online alternatives, many analysts feel that the smartphone effect is subtler. Consumers often do phone look-ups to gain peace of mind before making an in-store purchase. Moreover, the retailer has an opportunity pull that consumer into an omnichannel environment where she can make the final buy from anywhere through the retailer’s online channels. 

2 comments about "Data Anxiety, 'Anemic' Carrier Support Lower NFC M-Payments Forecast".
Check to receive email when comments are posted.
  1. J N from , October 29, 2013 at 6:23 p.m.

    I downloaded Google Wallet on my S4 a few weeks ago and only just had the opportunity to use it at Petco over the weekend. I wanted to use it at various other locations but the Tap feature wasn't available on all POS systems. Until it becomes mainstream in all the core shopping locations like groceries, gas stations, etc. - I think consumers will realize how easy it is and come to expect it and eventually demand it. I don't think NFC is going anywhere - it's just a matter of time.

  2. Paula Lynn from Who Else Unlimited, November 7, 2013 at 6:08 a.m.

    Digital wallets do not help pay for things; they help to buy things. It helps financial institutions make more money on people who keep buying and then pay more for more purchases in absurd interest charges when they don't and can't PAY for them when the bills are due. It's worse than credit cards.

Next story loading loading..