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.