Doomed NFC Debate ‘Will Slowly Die’ Next Year, PayPal President Predicts (Dec. 18, 2012)
Dec. 18, 2012
The bold prediction this week by PayPal’s president David Marcus that NFC will fail to gain adoption and “the NFC payments debate will slowly die in 2013” is touching off fresh arguments as payments industry execs head to office holiday parties. In a Dec. 17 blog post, Marcus explained why he doubts NFC will ever catch on widely among consumers, asking: “Is tapping a phone on a terminal any easier than swiping a credit card? I don’t think so—it’s not solving a real consumer problem and it’s not providing additional value to encourage me (or anyone else for that matter) to change my behavior.”
Marcus may not own a magic crystal ball, but his view is not that surprising, analysts say. PayPal has no great stake in NFC’s success; its cloud-based platform does not require the tap-and-pay technology. And NFC faces a “big hurdle” in motivating consumers to dramatically alter their payment habits, Eric Grover, an analyst with Intrepid Ventures, tells Paybefore.
And although NFC has many skeptics, it plays a key role in several other promising mobile payment schemes from rivals around the world, Aaron McPherson, practice director with IDC Financial Insights, tells Paybefore. Visa recently kicked off its worldwide NFC push with a Vodafone pilot in Australia. NFC underlies several worldwide mobile pilots MasterCard is backing. In the U.S., NFC is the backbone of Isis, the mobile payments pilot underway in Austin, Texas, and Salt Lake City that mobile carriers AT&T Mobility, Verizon Wireless and T-Mobile USA are supporting. And Google Wallet, which also supports cloud-based mobile payments, has heavily backed NFC technology for POS transactions.
It has taken longer than expected for NFC-equipped phones to hit the consumer market; only about half a dozen are available so far, the analysts note. Relatively few merchants have installed the two-way NFC hardware and software at the POS required to exchange payment information, including data for coupons and other offers. But Marcus’ prediction that the debate itself surrounding NFC will die next year has no merit, McPherson says. “It’s perfectly fair to say NFC will be slow to roll out, but if you look around the world at technology trends, it is pretty clear that NFC is where we are headed,” he says, noting that in Europe and Asia NFC technology is much further advanced than in the U.S. Another thing to keep in mind is that NFC and cloud-based payment technology are not mutually exclusive. “Many merchants already have capabilities to process contactless transactions, enabling consumers to pay with an NFC phone without making changes at the POS, while certain cloud-based systems would require a lot of configuration at the POS.”
