NFC For Mobile Payments Is Going Nowhere Until Somebody Gets The Customer Experience Right
So another Mobile World Congress has now come and gone and there were some interesting movements amongst the communications providers and technology vendors this year. More and more it seems the majority of coverage on the event is focused on the glitzy product releases and announcements made by the consumer solutions and this year was no different.
However, unlike last year that had significant launches of new devices, this year focused more on services for the consumer. At the top of the list was Near Field Communication (NFC), which has been touted for several years as the ability to finally get consumers to use their handsets for secure communication on a mass scale – primarily with payment systems. Even though several million devices have been sold with NFC technology it has been slow to take hold. It was promoted at every turn by the GSMA this year at Mobile World Congress though as a tool for entry or retrieval of information but to make it big NFC really does have to go hand in hand with payments and this year there was also an abundance mobile payment and wallet announcements at the conference. The numbers of companies or organizations offering some sort of mobile payment solutions were too numerous to count (I stopped trying at 12) and it is not like it was any particular type of company either. It was startups, financial and banking organizations and even communications service providers themselves offering choices.
The systems in Asia are particularly mature and showed how easy it was to retrieve discount coupons or information updates from a kiosk in a public area with NFC but that did not require any type of secure transaction since no money was changing hands. When it came time to actually pay for something the effort is more significant. For instance, when testing SK Telecom’s ZooMoney that I was given an NFC handset, which I used to rub over the NFC reader at the point-of-sale system. Then I was presented with a question as to whether I agreed with the amount on the screen. Fine, I did. Then the cashier had to finalize the agreed to amount and I waited for another prompt. Then I was prompted to enter a PIN number. After that I was asked to finally confirm. At that point I was given a receipt. Um… that was ‘cool’ but I could have been done in half the time if I would have just handed over my Amex when I walked up. And it also became clear that most of the systems for now seem to be limited to a particular country or region when I was told that they had recently gotten agreements to allow the system to work in Japan as well as South Korea.
And I’m not picking on SK Telecom because their system is actually one of the more polished solutions. The problem is bigger than that and as I said it was ‘cool’ but it still did not make my experience making payments any better. And that is the primary reason I believe we have have not seen Apple adopt the technology yet. They have stated over and over again that they do not and will not care about technical specifications (world’s fastest phone posters were all over MWC - who cares?) and raw capabilities because those are meaningless additions to cost and battery life (both precious in the handset space – how do I make a payment when I left my real wallet at home and now my phone battery is dead?) if they make no positive impact on the user experience. The other massive assumption we are making is that all the vendors of the world will add NFC capable solutions to their systems – not going to happen until they perceive themselves to be at a disadvantage for not having it. We have only just gotten mobile credit card systems for small shops on the go (ala Square and the like).
If you really want to make worldwide simple payments from a device work you are going to have to solve a few things and learn from the successes in emerging markets.
1. Digital Cash. Paypal and its knockoffs are great for ordering off of eBay or Amazon but if I’m on the go I need the option to use ‘cash’ that I am not carrying. This means no authentication and the ability to carry it ‘locally’ without Internet. It also means supporting a digital currency like BitCoin that was designed specifically for this purpose. Make it the same as carrying cash in my wallet and while I would understand the risks of carrying ‘cash’ my larger portfolio is not at risk. This also takes out the issues of availability in multiple countries – and the system should offer me onscreen conversion of what I paid for the BitCoin(s) in my home currency. That way when I’m in China or in Brazil I know what I actually paid for that soda or taxi ride.
2. Biometric Security. Having to enter a bunch of PIN numbers and entering them over and over does not make my experience any better. It frustrates me and makes me wish I had broken the $20 bill on the pack of gum anyway. Having the ability to permanently use biometric information stored for myself or others I designate as authorized to spend money by simply putting my thumb on a screen or a button means no PINs and faster processing. And it is even more secure, sort of like having a big black leather wallet with one of those chains on it hooked to your jeans like the Harley Davidson guys wear.
3. Learn From The Unbanked. It has to be as easy (easier even) as sending a text message like they do to make payments in Africa. The reason it is so hard to get people to adopt the technology in mature markets is that the credit card companies have done such a good job of making it easy to use the card users to buy almost anywhere without cash – and we do not (knowingly) pay those 3-5% transaction fees so we do not care. In areas of the world where the vast majority of people do not have checking accounts, savings accounts, investment accounts, etc. they have been using their phones to make payments – because the carriers in those regions have made it easy to do so. Make it easier and people will adopt it.
4. Beg Apple To Put A Chip In The iPhone 6. This is obviously a bit tongue-in-cheek but you know that if Apple decided to offer NFC support they would have already thought through most of the issues raised above and would have a way to make the customer experience better. And in the end they may be the only company out there right now that has the clout and foresight needed to pull the whole ecosystem together anyway.
I envision the day when I can walk up to a Coca-Cola machine, a Disney ticket kiosk or a movie theater and select my product choice, place my thumb on my phone and tap it to the kiosk and move on. There is no technological reason I cannot do it today but no one yet has come up with a compelling user experience that goes beyond ‘cool’ and is just plain better.