“The competition is plastic. We have to find something that makes plastic obsolete.”
Clearly, since the above quote could refer to any number of industries, a little context is required. The speaker was Michael Abbott, CEO of Isis
, at CTIA’s MobileCON in San Jose; the subject, mobile payments in general, and NFC in particular.
Abbott was asked whether mobile would replace plastic, to which he responded that “It took 40 years to move it from cash to cheque. It will move but it will take a number of years… People are overestimating the rate of change for the next three years. And underestimating the rate after those three years.”
Wisely, Abbott left it at “a number”, without elaborating on how many decades were involved. For while there is still optimism amongst NFC’s adherents in the US, the fact of the matter is that (a) we are still at the trial stage for Isis (b) one of Isis’ backers, Capital One, has pulled out of those trials and (c) Google Wallet, the other great US NFC flagship, has been updated so that it is no longer wholly reliant on NFC.
I have carped on about this for a while now, but, in case you missed said carping, here’s a brief recap: we are dealing here with a fundamentally different means of payment to those to which people are accustomed.
If it is to be successful, the following hurdles must be overcome:They need to have an NFC-enabled handset.
We’re getting there on that one, unless they have an iPhone. So that rules out around a quarter of US smartphone users to begin with.They need to know that they have an NFC-enabled handset.
Scratch a goodly percentage at this hurdle, too.They need to know that they can make a proximity payment with an NFC-enabled handset
. And a few more here.They need to know how to make a proximity payment with their NFC handset
. Fortunately, in most markets, there has been some steady traction with contactless cards. Except in the US, which hasn’t yet made the transition to EMV cards and where magnetic strip contactless never took off. Oops. Yet more fallers.They are willing to make a payment with their NFC-enabled handset
. This is an enormous inhibitor. We know all about cash, and cheques, and cards – and in most of the world, we’ve got used to tapping in a four-digit PIN code rather than signing a piece of paper to enable that card transaction. In fact – re: my previous observation – a good number now pay by tapping their card rather than slotting it into the POS terminal. But the item that they’re tapping is a credit or debit card which the nice man at the bank gave you for, well, paying for stuff with at the checkout. Your phone – well, that’s for making calls with, and texting, and watching funny Youtube videos of cute kittens on. And even when buy stuff on Amazon with it, you’re paying with… your credit card. Lose most of the remaining field at this point.They make a payment with their NFC-enabled handset
. Now that they’re happy with making a payment, they need to find a retailer with terminals that allow them to make that payment. They may be some time in locating one.
What needs to happen, for NFC to stand any chance of gaining mass adoption, is advertising on a fairly dramatic scale. In every commercial break, on every billboard, in every magazine. Rather like the campaigns we saw when Apple came from nowhere to create a consumer smartphone market and an apps market, by educating consumers about what they had to offer.
In fact, Apple would be ideal to drive NFC. Except, having thought about it, they’ve decided that, for the moment at least, they’ll give it a miss.
NFC will happen: slowly, in fits and starts, but it will happen. In a number of years.
But neither plastic – not cash – will be obsolete for a long time yet.