Recent Announcements Place NFC Payments on Life Support October 8, 2013 Recent announcements by leading players in the payments industry indicate that NFC’s prospects for any sort of sustainable future are becoming increasingly dim. It all began in with press announcements in August of this year when Apple and PayPal continued to reaffirm their plans to ignore the technology by not including NFC into their mobile payment offering. This was manifested by the new iPhone 5S and iPhone 5C not having the contactless technology in them and by PayPal taking an Anything But NFC approach by enabling their customers to pay with Card Swipe Readers, Bluetooth Low Energy (BLE) and/or QR codes. The above was followed by an announcement on September 30th that Google was giving up on NFC as the sole method of mobile payments for their Google Wallet service, setting the stage for other technologies such as QR codes to enable mobile payments. The new Google Wallet solution will also most likely include a non-NFC person-to-person payments feature focused on Gmail subscribers. That leaves us with Isis, the increasingly ugly duckling of mobile payments in the U.S. market. The NFC solution provider looks to be losing its way as Capital One recently announced that they would no longer be part of the Isis pilots in Salt Lake City and Austin. On October 4, 2013, the company also did not do itself any favors when they announced that they had selected a vendor to implement the Isis mobile wallet on Blackberry’s new operating platform. That’s right, Blackberry. It is difficult for industry pundits (including this one) to understand the strategic value of working with a handset manufacturer that is on the cusp of bankruptcy. The press release was also accompanied with poor timing and market positioning as it was issued just in time for the industry’s marquee event, Money 2020, which began on October 6, 2013 in Las Vegas.

The recent announcements also show that the industry is starting to reach the initial stages of maturity in terms of product development and technology preference. We are now reaching a point in which some mobile technologies are clearly starting to fall by the wayside, and NFC is one of them. There remains however, a few very remote possibilities for the technology to give it one more

go, but even these scenarios seem far-fetched. In one scenario Isis could partner up with MCX and roll out a solution that incorporates NFC and MCX’s preferred method of mobile payment, which currently looks to be bar codes. MCX would benefit by forging an alliance with a company that has strong relationships with mobile operators, and Isis would benefit by decreasing its reliance on NFC and at the same time gain access to key retailers that are betting on MCX. Any union between both companies would also act as a counterweight to PayPal whose grand designs to become a leader in mobile payments are becoming a reality. A similar scenario could also see Isis partnering with LevelUp, a solution that currently has better traction than Isis and uses QR codes to facilitate mobile payments. However, this scenario looks more implausible as each company’s corresponding business models and corporate cultures are radically different, making reconciliation in an eventual merger a difficult task. It is also likely that LevelUp may be looking at more established payments partners to form strategic alliances with as the company has stated aggressive ambitions to become a strong player in the electronic payments industry on a par with PayPal or even Visa and MasterCard.

NFC will most likely soon be a forgotten experiment in mobile payments and only exist in certain niches where there is a clear value addition to use the technology. In fairness and retrospect, it is worth mentioning that in the past NFC has been discounted numerous times by the industry as a viable alternative for mobile payments, only to resurface again in the form of a new strategic investment, partnership, or unexpected commercial roll out. This time though, it is difficult to imagine how NFC will continue to compete in an increasingly crowded mobile payments space with various solutions that are already attaining commercial status and that require significantly less investments in hardware upgrades. As for Isis, the company will most likely continue to exist, but without NFC as its centerpiece offering. Its three main backers, Verizon, AT&T, and T-Mobile, will want to continue to invest in Isis in an effort to gain new streams of revenue from mobile payments.