NFC Update – 2

Time for yet another NFC update. Follow up to previous NFC posts (NFC Update-1, Angry Birds and NFC, NFC Series 1, 2, 3).

A lot has been happening and the momentum is slowly but steadily building. As I had mentioned before, ‘soft NFC’ is more likely to show up in the market place first. ‘Soft NFC’ again, is defined as NFC based applications that are relatively unsecure – think smart posters, Angry Birds Magic and the like. And ‘Hard NFC’ (secure NFC) will soon follow. There are many issues with security related to NFC that the industry is currently grappling with. With many pilots launching across the developed world, many of these security issues will come to the fore and be addressed.

Gartner has forecasted the impact of NFC to be in the order of 10% or so by 2014 in the smartphones market. That’s quite significant considering the fact that IDC expects around 850M smartphones to be sold in 2014. So, this is no small number by any means.

Meanwhile, what’s been cooking in the NFC world?

A. Nokia recently announced that its C7 and C9 phones will not be NFC enabled. That announcement was not very surprising in that these phones were based on MeeGo that is being EOL’d. Incidentally, Nokia is big on NFC and has dedicated staff to address this segment. I expect it’s windows mobile enabled smartphones to be NFC enabled. There is increasing speculation that Nokia’s upcoming ‘Sea Ray’ smartphone based on Windows that will launch later this year will contain NFC. It will be very surprising if Nokia chooses to pass over NFC with Sea Ray. Speaking of ‘Soft NFC’, Nokia recently launched an online store called – ‘NFC hub’ to help businesses drive traffic to stores using smart posters, business cards and the like. Using Facebook, Twitter or FourSquare etc, customers can help ‘like’ businesses. Personally, I think they are setting up the stage for NFC payments that will follow in 2-3 years.

B. And speaking of smart posters, US TV network VH1 is now testing NFC embedded posters in the NYC area to promote their new series ‘Basketball Wives’. This effort follows the success of a similar campaign in London to promote the X-men movie.

C. ISIS is now launching in yet another city – Austin (in addition to Salt Lake City). And it’s partner ecosystem has expanded to include all the four major credit card players (MasterCard, Visa, Discover and AMEX). And that is a big win! It signifies the interest payment vendors have in this new technology and that they are vested in opening up yet another payment channel. ISIS is a carrier based mobile payment technology that will be a win-win for end-users, carriers and payment processors alike.

D. Google Wallet is launching this fall with Citi and MasterCard as key partners with Sprint as the carrier. This is a NFC pure-play and will leverage the Samsung manufactured Google Nexus phones to enable this service. Google is throwing its weight behind NFC is a good thing, but I do have reservations about the Google Wallet. With much of our online presence going through Google’s servers, I think there will be issues raised with Google now involved in payment platforms as well. It could well be perceived that one company has just too much of our data and this could impede the ramp of Google Wallet. But what could very well be Google’s masterstroke is that the Google Wallet is in reality a secure Google app, that is designed to work with merchants, vendors, payment processors and banks. More about this later.

E. American Express (Amex) launched a payment platform called Serve that could be used to pay for online and offline goods. The customers Serve account could be funded by a debit card, bank account or credit card. Serve, at this time will not be NFC enabled but will enable customers to pay from their mobile phones in a secure manner using their device IMEI number and SIM card details. Amex recently acquired payment startup Payfone that essentially brings in the mobile payments technology. It is not inconceivable that at some point Amex could essentially turn on the NFC switch when needed at which point they will have a technology that has already been tried and tested. Sprint is the carrier with which Amex is going to market with.

F. While NFC based payments has been slow to catch on in the U.S mainly due to security and infrastructure concerns, several companies in Eastern Europe are launching multiple pilots to test out mobile payments using NFC. Several Hungarian carriers Magyar Telekom, Telenor and Vodafone recently came together with MasterCard and OTP Bank and loyalty program operator SuperShop to establish the Hungarian Mobile Wallet Association. Aim here is to promote NFC based payments. In Czechoslavia, Telefonica began NFC payment trials in Prague and Pilsen.

It must be noted that while many key players and small set of consumers expect NFC based payments to eventually ‘rule the roost’, NFC based payments does have its detractors and competition. In terms of alternative ways to use the mobile phone to pay, a slew of startups are already in business already. Companies of note are Square, Card.io, Zoosh (uses ultrasound technology), Zong, Payfone(mentioned above) and Sage. This is a lucrative market for sure and even a small piece of action could represent a lot of money for the players.

I shall be scouring the NFC world and will post regular updates on this topic. Do share your thoughts on this upcoming technology as well.

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2 Responses to NFC Update – 2

  1. Pingback: A note on NFC security | Pixel Ballads

  2. Pingback: NFC Update – 3 | Pixel Ballads

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