Seven barriers to the growth of NFC mobile payments?

Seven barriers to the growth of NFC mobile payments?

BillingViews today published a report / presentation called “The Seven Barriers to Mobile Payment Adoption” that primarily focuses on NFC payments and adds a dash of QR codes for good measure. BillingViews describes itself as “the global home for billing expertise and intelligence in the communications and media industries.” We can’t say we are feeling the report and disagree with it on a few levels. We do agree that there are barriers, we are just a little at odds with some of BilliingViews’ seven reasons.

“Common sense dictates that not only are the messages designed to attract customers to mobile payments flawed, but there are also serious issues that can affect adoption,” says Alex Leslie, Publisher of BillingViews. “None of these barriers is insurmountable, but they need to be addressed now. The hype has to be balanced by the reality that mobile payments could well be a solution to a problem that does not exist. Today’s card swipes are not inconvenient and phones can be hacked. The giants who are driving this industry need to rethink their approach,” says Leslie.

So what are the seven barriers to the growth of NFC mobile payments?

Now, we’ll readily admit we are probably biased towards NFC (shocker) and because we spend all day thinking about the nascent industry, the products, services and firms involved, we may not share the same perspective as BillingViews. So, in all fairness here is the list of seven barriers to the growth of NFC, or as they put it mobile payments, as identified by BillingViews.

1)    Uncertainty and complexity of fees

“Fees are too high and too complex. Customers know that credit cards charge the merchant up to 3%, but when a merchant tries to pass that fee on to us, are we happy? With banks, payment processors, app store owners, telcos and merchants all in a new eco-system, charges need to be low and simple.”

This is no different to normal payment processing. This has nothing to do with NFC mobile payments and we are a little confused about the uncertainty. As more and more payment solutions become available, merchants will shop around for the best deal for themselves as they do now. The free market will decide what percentage rate is charged and it will no doubt be based on revenue as it is already. We haven’t spoken to a single consumer who feels this way. However, we have seen reports where consumers have a perception that purchasing something on a mobile phone costs more in the UK, but we highly doubt consumers had debit and credit fees charged to merchants in mind when expressing this.

2)    The threat of heavy handed regulation

“Regulation is too heavy handed. Mobile payment success depends on speed. If regulators from every part of the eco-system try and add their little piece to the puzzle–and then add tax-then there will be delays and confusion and objection.”

Yes, and the rich should be taxed less, people should be left to die if they don’t have health insurance, and religion and government should be melded together in a state of union. Oh, add to that little list of craziness that corporations should be elevated above personage because they are, quite frankly, superior and that can be proved in their bank balances. (Yep, that’s sarcasm.)

There shouldn’t be crippling regulation for the sake of regulation itself. However, with new technologies and processes there needs to be different regulations to protect consumers. We would like to see regulation that specifically deals with NFC payments and mobile wallets. There has never before been such a complex eco-system for payments with so many industry stakeholders involved. We’d like to think there are laws to stop consumers getting taken advantage of by unscrupulous NFC payments companies who, let’s say for example, want to change rates on consumers, terms of service or market at them without permission, or even worse cut of their mobile phone accounts due to a billing disputes and prevent them from being able to make payments. Remind you of anyone?

3)    Too many competing technology enablers

“A winner does not emerge. Merchants simply will not accept the inconvenience of installing multiple terminals and managing different payment providers. Big initiatives have failed before. There are too many choices–NFC, QRcodes, apps, contactless cards etc. NFC is not a sure thing–1million $100 terminals are needed in the US before we start.”

Dear, oh dear. If you head into any BestBuy you will see contactless terminals that accept Visa, MasterCard, AMEX and Discover. More and more merchants are becoming contactless enabled and anywhere that has contactless readers also accepts NFC or will have the ability to do so in the near term. It takes time to upgrade a whole system. It took time for NASA to send people to the moon, and the Russians were trying to do the same. Is that a reason not to do it? Of course not.

Around 90% of terminals sold now have contactless readers built in, and the average lifespan of a reader is around 5 years. Ubiquity takes time just as it did with credit cards starting back in the 50′s. QR codes are a stepping stone to NFC, and apps will have the ability to access the secure element so they are a non-argument. Contactless cards are complimentary to NFC payments and certainly aren’t a competitive product. Just ask Visa! Both Visa and Google Wallet have both committed to accepting and building in everyone else’s payment methods in their mobile wallets. The more we read of this, the more it is sounding like a warm up routine for Isis. Oh and NFC is a sure thing, with Microsoft, Intel, Google, Samsung, Nokia, MNOs and thousands of other firms working to make the technology ubiquitous. NFC is too big to fail.

4)    Major players failing to commit to a consistent path

“Players keep hedging bets. This will not accelerate the take-up of mobile payments. As NFC becomes the de-facto standard of the hype cyclists, credit card companies, telcos and banks are investing in multiple solutions. This does not help merchants or customers trust them–and ultimately the choice is theirs.”

Sorry? Not with you. Do you mean bridging solutions that allow consumers to benefit from mobile payments today while networks ready their NFC offerings? As far as we are aware other forms of payments and apps that have payments are complimentary and will either still work or be upgraded to NFC as appropriate. That’s simply allowing consumers to have more facilities today. Make no mistake – NFC and EMV are the goal.

Guilty as charged – we are “hype cyclists”. We wake up every morning and decide how we can best over stimulate consumers, industry stakeholders and general people we meet on the street. In fact, we and other media outlets are part of a clandestine organization whose only mission is to blow new technologies that make life easier out of all proportion. Every other Thursday, in our meetings it’s knitting, tea and cookies. You got us – it’s a fair cop, governor!

5)    Inability to find a problem for which NFC is actually the best solution

“We do not work out which question NFC actually answers. PayPal is now on track to process $3.5 billion this year, QR codes and apps are becoming popular and proprietary solutions devised by retailers, such as Starbucks, are making ground with their top up cards-and building loyalty in the mean time.”

Okay, the gloves are off now. BillingViews has just insulted our children, their mothers and our mothers in one foul swoop. Every single day here on NFC Rumors or at other tech sites that cover NFC, the benefits of NFC are covered again and again. The innovation around the industry is staggering and the creativity blows our minds. PayPal may well be down on NFC at the moment and have done very well in mobile payments in general, but PayPal is not ubiquitous and nor will it be until it embraces NFC.

Just in payments alone NFC speeds up transactions, is more secure for payments than cards, allows for frictionless couponing and loyalty campaigns that brings consumers back to stores again and again. It means you will be able to leave your wallet at home, which represents convergence. It will also enable value added features that benefit consumers and allow retailers to give value added services that may well up spend levels. We could go on, and that’s just in the arena of payments which represents a fraction of the ways in which NFC is due to impact our lives.

6)    Balancing simplicity and speed with security

“The three ‘S’s’-security, simplicity and speed-are not addressed immediately. All of them are cited as reasons for the slower than predicted take up of mobile payments. Education to breed trust is needed before customers commit. Customers see mobile payments as extra not a replacement–so ubiquity is still a dream.”

Did we miss the news or is it just opposites day today? This is a joke right? Security, check. Simplicity, uh huh, check. Speed, well it’s quicker, so ‘um check. However, we have finally found a point we agree on – consumers do need educating and so do merchants. NFC payments education on both sides of the fence is the missing key, and without it NFC will take longer to proliferate.

7)    A failure to identify a truly compelling advantage for consumers

“The key customer messages are not re thought. The current messages of convenience and speed are flawed. It is not more convenient and it is only marginally faster. The whole mobile payments process needs to have an obvious and significant advantage for customers. It also needs to work as advertised, first time, for it to succeed.”

Okay countered your own argument by saying it is quicker, and then stating that the fact it is said to be faster is flawed. Just take a look at ShelfX that could mean checkouts are a thing of the past and tell us how this is not advantageous for consumers. Convergence, security, simplicity,offers, coupons, loyalty programs, digital receipts…

Our 7 reasons of what could be slowing down NFC adoption including payments

We know we have been hard on this particular snapshot of the NFC industry. If you hangout here often you will know how much we usually respect projections from research houses and even if we don’t agree we acknowledge they have a point. In faintness rather than simply pointing out where we think the BillingViews report is wrong, here is our seven barriers that are slowing down the adoption of NFC payments in America for you to agree with or completely disagree with and think we are off our rockers for stating.

1. MNOs are crippling NFC smartphones from using card emulation if they even allow NFC services at all on their networks. Yes, we are talking about AT&T, Verizon & T-Mobile.

2. Not enough choice in NFC smartphones in the marketplace. This is linked to number one, but when most phones come with NFC, adoption will happen on mass.

3. Isis, greed and need for control. Oh yes, again linked to number one and two.

4. User experience for NFC mobile wallets needs to be refined, no different to any new service.

5. Education is a must throughout all facets of society which includes checkout clerks, consumers and anyone else that touches NFC payments in anyway.

6. Time. It takes time to change smartphones for 350 million people in a country. It is also takes time to upgrade POS systems to the newer NFC POS systems.

7. Larger secure elements that house more of the sensitive data. The fight over who owns the secure elements needs to be resolved.

The barriers of NFC payment adoption is a great subject to be tackled. Everyone will have differing views but most agree it is happening and is ultimately more secure and faster. Views also change quickly as pain points seem to be overcome every other day on this industry where competition is very fierce at every level.

Well, we came over all defensive about our favorite short range protocol and its impact on payments. We would love to see your list of reasons you think the adoption of NFC maybe slower in the comments below. If not, list your thoughts on particular items you feel are slowing down the deployment and adoption of NFC mobile payments.