On the 18th and 19th of June we were delighted to chair the Informa Mobile Wallet and Retail Innovation conference.
This is the second article considering insights from this year’s event, and it concentrates on where we go with NFC, a technology that despite being almost seven years into its development, has so far failed to provide a single universal cross-device payment capability, according to Dave Birch, a Director of Consult Hyperion. At face value, this seems to be right, as there does not appear to be one single solution across mobile devices. There have been a number of notable success stories; for example TFL in the UK which now allows both ticketing and limited micropayments over Oyster, the incorporation of ticketing with debit card partners through PayWave, and the ticketing payments combination provided by Octopus cards in Hong Kong, but this is hardly the global conquering payments platform envisaged for NFC when combined with mobile devices. Moreover they remain card-based solutions.
It has been a decided lack of integration and standardisation that has led to this impasse with the involved parties, particularly telcos, pushing vested interests and never really cooperating fully argued Birch. The operator led debacle regarding Secure Elements which many have stated is far too complicated was given as an example; access to any NFC embedded secure chip has been jealously guarded by operators who wish to rent and sell space on the chips to service providers. Birch added that secure elements should never have been left to operators. Interestingly Samsung bypassed operators by providing the secure element within its Galaxy SII device. Samsung’s strategy could allow it to build the applications and wallet on the embedded secure chip. This scenario has been lent credence by Samsung’s hiring policy; it recently employed a former head of mobile payment for Visa Asia and its launch of a global mobile-commerce unit. Obviously such a scenario is only likely in those markets where operators do not control the device distribution network, but Birch’s wishes for a device manufacturer led push toward NFC payments could yet happen.
The other choice is to do away with all secure elements resident on the app and rely upon applications downloaded to the device, or alternatively host all secure signing, authentications etc. in the cloud. These approaches benefit from simplicity but are prone to fragmentation in approach and the perception of security risks. Whether these security risks are justified is not the question: customer perception is as much of an obstacle as a real problem, as it is ultimately the customer who will decide the approach that wins out.