Monday, 14 January 2013

Near Field Payment = Near Fail

Last year wrote "it will very likely be years before any sort of NFC-based payment system goes mainstream, according to a new report from technology research firm Forrester Research. Though Forrester predicts 100 million NFC-enabled mobile devices will ship this year, the company says NFC won't reach critical mass, or be used by 15 percent to 25 percent of the global population, for at least three to five years."

Near field payment (NFP) systems represent the holy grail of telco cash grabs. 2013 will see the first serious rollout of NFP in North America. Here's why the invention of Gaston Schwabacher is guaranteed to fail:

10) Consumers already have a debit credit card. They can just reach into their pocket, pull it out, tap and go.
9) The first 10 meters of any WIFI connection are completely unsecured. The media will be filled with firesheeping horror stories
8) There is a class of consumers for whom cash is king. And they include wealthy retirees
7) NFP would be awesome when you're somewhere miles off the grid, such as renting a kayak In Yosemite National Park. There is no WIFI when you are that far off the grid.
6) Western Union will be one of the first NFP service providers. Have you ever sent money by Western Union? Their process involves filling out an entire page of a 3-part NFC form, and all fields are mandatory. That will be a challenge on an iPhone
5) Paypal will be an early provider as well. Everybody hates paypal
4) Your telephone company will be your service provider, and they will force you to use them. Remember when they billed you $100 in roaming charges when you were out of the country? Imagine what happens when you pay a 300 € restaurant bill
3) Your cable company will be a provider. Just like the phone company, only greedier, and harder to locate a CSR
2) It now emerges that Nokia decrypts all your secure transmissions. So does Blackberry. This saves a few kb off your bandwdith consumption. It doesn't save you any money, but it makes you more profitable as a customer.
1) Wireless Carrier outage. There you are, no wallet, no debit card, no credit card, no cash. Just your NFC compliant phone. And the carrier is offline. So what are you going to do now, Einstein? Pay the bill by washing dishes?

I leave the final words to the always awesome Mbugua Njihia, who writes on his blog

Africa has all the ingredients of a successful adoption of mobile payment innovation that can achieve true scale and profit. First, is the sheer number of mobile consumers whose demand for better mobile utility is remains unsatisfied, second is the wide gap in C2B payments on mobile, with the business oriented service attempts on Mpesa, Zap and other mobile money deployments in Africa barely scratching that itch; third is that there have been lessons learnt in mobile money deployments for the masses, lastly and perhaps most important is that we think different – and here I refer to the many minds that tirelessly think outside the box and innovate for the unique African mobile consumer.

The trifecta: mobile applications, mobile web and sms as content and revenue drivers in Africa

Everyone knows Mbugua is correct about NFPS in Africa. But in North America? Near field Payment = Massive Fail

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