2009.20 | What Mobile Wallet?

I’ve been looking at using NFC solutions for some time now, and the recent announcement that Subway is going to install a Visa PayWave contactless solution reminded me of that fact. It’s solid technology, it works well, and I personally use it a couple of times per week where I can with my MasterCard Paypass credit card.

In Canada, we have infrastructure in place with most large retailers owning or deploying contactless infrastructure in some fashion – Subway, Second Cup, Rabba, McDonald’s, Canadian Tire, Petro Canada, Tim Horton’s, Cineplex, Loblaw and more moving to contactless support every day. I love it and think it’s a tremendous solution on cards.

We’ve also had a couple of trials in Canada on using NFC as a mobile wallet, with the credit card companies, the mobile carriers the and payment terminal companies all explaining the benefits, but what’s happening to take it to the next level?

Two big things hold back NFC as the mobile wallet (in Canada at least):

1. Acceptance – For 20 years and more, Canadians have been used to three options. Cash – no problem. Debit – swipe card, use pin. Credit – swipe card, sign receipt. Now we’ve added Chip and Pin to credit and debit. That’s confusing to the uninitiated. We also have contactless NFC cards and now dual interface NFC and Chip and Pin on the same card. There is word of Visa Debit competing with Interac.

Now, customers aren’t sure if they swipe, dip, tap, sign or don’t sign, or if there is a charge to use a service. Most of them will default to what they know. They are being asked to think about too much. In this case, it seems that competition is actually a bit of a problem.

2. Device Availability– I spoke to someone from a bank today that works with new solutions and when I asked about contactless, she said she was getting a ‘4 year old phone’ to use for a contactless trial. She uses a Blackberry and I use an iPhone. We represent a large proportion of the market for a mobile wallet in early days, and we can’t get a mobile wallet for our phones. Without NFC or some other secure way to pass information, the mobile wallet is just a mockup, and the fact is that you just can’t get an NFC phone in Canada. I’ve witnessed 1 mobile transaction in Canada and I was with my very knowledgeable Vivotech contact when we did it.

Why can’t we get NFC enabled mobile devices? Unless there is something in it for the mobile carriers, why would they give us a new feature like NFC mobile wallets on our phones? They can’t make more profit from it, and I think that is the greater concern with the trials than the functionality. The system works – it just doesn’t make money for the carriers. Impact: the mobile device makers won’t put something on the phone that carriers don’t want (like: tethering, Slingbox Player, VOIP, programming long distance card numbers etc.) so consumers don’t get them without delay and strategizing by the carriers.

There has also been a problem with hitting on a standard for NFC on mobile. Nokia is done with making their own NFC phones, and they are releasing a SIM card based NFC phone. But when will that happen, and who can really drive it? It may take a third party application to drive mobile NFC, but without a large presence to lend such an enterprise the necessary consumer confidence, this will prove a challenge.

Until payments are simplified and there is a universal (or at least accepted) NFC standard or a viable alternative method of getting data from phones to consumer facing touchpoints like POS/ATM/Kiosks, I don’t see mobile wallets going anywhere.

It’s a wonderful opportunity for anyone that can crack the code.

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