Sunday, May 29, 2011

Is NFC the Future of Mobile Payment ?

Last week, Google unveiled Google Wallet in a joint venture with Mastercard. The initiative will allow customers to pay for goods by waving their mobile phones at check-out terminals.

In the past few thousand years, the way we pay has changed just three times—from coins, to paper money, to plastic cards. Now many believe we are on the brink of the next big shit. Mobile Payment based on NFC Technology. But can NFC really become the future of mobile payment ?

In order to be the De Facto standard of mobile payment, NFC would certainly have to overcome a few obstacles as well as stand up to challenges from other technologies in the field of mobile-payments. A major obstacle for NFC phones is that in order to function as a payment tool the merchants would need to upgrade their POS readers.

In New York and San Francisco some of the merchants like Macy’s, Subway and American Eagle Outfitters have done the necessary upgrades thus allowing their customers with Nexus S phone to make payments through phones in these cities. However NFC still faces a big challenge of convincing the phone manufacturers to put NFC chips in their phones. The manufacturers on their part would be skeptical about using NFC chips until more merchants upgrade their POS terminals to handle NFC payments. On the other hand even the retailers might not be open to the idea of spending more money on upgrades until more number of consumers begins to use NFC enabled phones.

There are one or more biometric technologies which might offer some kind of challenge to NFC. Few of leading companies in that field like Square are planning to offer a new system which enables customers to pay simply by stating their names. In order to avail this service you need to register with the merchant wherein you will have to provide your credit card details. However, when you enter a shop, all you need to do is to state your name in order to pay for your purchases. This concept can be extended in future, where you can make payments through MasterCard or Visa by registering your voice with them. With advanced voice recognition technologies available these days, it wouldn’t be completely farfetched to think that sometime in future it might be possible to make payments by simply stating your name, address and the purchase amount into the microphone at the sales counter which would verify your identity against your registered voiceprint. It could be extended, for added security, with a camera transmitting your image along with your voice for facial recognition.

Though NFC is surely gaining popularity as a payment device, it’s the users who will give the ultimate verdict on which technology will win in the long run. It will depend on what the customers find more user-friendly and convenient. With many other several tasks that the mobile phones already perform, Mobile use as payment device might just become another one of them.

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