Contemplating this 5ish year timeframe along with all the other things involved to get this whole new ecosystem off the ground (merchant purchases of 8 million NFC capable terminals, a fleet of NFC ready phones) makes me wonder less about utility and more about if there is even enough time for NFC to become instantiated in the U.S.A. before other disruptive payments methods and technologies supplant it during its ramp up?
Payments methods like Square’s Card Case, PayPal, Dwolla, Modo Payments, Paydiant, DigiMoand even the Apple Store, to name a few, all store payment credentials in the cloud instead of in hardware. These disruptive systems are essentially trying to change the traditional paradigm for Point Of Sale purchases. You are the POS.
But payments via NFC (and payments is the key word here) prolongs the payment card metaphor and attempts to give the incumbents another method to keep control of the current ecosystem. As fast as these incumbents are trying to move, time is not on their side as new innovations pop up all around. These other companies — some big like PayPal and some lean startups, like DigiMo — are attempting to get in place ahead of the NFC highway.
The entrenched stakeholders (the card networks and and mobile carriers) would like you to believe that NFC capable phones for payments is an inevitability and a necessity — the evolution of modern payments. The truth? According to Richard Crone, CEO of Crone Consulting LLC, the truth is that NFC payments are actually an outmoded concept that really isn’t needed. A remnant of our “offline” past when storing actual card data, in secure element hardware, was actually necessary. It can all happen in the cloud these days.
Sure, Apple figures into the NFC payments equation as they could stand to uniformly connect the dots for however many new NFC enabled iPhones (and attached iTunes accounts) they might potentially pump out in 2012. That might flood the market more quickly with capable handsets and increase consumer demand for this payment capability — I am not disputing that.
But the solution here is more complicated than just dumping a bunch of NFC capable phones into the market. It’s all about the merchant infrastructure. It’s in their hands. It doesn’t matter how many cars you have if there is no highway.
read the full TechCrunch artical by Jay Donovan