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

Mobile payments with no point of sale changes

The Seven KSFs for Mobile Payments

It is widely recognized today that the payments industry is on the brink of major disruption. Mobile payments aim to change the way we all execute payments transactions – specifically at the point of sale.

With hundreds of pilots across the globe, but not even one commercial success, it is important to understand the key success factors for true mobile payments to prevail.
The fundamentals of payment have to do with a merchant accepting a payment by the consumer. The following outline those KSFs from both the merchant and the consumer’s point of view:

1. Mobile payments need to offer the customer added value over traditional payments. Price driven benefits, new shopping experience, personalized location based offers are just a few. Needless to say, to extra cost should be imposed on the customer for paying with his mobile.
2. Apart from simply accepting mobile payments – added value to the merchants will enhance acceptance. The ability to open a direct personal communication channel with its customers is appealing to every merchant of any size. These services include – location based services, targeted coupons, loyalty program, mobile vouchers, personalized online coupon redemptions and alike.
3. Merchants shouldn’t pay more for accepting mobile payment (!) Not for the infrastructure and not for the transaction processing.
4. Since the mobile channel can and should drive sales up – a cost per acquisition (cpa) for coupon redemption to be paid by merchants is acceptable.
5. Mobile payments should be universal and agnostic. A merchant needs to accept payments from all its customers regardless of their mobile operator, card issuer, or handset manufacture. Fragmentation reduces merchant motivation.
6. Wide acceptance is crucial to the success of mobile payments offering. Giving the customer the ability to pay with his mobile at unlimited locations, where he does his day to day shopping drives customer adoption and usage.
7. Both merchants and customers hate queues. Executing a mobile transaction should not take longer that executing a traditional payment transaction.
8. Any current or future mobile payments provider must take these seven issues into consideration. At the end of the day – mobile payments should make life easier for merchants and customers alike. A mobile payments service that will follow these KPIs will win the battle and truly be the one that changes the way we pay.