The short answer: probably yes.
For years, Americans have gazed enviously from afar as other parts of the world purchased everything from train rides to restaurant dinners simply by tapping or waving their phones. More and more of our daily activities have migrated from home computers and onto our smart phones and the general public has been growing restless waiting for the same migration to happen with card payments. While the adoption of contactless payment systems has been slow taking off here in the United States, evidence has come out recently that may prove that the dream of using your phone as a mobile wallet is right around the corner. The most interesting detail to witness will be how the banks, card issuers, hardware manufacturers, and carriers define their roles in order to create a viable NFC payment ecosystem that both customers and merchants will believe in.
In December 2010, Google announced their second “unified Google phone,” the Nexus S by Samsung. This was the first phone to run Android 2.3, known as Gingerbread, which is the first incarnation of the smart phone OS to offer NFC support. The Nexus S has NFC capabilities built into the handset as well. But this isn’t the only piece of evidence supporting Google’s desire to enter the NFC payments arena. Bloomberg reported in March that Google was planning to test a mobile-payment service in New York and San Francisco and pay for thousands of shops to install special NFC enabled register systems made by VeriFone. Lending more truth to this is the most recent report that the search engine giant would also be testing their mobile payment platform with Ingenico. The Wall Street Journal went even further to add that MasterCard and Citigroup would also be taking part in this project.
Earlier this year, evidence also leaked that revealing that Bank of America and Research In Motion will be running another trial program this spring that would allow customers to make purchases using BlackBerry devices equipped with RFID enabled microSD cards. These payments will be able to be made anywhere Mastercard’s PayPass is accepted. Mastercard has not commented on their potential role in this program.
The most compelling venture into the mobile payment sphere might come by way of 3 of the major U.S. wireless carriers and Discover Financial Services, who have come together with their own NFC payment solution called ISIS. Consisting of Verizon, AT&T, and T-Mobile USA (the latter two, who may become a single entity in the near future), the carrier coalition will almost certainly launch with a system partially based on direct carrier billing, where customers can have their purchases billed to their cell phone bill rather than tacked onto their credit card balance.
And of course, there is the big question that we cannot seem to stop asking: will the Apple iPhone 5 support NFC? It was first deemed a no brainer that the next incarnation of the landscape changing smart phone would include NFC technology, until reports emerged that the Cupertino company would not arrive with NFC support due to a lack of a clear standard for the payment technology. This statement has some truth to it; there is currently a divide within the industry on whether the NFC element should reside on the phone itself or the SIM card, which would essentially decide whether the carriers or handset manufacturers controlled the data. However, recent reports claim that the inclusion of NFC support in the next iPhone is still quite possible. Apple product releases have always been successful at generating plenty of activity in the rumor mills with regard to feature sets, but it is with good reason: analysts and industry insiders know the influence that Apple has in shaping the landscape of new technology due to their ability to sell their product products and catalyze widespread adoption.
Based purely on the number and size of the major players invested in an NFC mobile payment system, it is clear that the stakes are high. These architects have come to agreement about the need for such a system and the security required, but there are loose ends that must be tied before anyone can claim victory. The potential issue of fragmentation must be kept to a minimum. A fragmented landscape that would mean purchasing a variety of expensive NFC payment acceptance terminals will prove to be huge barrier if it isn’t continuously subsidized by the payment players, handset manufacturers or carriers themselves. Will these powerful entities be willing to forgo some profits and make concessions for the sake of a unified NFC payment system? The reality is that they cannot afford not to. After missing the boat and failing to gain traction when NFC systems were introduced in the past, the stakes are higher than ever to win the trust of consumers and merchants.