Cooperation, Not a Technology Arms Race, is How to Find a Way Out of the Mobile Payments Quagmire

There continues to be more developments and questions raised about NFC and mobile payments.  As might be expected, when you get into discussions about who pays what, and gets what cut of what fees and revenues then things get bogged down.  It is very rare that any technology is win-win for all stakeholders with a vested interest in its development.  That is the nature of technology, it more often than not disrupts and companies look to take advantage of the options that are made available to them.  Even rarer is it that a single company has enough scale or influence to push through a new technology into the mainstream.  NTT DoCoMo with FeliCa and Suica was an exception, one not recognised by many proponents of NFC when they said why can’t we (in country X) make NFC work like in Japan?

Rather than dwell on the past and countries with different industrial and business environments and cultural leanings I’d rather focus on the bigger picture in the here and now.  Much of this is technology led discussion forgets about the end-users and what their experience is.  This is being recognised (slowly) with NFC and mobile payments but too often it still gets tied down in individual interests instead of what is best for the industry – and the users and retailers – in particular.

You can have the best solution built upon the best technology but without the cooperation and partnerships to support it then it will flounder, achieving either limited uptake or sinking altogether.  Until the banks and MNOs work out at what level they can both win and leverage NFC to maximise their positions and additional business opportunities that can be based upon a mass-market commercial NFC payment service then it will never get anywhere.  Beyond that they then need to identify their preferred path to market for service launch.

There are two routes that they can go down to achieve this.

One is to give the retailers what they want; not strictly more value and more data and CRM analytics, a way to cut their costs and make them more competitive.  If you can get the retailers on board with then they will promote it to the customers and you can leverage additional services on the back of this, whether inventory management, shelf labelling, loyalty, etc.

The other route is to produce something so compelling to consumers that they will demand it from retailers, or go elsewhere if it is not supported.  In this instance I think it is difficult to do this.  Consumers are generally quite happy with cash and (contactless) cards.  Removing and maximising all loyalty cards would be one way to do this, integration with online channels and website, apps, etc. would be another.

Either one of these requires a degree or compromise but without they will be limited in appeal and uptake.  And whilst the debate continues and different pilots take place, various groups will look to make the most of uncertainty and introduce their own alternatives into the mix.  And so now we find ourselves still looking at what is the best technology: NFC, and QR codes, and BLE, and HCE, even ultrasound and infrared, and now TEE and tokenisation….


What they all have in common is that the technology has (largely) been developed and they all have complimentary and competing features and benefits with a number of these overlapping.  They also have in common that they are technology led, with the view of how to launch them coming afterwards – and this is the discussion that continues to be required. At the same time, they all face the same challenges, i.e. how to achieve ubiquity with device support and integration at POS, to gain retailer support and end-user acceptance, etc.  The industry needs to set aside its differences, bringing mobile and financial together with retail to find the common ground.  It is there but without this dialogue to explore how to work in cooperation the business model quagmire and achieving a win for all parties will continue to slow widespread and interoperable proximity mobile payments down.