The common wisdom around mobile payments in the US is that they will be based upon card credentials electronically inserted into secure elements in new mobile handsets that will talk to new POS terminals capable of supporting NFC or contactless payment technology. There’s been lots of activity – and accompanying industry forecasts about how we’re on the cusp of a new world of mobile payments based on NFC/contactless technology.
Almost a year ago, three of the mobile network operators in the US – Verizon, AT&T and T-Mobile – announced Isis, an NFC-based approach that was going to create a new payments network to rival the payments incumbents. Post-Durbin and after listening a bit to the marketplace, Isis modified its strategy to be much more accommodating to the existing payment networks – while still remaining very NFC-centric. As a result, the major networks agreed to cooperate – time will tell exactly what that means. Trials begin in 2012.
In May, Google announced it was partnering with Citibank, MasterCard, First Data and others to launch an NFC-based Offers and Wallet – based on this technology approach. The only wrinkle in Google’s approach is that it decided that it (and not a card network, a card issuer or a wireless operator or a consortium like Isis) would manage the keys to the secure element in each handset. Google also introduced a nifty concept called SingleTap that would enable a new kind of offer redemption process at the time of payment – for those merchants who agree to deploy Google’s proprietary SingleTap POS technology.
In August, Visa announced its support for nudging this POS upgrade process along by defining a multi-year program designed to transition the US POS infrastructure from mag stripe-based today to both EMV contact and NFC/contactless technologies over the next several years.
That’s seemingly the current state of play with respect to the NFC-based approach to mobile. Everything seems to need changing – the mobile handsets, the POS terminals, along with new operational systems being required to manage and control this fundamentally different payments ecosystem. And, of course, the consumer will have to be educated and understand how all of this works – perhaps by their mobile carrier, or their issuer, or the card networks. It’s fair to say that it’s yet to be seen how that might evolve.