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Mobile Payments Today recently had an article entitled: "Wal-Mart Exec Says ‘No’ to Google Wallet, NFC." Not long after the article was published, I had people flooding my in-box with both shrieks of panic saying: "Oh no! You’re doomed!" and boasts of pride saying: "Nah! Nah! I told you so!"
For those of you who haven’t seen the article, let me summarize it for you: Wal-Mart’s VP and Assistant Treasurer, Mike Cook, said at a conference today that Wal-Mart did not believe NFC-based mobile payment solutions such as Google Wallet and Isis were the way to go. He went on to say that he didn’t think NFC could handle mobile payments.
For those not schooled in NFC, or for those who don’t follow mobile payments, let me try to translate his comments for you. First, he’s not knocking NFC as a one-to-one communications technology; he’s taking a shot at the overhead connected with the current crop of NFC-enabled payment offerings. He’s also implying that these NFC-enabled models are nothing more that layers of cost and complexity on top of an already outmoded and expensive method of commerce. Again, he is not knocking NFC in general.
Is Mike Cook saying that NFC will never be used in the Merchant Customer Exchange (MCX) offering? (For those who don’t know, MCX is the mobile payment solution that Wal-Mart is endorsing.) I don’t think so. If MCX thought that the transmission medium for closing a payment needed to be NFC, then I’m sure they’d use it, but frankly I’d bet that they don’t even know what they’re going to use at this point.
What Mike Cook is probably saying is that there needs to be a mobile payments process that does not depend solely on the existing credit card infrastructure. If I had to guess, I’d bet he’s also saying that MCX is moving towards a closed-loop mobile payment model similar to the one used by Starbucks. But rather than be a payment solution dedicated to just one merchant, the MCX offering will be like “Starbucks on steroids” involving many merchants.
No matter which direction they ultimately go, keep this in mind: A very significant portion of Wal-Mart’s customers are un-banked and deal exclusively in cash. The MCX solution must accommodate these customers. A closed-loop payment model would do this quite well and would support traditional payment methods too. None of the other mobile payment models being proposed would — with perhaps the exception of Pay Pal.
Will the MCX model use 2D bar codes to consummate the payment at the point of sale or will it use NFC? It could go either way because new readers are required no matter which solution that they use. Remember, most existing barcode scanners do not read 2D barcodes.
I believe Mike Cook’s issues are not with NFC but with the cost, complexity and limited scope of the current suite of mobile payment solutions. NFC is still a viable communications technology that can be used for finalizing a mobile payment. Frankly, it is also a viable technology for creating a one-to-one engagement between consumers and the items to which NFC tags are attached.
In closing, I believe the real value of NFC is its potential role in the delivery of content (e.g. product info, pricing, marketing promotions, inventory availability, etc.) to the mobile device. If one would use NFC to facilitate the delivery of content, then it makes sense that one would use NFC to consummate a payment.
(Are you listening MCX? Are you listening, Wal-Mart?)