Circle adds NFC functionality to Android mobile bitcoin wallet app
Bitcoin wallet providers right now face the task of growing their user base beyond the cryptocurrency's early adopters. Circle, which launched its service in September, is cautiously optimistic that one way to capture the mainstream consumer's attention is with a technology that has experienced a resurgence of sorts thanks to Apple Pay.
Circle earlier this week announced it added NFC functionality to its Android app. This comes almost two months after bitcoin processor BitPay added NFC support for its merchant-facing Checkout app to enable such payments between compatible devices.
"Our customers wanted to use NFC and we have a partner like BitPay flushing out that functionality," Circle CTO Sean Neville told Mobile Payments Today in an interview. "Based on the [customer] demand and presence on the merchant side, it was something that made sense for us to do."
Nathalie Reinelt, an Aite Group analyst who tracks virtual currencies, said Circle's NFC addition to its Android app makes sense considering the current buzz about the technology.
"It's not surprising that bitcoin wallet providers are attempting to ride the Apple Pay wave on NFC," she told Mobile Payments Today. "Apple Pay received an enormous amount of press attention and by adding NFC; Circle is likely hoping it will make their bitcoin wallet more palatable to mainstream."
Boston-based Circle emerged from its beta phase in late 2014 and did not limit its online bitcoin digital wallet to the U.S. It focused on the international market from the start and made its website available in seven languages: Chinese, English, French, German, Japanese, Portuguese and Spanish. Since then, Circle has released iOS and Android apps and made them available in 31 countries.
Circle saw customer demand for NFC functionality within the Android app from "everywhere," not just from countries such as South Korea and Japan that have more mature contactless infrastructures than the U.S., Neville said.
"It's kind of interesting because in the iOS world, there's a lot of debate over BLE and NFC versus other alternatives," Neville said. "But as far as Android goes, the clamor for NFC support was pretty loud early on."
Whether the concept of NFC-enabled mobile bitcoin payments is enough to entice mainstream consumers to adopt the cryptocurrency for purchases seems like a stretch at this point. Neville said there is some optimism within Circle about NFC attracting more users outside of early adopters, but there are other issues that need to be addressed with those potential customers first.
Bitcoin wallet providers such as Circle will need to convince the non-early adopter crowd about the cryptocurrency's benefits before it has the chance to become a mainstream payment method, Neville said. The technology's enthusiasts have trumpeted those perceived benefits from the beginning and include the ability to use bitcoin as faster funds-transfer mechanism that costs pennies to use compared with traditional outlets such as Western Union.
"As those mainstream users reap the benefits of cryptocurrencies, they may be pulled deeper into it and be aware of the underlying protocol of using it," Neville said.
A bitcoin wallet provider's desire to attract more mainstream consumers might have become more difficult over the weekend when U.K.-based exchange Bitstamp suspended operations because it was hacked and lost 19,000 bitcoins worth $5 million. Bitstamp planned to resume operations by the end of the week.
Reinelt notes that obstacles remain for bitcoin wallet providers to attract more mainstream customers, maybe even more so now thanks to the Bistamp issue.
"Simply adding NFC isn't going to be compelling enough to attract a significant number of mainstream users once consumers realize they have to set up a whole new account for bitcoin, transfer money from their existing bank account to their bitcoin account, take on the risks associated with bitcoin's volatility, and in light of the recent Bitstamp theft, continue to expose themselves to possible losses in the event those platforms are hacked, since consumers have zero insurance on bitcoin losses," she said.
Circle does provide insurance to its users in the event of a unforseen circumstances.
"There's a matter of helping to educate the public on how their money can be safe and how they can take control of their own funds," Neville said when asked about the Bitstamp situation. "There is a need to insure that companies either in the traditional finance space or in this new cryptocurrency space have good cybersecurity and things like insurance to protect consumers."
Meantime, Circle plans to move forward soon with new product plans. Neville could not share specifics but said the company has seen healthy demand for its digital wallet.
"In general, the response has been great and maybe a little better than we had reason to expect," he said.
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.