Why Low-Tech Mobile Payment Options Are Kicking NFC’s Butt

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The mobile payment options becoming mainstream are the simplest and low-tech ones
The mobile payment options becoming mainstream are the simplest and low-tech ones.

Read enough articles about NFC and its potential for mobile payments and you’ll find yourself thinking the technology is the inevitable mobile payment platform. Every major mobile platform except iOS already includes or will include support for NFC-enabled devices. There are lots of partnerships being announced between key players like device manufacturers, carriers, and banking or credit card companies. It also just seems to make sense that this is the future.

Until you look up from all the stories about what NFC and look at what’s really happening in the  world. You don’t see much evidence of NFC payment systems in everyday life. NFC isn’t yet emerging into mainstream commerce, but there is ample evidence that mobile payments are taking off without it. Those options becoming mainstream are decidedly low tech by comparison, but that’s precisely why they’re succeeding.

Apple’s retail stores are one major example about how NFC-free mobile payments can be handled. You can go in, pick up an accessory, scan its bar code with your iPhone, pay for it using your iPhone, and leave without any real need for human interaction. The process is simple, leverages the power of your Apple ID/iTunes account, and it requires little in the way of specialized hardware.

Then there’s Paypal’s move into brick and mortar retailing. The company launched a program with Home Depot earlier this year that allows you to pay for purchases your their Paypal account. The approach is tied to the mobile phone number that you have registered as part of your account or a retail Paypal shopping card. The process is decidedly low-tech, but it allows you to make purchases using just your phone number and PIN, making it easy for customers to adopt because it doesn’t even require a smartphone. In fact, it enables you to leave your wallet home altogether. Following its success in Home Depot stores, Paypal is extending the service to 15 other retailers.

Then there’s the approach used by the Passbook feature in iOS 6 that uses on-screen codes to offer up previously purchased tickets, loyalty program memberships, and gift cards. That approach is already in use by Starbucks and some other retailers/

Of course, there’s also location-based mobile payments like those offered by Tabbedout that let’s you to pay your restaurant or bar tab using your iPhone or Android phone. The system relies on location services and check-in capabilities similar to social networks. Payment can even take place after you’re home from a night on the town.

The big advantage to all of these systems is there’s little need for new hardware on the part of the customer or the retailer. Paypal payments are enabled by an update to a store’s existing POS system. The same is true for Tabbedout. Passbook relies on barcode scanners, which are in almost every store or restaurant.

By comparison, NFC requires a phone with the appropriate hardware, an OS that supports NFC, a digital wallet app, and buy-in from payment processing companies and POS vendors. And that’s just what the customer needs. Businesses need POS hardware with an NFC reader, support for a range of NFC payment systems, and integration with their payment processing partners. That’s a lot of buy-in that hasn’t to happen and it’s a reason that it could be years before NFC payment options are ubiquitous.