Mobile communications entered a new era in June of 2008 when Apple simultaneously launched the 3G iPhone and the iTunes App Store. That one event became the cornerstone of a new mobile model in which hyper-intuitive smartphones, high-speed wireless networks, geo-location services, multimedia content, downloadable applications and mobile commerce seamlessly converged to form a new mobile ecosystem. That new ecosystem changed the way in which people engaged with one another, with mobile technologies and with the world around them.
Since the launch of the new mobile ecosystem, smartphones have increasingly become a tool for purchasing digital goods such as songs, videos, books and applications. In only four years, digital goods purchased via smartphones have grown from a few million to multi-billions of dollars annually. But, digital goods represent only a small fraction of the $20+ trillion in real-world, in-venue products that some believe could be purchased via mobile technologies.
Several of the world’s largest brands are working furiously to develop the processes and technologies to extend the mobile commerce model from the virtual world of digital goods to the physical world of tangible products and services.
Alliances and partnerships are being rapidly assembled to turn the smartphone into a platform for executing in-venue purchases. Billions of dollars in transaction fees are believed to be at stake for the company or companies that can make it happen. The following is a list of mobile payment initiatives that are currently underway.
- AT&T, Verizon and T-Mobile’s announced Isis initiative
- Google’s collaboration with MasterCard on Google Wallet
- American Express’ work to offer their Serve digital commerce platform
- Bank of America, Wells Fargo and Chase’s formation of ClearXchange
- PayPal’s efforts to expand their existing reach beyond online services
- Square, Inc.’s work to bring mobile payments to the small retailer
- Starbuck’s efforts to extend their payment card to mobile devices
- The alliance of many retailers to form the Merchant Customer Exchange
For those who follow Near Field Communications (NFC), the question is this: Is NFC critical to the success of these and other mobile payment initiatives? The short answer is: “no”.
While many of the preceding initiatives are relying upon NFC to transmit payment information from the consumer’s mobile wallet to merchant’s payment terminal, not all payment solutions will utilize NFC. So does this spell disaster for the deployment of NFC-related solutions? Not in the least.
Mobile payments is but one use-case for NFC – albeit the most well known. The second most popular use-case, and the one that is being promoted aggressively by Samsung, is the peer-to-peer exchange of information between consumer smartphones. The third most popular use-case is the delivery of digital content to a consumer’s smartphone by way of a tap on an NFC tag attached to a physical object.
The third use-case is, however, the most complicated because the value chain has so many steps and involves the participation of numerous parties. Today, no single entity owns the process from end-to-end. (Look for more information on the NFC value chain in subsequent posts.)
For those of you who will follow my journey to build a company focused on NFC-enabled solutions, my new company’s goal is to knit together the various NFC value chain components in order to give businesses a one-stop-shop.
If you would like to know more about NFC and the various NFC use-cases, download my white paper: “An Explanation of NFC”.