Re: An analyst's view of the payment industry

My perspective on this:

NFC was not created with the intend to make payments. There are many
use cases for NFC and payments is just one. Contactless payments
suffer from lack of network externalities (chicken and egg) and the
fact that nobody has figured out what problem it actually solves. But
further, thanks to the card association, the requirement to run an
applet inside of a secure element that is (for security reasons)
completely decoupled from the operating system of the phone hasn't
helped. But that is the only way that you could do card-present
transactions (which carry lower interchange fees than card-on-file).
So BLE is not going to solve that either - the solution has to come
from the card association (and they are working on tokenization etc.)

KitKat get rids of the SE requirement by allowing the operating system
of the phone to emulate the SE element functionality. Google had to
move this way if it wanted for NFC to have a real shot at tag
emulation (which is currently what 90% of all use cases require;
including attendance recording, building access, device connectivity

The other change in KitKat is a requirement to continue to support
card emulation independent of OEM's own wallet plans. So, in other
words, ISIS can't block card emulation in KitKat and I can easily run
the Google Wallet over an ISIS sanctioned phone (as long as that phone
runs KitKat).

[I'm currently running Google Wallet on a Nexus 5 and I make payments

Finally, NFC and BLE function very differently (I've already suggested
that you would need tokenization to work if you wanted a card-present
payment scheme; that is true for NFC card emulation as well as beacon
stuff) but NFC always has 'intent' at its core by clearly showing
(pointing) what user has intended to do. So wether it's opening a
door, unlocking a bike, making a payment etc. there is always a clear

Bluetooth can't solve this simply by the fact that if you have 50
bikes that are within range, it's awfully hard (impossible) to pick
the one you want.

In short, these are complementary solutions - the real question is how
much appetite to merchants have in investing into any of them...

On Thu, Jan 30, 2014 at 5:18 AM, Anders Rundgren
<> wrote:
> I'm personally unconvinced that NFC is dead.  It is the idea that operators will replace banks which died.
> An "untangled" NFC such as featured in Android "KitKat" may revitalize the NFC.
> Wallets is another strange thing.  To me a wallet is a device/function holding payment objects.  Converting the holder into a business seems like an awfully crummy scheme.
> Well, physical wallets cost a few bucks but a SW counterpart is just a bunch of bytes and shouldn't cost anything.
> OTOH, the only thing we know about predicting the future, is that it has proven to be impossible.
> But we all try, don't we? :-)
> Anders

Received on Thursday, 30 January 2014 16:40:46 UTC