BlackBerry Sneaks Up On Mobile Payments. Should Retailers Care?

Pity the poor BlackBerry. There are more BlackBerry models equipped with NFC chips than there are NFC iPhones and Android phones combined. BlackBerry phones are actually being used for mobile payments in some Middle Eastern countries. And on Monday (Oct. 10), BlackBerry maker Research in Motion announced a new set of NFC-based features that sound like a perfect platform for doing payments, too, although RIM made no reference to payment. But still, nobody takes the BlackBerry seriously as a mobile-payments contender in the U.S. anyway.

There are lots of reasons for that: IT shops have bad memories of having to run proprietary RIM servers to support BlackBerry users. RIM's periodic network outages (such as the one slowing E-mail delivery and choking BlackBerry Internet access this week) give retail IT plenty of reason to hope payments will never depend on RIM. And although iPhones are sexy and Android phones are at least gadgety, BlackBerrys—until recently—looked downright clunky. But with a growing consumer fan base spearheaded by BlackBerry Messenger users, along with actual experience doing mobile payments, retailers may have to bite the bullet and accept that RIM is going to be a payments player in the U.S., too. The question is, how soon—and then how?

RIM appears to be in no rush to make that happen. The BlackBerry Tag features that the handset maker announced on Monday let users tap their NFC-enabled BlackBerry Bold and Curve phones to share contacts, documents, social-media information—everything except money. It almost sounds as if RIM has thrown in the towel on payments, if not for the fact that on the same day RIM announced it is doing NFC-based mobile payments in Dubai and the United Arab Emirates.

And although no one is about to suggest that a BlackBerry will ever be as sexy as an iPhone, the devices have attained a certain level of gadget-chic (along with lots of young, non-business users) thanks to the BlackBerry Messenger service that only works between BlackBerrys.

That points to an annoying shift in who is likely to walk into a store carrying a BlackBerry—from E-mail-oriented business users, who were never going to use the RIM devices for mobile payments anyway, to social-media-obsessed young customers, who aren't going to trade them in for iPhones or Androids. Until very recently, the BlackBerry was extremely easy to dismiss as a mobile-commerce platform—as Pizza Hut CIO Baron Concors said about developing an M-Commerce app that was released six months ago, BlackBerry wasn't seen as an option. "It was discussed early on, and it was quickly eliminated. They haven't strategically put themselves in a position to compete."

But in practice, RIM now increasingly has the right kind of customers, the right type of phones and the right type of experience to be attractive for mobile payments.

Problem is, RIM doesn't quite have all the experience it needs.Problem is, RIM doesn't quite have all the experience it needs for mobile payments. True, RIM is doing mobile payments in the Middle East. But mobile operator Etisalat and local banks are actually handling the virtual money in those cases. RIM is following their lead.

In the U.S., RIM's plans got bogged down because it couldn't cut those types of deals with carriers. In March, The Wall Street Journal reported that U.S. and Canadian mobile carriers AT&T, T-Mobile and Rogers were pushing RIM to put the NFC Secure Element in the phone's SIM chip (so the carriers would control it), rather than build it into the phone itself (so RIM would control the process).

And although RIM eventually launched a limited NFC-payments trial in New York earlier this year with MasterCard and Bank of America, Google lined up retailers and POS-device partners and plowed past RIM to become, for the moment anyway, the only other vendor with actual mobile-payments experience. Google is also the only player that has built out a mobile-payments network of retailers.

That puts RIM—and retailers—in an odd position. For years, retail IT had to put up with being told what to do by RIM. Now the situation is rotated (though not quite reversed): All those new NFC-equipped POS devices that retailers are installing to support Google Wallet now make up the baseline for NFC mobile payments, and Google will dictate exactly how BlackBerrys will be able to access its payment system. (That's not actually likely to be a problem, even though RIM rejected a partnership with Google early on, because Google will probably let anyone on board as long as they'll let Google hand out coupons.)

Or RIM could wait to partner with ISIS or (more intriguingly) Apple, which has a potentially very strong hand in mobile payments, especially now that it held back any NFC activity with last week's iPhone 4S rollout.

In practice, though, it's highly unlikely that retailers will accept a second NFC POS device on the counter—and not any more likely that retailers will want to deal with a completely separate suite of back-end software to process mobile payments.

There's one other possibility: that RIM could create its own closed-loop system in which a BlackBerry behaves like a contactless card from the point of view of the POS, but then tracks each purchase separately through the mobile device to issue coupons or monetize the transactions another way. It wouldn't even require the active cooperation of retailers.

How likely is that scenario? Not very. RIM already has the phones and the demographically appealing consumers, but RIM has also demonstrated that it's not going to push ahead on its own. And the path of least resistance between the BlackBerry and mobile payments—for both RIM and retailers—runs right through Google's Wallet.