ISIS Launch Boosts NFC Payments

When it comes to mobile payments by consumers, you have a tale of two worlds. At least that is where the mobile payments marketplace was in the past. On one hand, operators could utilize NFC (Near Field Communication), which boasts approximately 400 million NFC-enabled devices and hopes to grow to an estimated one billion by 2016. On the other hand, you have Bluetooth devices, which account for around three billion devices annually. Now, the future has arrived and the two options may soon be one and the same. In an unprecedented move designed to secure a brighter future in the world of m-commerce, both of these mainstay entities have developed an alliance. The NFC Forum, a non-profit industry association that advances the use of NFC technology and the Bluetooth Special Interest Group (SIG), the trade association responsible for the development, promotion, and protection of the Bluetooth® specification and brand, announced the signing of a Memorandum of Understanding that will enable the two organizations to work more closely together, via a formal liaison relationship. This camaraderie between the two organizations is designed to create an environment of collaboration. The goals are simple. Each wants to grow its market exposure. By combining efforts, each will have the chance to “evaluate opportunities to enhance interoperability and the user experience of devices that use their technologies,” according to an NFC Forum statement. While Bluetooth technology is more prolific, NFC gained a foothold this week with the long-awaited nationwide launch of the ISIS mobile wallet, a joint venture from AT&T (NYSE: T), Verizon Wireless (NYSE: VZ) and T-Mobile. ISIS faces a long road ahead before consumers are likely to adopt it for mobile payments, however. Isis is only available to Android smartphone users, on limited models. Plus, users are required to go to Verizon, T-Mobile, or AT&T stores to get a new SIM card. The average consumer is not likely to go to the trouble. Plus, wireless carriers’ lack of support for NFC mobile phones and consumers’ slow adoption of mobile payments have analysts worried about the future of m-payments. Strategy Analytics recently lowered its NFC projections, saying that 115 million NFC handsets will be responsible for spending $48 billion via NFC phones by 2017, down from an estimated 158 million phones spending $53 billion in its July forecast. “Alternative methods of making in-store mobile payments through solutions such as LevelUp and Square Wallet have gained pockets of traction, and are fragmenting the mobile payment sector,” analyst Nitesh Patel wrote on the company’s web site. Plus, he reasoned, the prospect of PayPal and Apple launching alternative mobile payment solutions based on Bluetooth Low Energy (BLE) “adds further uncertainty to the role of NFC in supporting in-store mobile payments.” In addition, consumer adoption of mobile payments – whether Bluetooth or NFC – is slow. 34 percent of consumers say they are “not interested” in paying for purchases via mobile phones, according to TSYS’s 2013 Consumer Payment Choice Study. Even more – 38 percent – don’t want to establish a prepaid account in which the account is automatically reloaded from a debit or credit card for small purchases. 33 percent have no interest in the ability to instantly transfer money to others, a highly touted feature of both Google’s (NASDAQ: GOOG) Google Wallet and Square through its new Square Cash program. However, with an estimated $235.4 billion globally in mobile payment transactions in 2013, there is plenty of opportunity for both the NFC Forum and the Bluetooth SIG to reap the bounty of financial rewards the partnership could create. The two groups could also use some of this newfound power to educate shoppers on the advantages of mobile payments.