Current state of contactless & NFC payments

It was back in 2007-2008, when everyone in the payments space was quite sure that NFC based mobile payments will be rocketing in the next couple of years. Countless graphics/info graphics showed us how the mobile payments would boom next year.

Unfortunately, we did not see any of the upcoming figures took place in the actual stats. Today, almost all Android phones have NFC chips embedded and almost all MNOs have a mobile wallet installed or the mobile wallet project is in the pipeline. Some of them even closed down the services and kept on trying at different levels.

Well, there are solid reasons agains this booming to happen. Here are the main ones:

  1. Contactless card based payment is still not a daily requirement for the average consumer; a different way to put this: contact payment is still very convenient for all.
  2. Contactless terminal penetration is still quite low -worldwide.
  3. The NFC based mobile payment experience is not user friendly -both the enrollment and actual payment parts.
  4. MNO offerings are vague and banks have not been successful to develop a successful NFC based payment product up to now.
  5. NFC is still not a requirement for people when buying their next phone, there is no cool use case for NFC for the average people. Even bluetooth is still at its baby steps. Existing apps and services work fine over 3G/LTE/Wifi connections, people do not need any other interface for connectivity.

So, what now? NFC projects may be still at baby steps, but innovative mobile payment solutions appear frequently. Host Card Emulation (HCE) presents a great future both for contactless based or remote based payment solutions. Not only payment, but it is especially great for apps that do not require high security level that SIM card provides.

Contact card payment is still the king and we need some more time, or a disruptive approach based on mobile for NFC/contactless payments to boom.

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