Back in March, as part of our South-by-Southwest 2011 coverage, we wrote "NFC's Great, but Rumors of Credit Cards' Death Are Greatly Exaggerated." Our contention was simple: "The fantasy of buying a Slurpee, say, with nothing more than a dramatic wave of your iPhone 5 seems to be coming true. But like hydrogen cars and hoverboards, electronic wallet technology has a long, long way to go." The blame was laid squarely at the feet of all the different players in this game: "It'll require cooperation between a bunch of powerful stakeholders, many of whom are eyeing the same pieces of the pie," we noted...adding that "there will be bickering."
How true. There are three problems with advancing our current system of payments. The biggest issue is inertia: The current players in the payments game are so big, and so well established in our minds that it's easy to forget it's actually a business market like any other. The players in the credit card and debit card industry are huge firms with billions of dollars at stake and a long-established stranglehold over how payments happen. They'll want to stay in control.
Then there are technical issues: The technology to enable wireless pay and more is actually simple, and has been around for years. This is causing a battle over protocols, agreed standards, and security--different players have their own ideas. Finally the actual act of payment is easier than it ever has been, technically--it's far simpler than the huge ecosystem that had to work behind the scenes to process a check, for example--and this simplicity is now exposed in a way that lets innovative new players disrupt the status quo (like Square), which makes the existing players edgy.
Hence this year we've seen Google Wallet, the biggest organized effort yet at enabling a wireless payment future, stifled on Verizon phones because Verizon is in league with Isis--a conglomerate of financial firms and cell phone providers--and Isis thinks it has the best ideas for security for wireless pay (which, of course, will siphon some of the cash involved its way rather than any one else's). Piecemeal international efforts to bring NFC payments have begun elsewhere around the world, inspired by different firms, but they're fragmented--and though they'll likely push ahead faster than in the U.S., they're still not true to the promise of the tech.
Meanwhile Apple's released its new iPhone 4S without its hotly tipped NFC effort (which may, or may not, come in the true iPhone 5 in 2012) and has found a way, EasyPay, to completely route around the credit card/cell phone provider hegemony for an amazing app that really does point to the future of payment tech--even to the point of letting you scan items and pay for them with your iPhone and walk out of an Apple store without speaking to an employee. This points to the clever shopping-changing ability of NFC that Google's Eric Schmidt pointed out. That is, the key to making NFC work is offering people incentive to use it: targeted deals, coupons, or rewards points, all of them stored in the phone. But Apple's app only works in Apple stores, and thanks to a battle among the different players, it looks like you won't be doing this in clothes stores or coffee shops for some time yet.
[Image: Flickr user oter]