Wind the clock back to this time last year and we were all preparing to enter into the unknown land of contactless payment. Google, together with their handful of partners; MasterCard, Sprint and Citibank leapt up on stage at a conference in New York to announce to the world that they were placing their eggs in the NFC basket and ushering in a new form of contactless payment – Google Wallet.
It was truly revolutionary, people would no longer be bogged down with credit cards, store cards and wads of notes and coins, Android would be selling mobiles which allow the user to make payments simply by holding the smartphone over a scanner.
The Google Wallet system would use near field communication, or NFC, which is basically a short range; secure, data transfer method.
So after a year to find its feet, get established and conquer the world – how far has Google Wallet come?
The reaction to Google Wallet has been at best; a mixed bag. Unfortunately, Google just hasn’t managed to corral enough additional credit card, bank or carrier partners to allow the application to grow. Google Wallet has made small inroads into signing up new retail partners; but this isn’t going to be enough if Google want their payment system to really take off.
Google Wallet only works with one credit card and bank combination: Citibank MasterCard. Plus the only major carrier where Google Wallet phones can be found is Sprint Nextel.
So where did it all go wrong? How did NFC go from being the next big thing to yesterday’s news?
The main reason is the lack of integration from the major retailers and banks. NFC technology is all fine and dandy, but the scheme is totally dependent on a broad ecosystem to give it any traction in the marketplace. You could have millions of people all carrying around their trusty Google Wallets, and yet if there is nowhere to pay for anything, than the system is useless.
Devices need to be equipped with tiny NFC chips and terminals (scanners) at the point of sale must also be equipped to read the information from the NFC chips installed in devices.
PayPal, which for those of you who regularly pay for items over the internet will be familiar with, had been trialling with NFC payments last year, but decided to ditch the short-range wireless technology when it launched its in-store mobile payment solution instead. PayPal has decided to go with a PIN-system which asks the customer to type in a security code in order to send payment via a mobile to another PayPal account.
PayPal's CEO John Donahoe stated recently that he doesn't see NFC ever really taking off, because it doesn't offer consumers any real value.