Apr 13, 2007

NFC mobile phone demo: A few smooth, convenient features … and one not so smooth

Most of the features in this video appear smooth, simple and convenient. Tap a bill board in an airport and trigger a phone call to a hotel. Tap an RF-ID enabled business card and instantly suck the contact information into the phone. Tap a contactless reader and pay without a card. The payment demo starts out just as smooth as the other features, but then unfortunately falls apart when security issues are addressed.

Watch the last part of the video carefully. The first payment demo is nice and smooth. Tap your phone against a contactless reader and you’re done. Just like a contactless card. The presenter starts saying that you can configure your phone for a PIN code if the transaction is over a certain amount. The customer taps the phone once, enters a PIN code on the phone keyboard, then taps the phone a second time. Another voice asks about PIN protecting every transaction, so if someone steals your phone they can’t use it to pay. You get a glimpse of how to configure the PIN code in the mobile phone, and then you get to see the phone tapped once, the PIN entered, then tapped again.

I pretty much get the idea of using a mobile phone the same way a contactless card is used, for speed and convenience. It makes sense for transactions under $25, where less security might be acceptable, in line with current thinking around contactless cards. Tap your phone against the contactless reader and jump out of the cab, eat your hamburger, or whatever. But over $25, things get a little messier. A contactless card can deal with purchases over $25 in several ways, inherent to the fact that the customer is holding a physical card. You can insert the card and enter your PIN code (for the EMV part of the world, i.e. everywhere except the US) or you might have to sign the credit card receipt. Those solutions are specific to contactless cards and cannot be used for mobile payments. You can’t insert the mobile phone into a chip reader to enter a PIN, and you cannot sign for the transaction, since the clerk has no way to check your signature. Hence the clunky solution that you see in this demo.

The demo doesn’t get into the mother of all mobile payment issues: the concept of a mobile wallet. You don’t see the customer choosing to pay with a different card programmed in the phone. “Let’s see, I want to choose my Citibank card, so I touch this key, then that one to confirm.” Or how about another nightmare situation that you know is going to come up: “Oh wait! Cancel that transaction please. I just noticed that it automatically chose my Visa debit card, but I wanted to use my American Express card instead!”

To me, this demo just shows that the cleanest, simplest and fastest way for mobile payments to come about is by keeping everything simple. Only small transactions and only one card linked to the phone. If you think about it, the only place where mobile payments have had some measure of success is Japan, where the phones are linked to the universal mass transit card for payment. Small transactions only, and just one payment option, your transit card.

On a completely different note, I really liked the way the video shows how NFC can be used to simplify Bluetooth connectivity. Bluetooth is always a hassle, what with identifying each device and everything. Here, you tap the device with the phone, which establishes the identification, and then Bluetooth is used automatically to transfer larger volumes of information that NFC is not designed for. So you skip the whole manual identification phase. It’s done automatically with NFC. That’s a cool feature that really does make things more convenient.

Actually, come to think of it, that is very much related to the payment issues that I write about. The “NFC/Bluetooth connectivity automation feature” is actually very relevant to how I think about payment innovation. I like things that make the complexity disappear, that hide all the strings, wires and mechanics so things look smooth and simple to the user. Make complexity your problem, don’t pass it on to the user like a hot potato. That’s the type of innovation that is really useful and makes you go, “Wow, I have to have that! It’s just too cool! When can I get it? I want it now!”

I haven’t gotten all excited about contactless cards or mobile payment because I just don’t get that feeling.

1 comment:

fb4 said...

"You can’t insert the mobile phone into a chip reader to enter a PIN, and you cannot sign for the transaction, since the clerk has no way to check your signature."

I think you may of missed the point in your first statement, mobile payments use EMV just like chip and pin. You don't need to insert your mobilehpone in a reader, you touch it too the reader, apart from that the process is identical, you could still enter a PIN into the reader.

As for signatures, the clerk has no idea if the signature on the card is mine or if the person signing is just good at forging them. My signtaure never comes out the same each time I write it so this is a sily form of id. I have many friends who never sign their cards so if it does get stolen at least they don't have the signature as well.