Mar 18, 2010

Why there is no real progress in the search for an NFC alternative for mobile phones

In addition to contactless stickers, First Data is now also exploring Micro SD cards. A comment at the end of this article pretty much sums things up, illustrating why there is no real progress:

"We chose Tyfone's SideTap memory card because it best serves the needs of consumers who want to use contactless payment options with over-the-air access but still want to retain the memory-card functionality of their micro SD card," said Dom Morea, division manager of mobile commerce solutions at First Data, in a statement.

I might be wrong, but I don't think I have ever heard a customer say something like, "I want to use contactless payment options with over-the-air access but still want to retain the memory-card functionality of my micro SD card." How many people even understand what that means?

When you work through all the details and simplify the statement down to something understandable, you end up saying something like this:

"We make it easier for you to add your credit card to your mobile phone, so you don't have to pull your card out of your wallet all the time. You still have to keep your cards in your wallet, because there will still be lots of retailers that need a card. But you can tap your phone at more and more retailers around the world, instead of pulling out your wallet."

Let's see. I still have cards in my wallet. I still have to carry my wallet around. But sometimes I get to tap my phone instead of pulling out my wallet. Wow. Cool. I hope its free, and I hope there is no hassle at all, otherwise the hassles of loading my card to my mobile phone, and getting my phone to work properly when I pay, will be weighed against the hassle of pulling my wallet out.

Here is a simple description of the pain that we are focusing lots of resources on: "We sometimes eliminate the hassle of pulling out your wallet each time you want to buy something."

Nobody presents the pain in this way. We hear all kinds of other pains that we presumably eliminate. "Imagine being able to leave your wallet at home!" Or this one: "People never leave home without their mobile phones or their keys, but sometimes forget their wallets." But the pain we are addressing today is not "leave your wallet at home". We can't offer a solution to that pain until all retailers everywhere accept contactless payments. Instead of recognizing that we are addressing very minor pain ("sometimes you can leave your wallet in your pocket and tap your phone instead") we let our minds slip and focus on some juicier pain that makes our investments worthwhile.

We are so far removed from solving significant pain, or even recognizing it when we see it, and so stuck in the nitty gritty technical whiz bang features that this technology can provide, that our industry just muddles along with little incremental improvements in payment systems that nobody gets really excited about other than ourselves. That's why retailers don't see enough value in paying interchange fees, and why customers don't see value in paying yearly fees.

What a ripe industry for an outsider to come in not knowing anything about "what can't be done".

1 comment:

david waxman said...

First, I want to say I really enjoy reading your great blog, been reading for a while now. Second, let me preface my comment by saying this is shameless self-promotion but after reading your insightful (and dead on) post I felt compelled to throw our hat in the ring and talk about our company/product. I am one of the co-founder's of VITA products (, we have developed a contactless payment/electronic health record platform that can be integrated into a wide range of wearable consumer accessories - thus allowing the wearer to have money and ID on them at all times without the need to carry their wallet.
Our first product, the VITAband, is a wristband and will be on sale shortly after we complete our pilot test with our financial partners. More form factors are currently being designed.
We came up with this product to address the problem active adults face when working out - how do you conveniently carry money and ID with you? (putting it in your sock or sports bra doesn't count). We believe our product truly is a value add for consumers and leverages the convenience of contactless payments along with adding the utility of connecting to an electronic health record.
David Waxman, Co-Founder, VITA products, inc.