One of the biggest stories to come out of the Mobile World Congress so far is Samsung’s announcement that it’ll be working closely with Visa to deliver mobile payments via Near Field Communication (NFC) technology. The two companies have agreed to form a “global alliance” that’ll guarantee mobile payments throughout the world with the Visa Mobile Provisioning Service to any business that enables them.
The deal will see Samsung’s NFC-enabled handsets pre-loaded with the Visa payWave app that uses NFC technology to integrate a user’s bank account info directly with their smartphones.
Samsung and Visa are hopeful that their agreement will encourage more businesses to adopt a mobile payments ecosystem, especially given the vast number of handsets that are already enabled with NFC technology. According to ABI Research, around 200 million handsets currently support NFC, but this will rise to some 1.95 billion devices by 2017. Furthermore, virtually all the top smartphone manufacturers have introduced at least one device equipped with NFC, which is expected to become a default technology for flagship phones in the near future.
Samsung was one of the first to embrace NFC, integrating the technology with its Galaxy S3, while others have recently jumped on the bandwagon. Both of Blackberry’s new handsets, the Z10 and Q10, are equipped with NFC, as is the Nokia Lumia 920, and it’s pretty much a given that the upcoming Galaxy S4 will also have it. In addition to phone makers, other financial service providers seem keen to get in on the act, with MasterCard using the MWC stage to show off its updated MasterPass digital wallet, which can support NFC.
Smartphone Payments Face Uphill Struggle
But companies are going to have a very tough time convincing consumers to swap their credit cards and cash for their smartphones, claims at least one analyst. Eden Zoller from the research firm Ovum said that Samsung and Visa will both need to make a huge effort to persuade consumers of the benefits of NFC payments:
“Both Samsung and Visa are committed to NFC and we would expect them to put effort and marketing muscle behind making consumers aware of the potential benefits that NFC payments can bring. This is desperately needed as for most consumers, mobile payments – let alone NFC – is simply not on their radar,” warns Zoller.
“This is backed up by Ovum’s latest Consumer Insights survey; when consumers were asked to rank their most frequently applications, mobile commerce related applications were very low down on their list compared to mobile games, email, and social networking.”
For its part, Visa is quick to claim that its contactless payments are now responsible for some 13 million transactions a month, but while that may sound like a lot, compared to other forms of electronic payment, it really isn’t – Visa Europe for instance, typically makes this many transaction in just 12 hours.
The biggest problem for consumers is that most just can’t see how switching to NFC payments would benefit them – after all, most people do not find it much of an inconvenience to use their credit cards of even pay in cash, as this still only takes a few seconds.
The second issue to be overcome is the lack of infrastructure. The vast majority of businesses simply don’t accept this kind of payment. Samsung and Visa will have to make a big push to get enough deals done between banks and businesses to make NFC payments attractive.
For sure these problems can be overcome, in time, but then again things haven’t exactly been helped by Apple’s steadfast refusal to adopt NFC on its iPhones. That the iPhone 5 lacks NFC means that many businesses and banks will be unwilling to consider mobile payments when one of the smartphone world’s biggest players hasn’t jumped onboard, especially when one might argue that Apple users are generally wealthier and as such, more likely to adopt the technology.
NFC payments are sure to be big in the future, but it’ll be some time before anyone goes ditching their wallet.