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We need the iPod of payments

I felt vaguely irritated today when an analyst from a major research firm was asked to position why NFC contactless payments haven’t taken off.

He said they had analysed the worldwide global market for mobile payments, the demographics of takeup, the likelihood of using contactless payments, the audience for new forms of payments, etc, etc, and had identified a global market of just 1.8% of consumers who would be receptive to such an offer.

What complete nonsense.

The fact is that there is no ‘market’ for contactless payments, mobile payments or mobile contactless payments.

There’s just a need that is as yet unfilled.

Another person in the panel discussion said that he didn’t get NFC, and felt that “contactless is just a solution looking for a problem”.

More nonsense.

I mean, I’m sorry, but NFC contactless mobile payments are intuitively obviously going to take off at some point.

The problem is that it's in a card form right now, and not integrated into a mobile contactless form and, even if it was, there's zero places that accept NFC contactless payments (that are obvious to consumers anyway).

But this will change … we just need an Apple (in Steve Jobs lifetime of Apple) to focus upon this and make it happen.

Apple have a knack of taking solutions looking for problems and working out how to build the solution in such a way that people see what problem is being solved.

For example, in 2003 I went into a store and asked for an MP3 player.

The store manager said they used to stock them, but stopped as “who wants to download music off the internet?”

That store doesn’t exist now – it’s just a website – and the iPod decimated the music market from its launch in 2001.

Markets were redefined by a visionary taking an obvious product and making it cool.

A visionary who could see the unfulfilled need, the solution, and match the two together.

These visionaries did the same with the iPad – everyone pooh-poohed the tablet market before the iPad’s launch – and yet this was another technology that had been around for over two decades.

In other words, it takes a visionary to see a technology or technologies that are disparate and fragmented, and bring them together into an integrated whole that is blindingly obvious to those who need it and completely compelling.

That’s what is needed for NFC contactless and mobile payments.

An iPod for mobile contactless, rather than the MP3 player we have today.

The iPod for mobile contactless was rumoured to be the iPhone5 but that hasn't appeared.

Mind you, if you look at the new Android details, the iPod for payments might already be here:

Incorporating Near Field Communication (NFC), technology behind Visa's PayWave, Android Beam enables select Android devices to share videos, apps, maps, contacts and other data through slight physical contact.

So, for those who think the market for mobile contactless is zero, go and talk to the trees.

“I’m doing a (free) operating system (just a hobby, won’t be big and professional like gnu) for 386 (486) AT clones.”  Linus Torvalds, father of Linux

“There is no reason for any individual to have a computer in his home.” Ken Olsen, CEO, DEC

“I’d shut it down and give the money back to the shareholders.” Michael Dell, CEO, Dell on Apple Computers

“640k should be enough for anybody.” Bill Gates, CEO, Microsoft

“I think there is a worldwide market for maybe five computers.” Thomas J. Watson, President, IBM



About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • Rob

    I was standing in EAT the other day clumsily fighting with their pin machine and looking longingly at their NFC reader, thinking about the blackberry 9900 in my pocket and wondering who the hell is going to get these things talking.

  • Carsten Jorgensen

    This might help pushing NFC along. Commonwealth Bank in Australia is now piloting and soon launching Kaching, an iPhone App for mobile banking linking in with social media and contact lists and with an iCarte case for retail payments connecting with MCD PayPass.
    It was announced to the media here last week and is in pilot now.
    And yes I agree it isn’t about a “market”, but a need/service that will eventually become widespread convenience, like the little piece of plastic most carry around now.
    It will be interesting to see how Kaching goes and if this prompts the other banks to follow suit?

  • Bo Harald

    Many reasons why NFC is so slow. One of them being that EMV has been so difficult in mobile devices, another one security element battles. But there is an alternative way to card payments in sight. More precisely by reusing press a (for invoice payment on due date) and especially n (for invoice payment now – real time). The n version could well be used also in retail environments – especially in smartphone apps.

  • David Hannam

    Actively insist on using NFC on my Visa Card at EAT’s counters…and ask to move to another till if the device is not functioning…. Also found a retailer promoting NFC for transactions under £15….want to say Boots but cannot remember as it was just natural to wave and pay… Without thinking about it…

  • We were waiting for the Android.
    The problem was blindingly obvious if you actually tried to do it: the closed market in hardware made it impossible to move. Now we have an open market, almost, in hand-held phones, something cool can happen.

  • Andy

    Surely NFC and contactless payments depend critically on the definition and wide scale adoption of appropriate standards.
    Trying to imply that Apple are promoters of multi-vendor standards with the business model needed for this issue is to misunderstand their approach. In fact the Apple approach is the complete opposite of what’s required – much like Microsoft when they first hit the big time with that sexy new graphical desktop called Windows: lots of good marketing, nice looking products to attract the casual user, but total failure to develop and promote standards (in fact lots spent on proprietory lock-in – remember when Microsoft refused to acknowledge that “Internet” thing and tried to force us down their own network route? The same is happening now with Apple’s attempts to agressively control which developers they allow on their OS and selective control of which proprietory functions are accesible to them).
    What we definately need is Android’s more open approach – adopted by multiple vendors – preferrably as part of a smart phone’s standard features. Samsung have just passed Apple on global smart phone sales with their Android range — and are including NFC e.g. in the Nexus S. Apple scrapped NFC plans for the 4S and “might” include it in the iPhone 5…
    But what will attract the casual user to contactless payments? Clearly this will be micro-payments… as we’re seeing in the UK with the likes of Oyster cards. Who will be the loosers? Perhaps middlemen like Visa and Mastercard, as smart phone OS providers like Google cut them out and reduce transaction costs with products like Google Wallet…

  • Chris, might the identity of the business who asked this analyst be known and perhaps quietly shared, even if it can be shared as a generalism.
    The point is slightly topical for me at the mo, it is research we are carrying out for a mobile/alternative UK Payment technology company.
    Would be very grateful.

  • John Quamina

    I very rarely do blogs but this one is good especially when the boss is irritated. I am going to irritate him some more because I don’t think there was never a need for an iPod (or Coke or a Mars Bar) prior to them being created. These innovations made a market. Now the market is so big that there is competition and real need. Unfortunately NFC is a technology looking for a problem. It has found some problems to solve but not big enough to drive a large roi for consumers, merchants and processors and everyone else in the value chain. What happens quite often is, if this technology (NFC) takes too long to “take off” then all these pent up needs and desires built up by the hype get delivered by an alternative technology. Look outside the box don’t focus on NFC focus on the opportunity and NFC may or may not be part of it.

  • Jeremy Kidd

    Amen brother!!!
    My take – the current players are too slow to react, heavily regulated, conservative, and scared to make a big move. It’s going to be someone out of left field who comes along and turns this space on its ear.
    For anyone reading this blog who hasn’t yet read it, pick up a copy of either of Clayton Christensen’s brilliant innovation books, The Innovator’s Dilemma, or The Innovator’s Solution. The first few chapters of The Innovator’s Solution are basically a how-to guide for bringing around a disruptive innovation. Just add cajones.
    I also have to share a story in a presentation by someone from an innovation conference back in 2005. The presenter was from P&G and he started off by asking how many in attendence owned a Swiffer. 2/3 to 3/4 of the crowd raised their hands. Then he asked, “How many of you knew you needed a Swiffer 2 years ago?” Everyone just chuckled. BAM! That is what mobile payments needs.

  • Attila Csikai

    “640k should be enough for anybody.” Bill Gates, CEO, Microsoft
    “quote” is only an urban legend.
    Do a “google” for it and you will find it out yourself.

  • Has anyone seen the new ‘CardCase Hands Free Payments’? (by Square)
    This is actually pretty wild – this tech uses ‘GeoFencing’ – walk into a store – grab your item – say your name – and be gone! Never swipe, tap, touch or lift ANYTHING
    does anyone see this method of mobile retail taking off?

  • Chris Skinner

    Great feedback folks and appreciate all the comments. I would pick up on all of these but will only choose one, which is @Attila.
    Was aware of the folklore around Bill Gates’ quote re 640k. Still good fuel on the fire however. What Gates says is:
    “I’ve said some stupid things and some wrong things, but not that. No one involved in computers would ever say that a certain amount of memory is enough for all time. I keep bumping into that silly quotation attributed to me that says 640K of memory is enough. There’s never a citation; the quotation just floats like a rumor, repeated again and again. Do you realize the pain the industry went through while the IBM PC was limited to 640K? The machine was going to be 512K at one point, and we kept pushing it up. I never said that statement, I said the opposite of that.”