The Struggles of Near Field Communications and eWallets

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    Electronic wallets, as the name implies, involve the fairly simple task of securely exchanging small bits of information over the short distance from the purchaser to the retailer.

    Services to do this are rolling out. However, two issues are slowing things down: There is less unanimity now than before on the best technology approach for the exchanges and huge players are jostling for position.

    The introduction of eWallets was supposed to be the coming out party for near-field communications (NFC). It has had a good deal of success, but it has not been overwhelming. In retrospect, the idea of pushing NFC as a vehicle for mobile wallets was a bad idea, since so much could go wrong that had nothing to do with the technology. In other words, the NFC element of a project can work perfectly, but the technology would look bad if it struggled for business case or other reasons.

    Bryan Yurcan at Bank Systems & Technology suggests that NFC indeed is having some trouble:

    However, could there be a tipping point in that last case? This week, Google Wallet decided to move further away from its NFC origins as it released an updated version of the app for all Android phones version 2.3 and higher, and to AT&T, T-Mobile and Verizon subscribers, which will not have an NFC component. Initially, only Sprint customers could use the Google Wallet app.

    A change in direction by a key player in the birth of another project, ISIS, also is bad news for NFC proponents, according to Mobile Commerce Daily:

    Capital One was one of Isis’ three founding card issuers, and the company’s drop of support as the company prepares for a larger roll-out emphasizes the challenges in gaining scale and momentum for mobile payments. PayPal and Apple’s recently announced their own mobile payment options that also avoid NFC reflect the opportunity that marketers see in services beyond NFC.

    Commentary in the story suggests that the problems are in the business model, not NFC.

    Bluetooth—or, more specially, Bluetooth Low Energy—is emerging as perhaps the chief competitor to NFC. Chantal Tode at Mobile Marketer suggests that electronic wallet projects using BLE—Apple’s iBeacon and PayPal’s Beacon—“are just the tip of the iceberg.” She says that many similar announcements will be made this year.

    A yellow flag for NFC was that it was not embraced by Apple, which never embedded it in the iPhone. Ironically, the industry is past the days when Cupertino had de facto veto power on whether a technology thrived or struggled. At the same time, NFC’s failure to break out a couple of years ago is hurting it now. NFC is a viable technology that will play a role, but in the big picture, perhaps the sector put too many eggs in the electronic wallet basket.

    Carl Weinschenk
    Carl Weinschenk
    Carl Weinschenk Carl Weinschenk Carl Weinschenk is a long-time IT and telecom journalist. His coverage areas include the IoT, artificial intelligence, artificial intelligence, drones, 3D printing LTE and 5G, SDN, NFV, net neutrality, municipal broadband, unified communications and business continuity/disaster recovery. Weinschenk has written about wireless and phone companies, cable operators and their vendor ecosystems. He also has written about alternative energy and runs a website, The Daily Music Break, as a hobby.

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