Apple, NFC and You & Me

There's lots of buzz this morning about Apple incorporating NFC-payment capabilities into iPhone 5. Google has already done this with the new Nexus S. Here's the Bloomberg piece that caused the stir:

The main goal for Apple would be to get a piece of the $6.2 trillion Americans spend each year on goods and services, Crone said. Today, the company pays credit-card processing fees on every purchase from iTunes. By encouraging consumers to use cheaper methods -- such as tapping their bank accounts directly, which is how many purchases are made via PayPal -- Apple could cut its own costs and those of retailers selling Apple products. 

There is a great deal of debate on the outlook for NFC in the US as a basis for mobile payments and other types of "transactions." Apple has more than 160 million iTunes users with credit cards on file that would immediately support a payments infrastructure. 

Google isn't in the same position to "mainstream" NFC because it lacks a significant installed base of credit cards. Google's failure to push Checkout has now become a real problem with Android in several ways (but that's another story so to speak). 

Others have pointed out the "chicken and egg" problem with NFC: there must be widespread infrastructure and acceptance before consumers adopt; consumers must adopt before many merchants will install NFC-based contactless payment systems. (NFC can be used for all sorts of marketing purposes in addition to payments.)

The larger point here is not whether Apple or Google (or someone else) will win the NFC race. The larger point is that we're starting to see an acceleration of the "mobile wallet." Initiatives from carriers, developers, retailers, credit card issuers and handset OEMs make widespread mobile payments inevitable now.

A recent CNN piece gets it partly right when it says "The end of credit cards is coming." The end of plastic may be coming but not credit card accounts which will remain the basis for mobile payments, though embedded within the phone.

Another point to make is that marketing really opens up in new ways when smartphones can simultaneously be used to receive marketing or loyalty messages and essential become the "point of sale" with a single wave/click/touch/etc. 

The "era of mobile payments is almost here" and there's a lot at stake for incumbents, which can be disrupted and have their empires overturned. 

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