Mobile NFC - Don't Leave Home Without It?

Finally we have seen the impetus required to start the mobile NFC ball rolling. There is a strong likelihood that Apple will announce that the next iteration of the iPhone will contain an NFC chip, whilst Google announced yesterday at the Web 2.0 Summit that the next version of Android (Gingerbread) will support NFC. Lots of people in the media are now off and running with their stories around mobile payments, and how you will be able to forget about having to carry “plastic”. But let’s strip away some of that veneer and consider a few salient points:

1. iTunes: If Apple do release an NFC enabled iPhone, will they expose the functionality of it to third-party developers, or keep it locked down for their own use? Apple already run one of the largest global payment aggregation services in the world – iTunes – and I wonder if they have aspirations to become a bricks-and-mortar acquirer as well.
2. Android: Google have announced that Android will support NFC, and that the next Google branded handset that they release (likely to be named the “Nexus S”) will contain an NFC chip. But we have to remember that Android is an operating system – and with Android being an Open OS, there is no pre-requisite that other hardware manufacturers will have to supply handsets with NFC built-in. We may well see the same stalling tactics as in the past – with the mobile network operators (MNO’s) not wanting to subsidise handsets that contain NFC.
3. Adoption: How often do you change your mobile telephone? Of course, the early adopters will go out and buy the latest and greatest, but how long will it take for these new handsets to start permeating the general user-base? If we consider that more and more MNO’s are pushing customers to two-year contracts, then understand that a lot more people are retaining older handsets (and going on ‘SIM only’ deals to reduce personal costs) and add to that the number of other operating systems / handset types that would need to be updated to NFC, I believe we are still three to five years away from seeing any worthwhile market penetration of Mobile NFC.
4. Standards and Security versus User Experience: Within Europe, Visa currently require that if you wish to spend more than £15/€20 in a single transaction using a PayWave (i.e. NFC enabled) card, you must revert to Chip and PIN. Standards – and security measures – such as this will need to be updated to reflect that with an NFC mobile telephone, there will be no Chip and PIN. Perhaps we’ll need an application on the device to allow us to authenticate that payment, but how would that work – would I expect to have an application for every credit card that I might carry, or would a single application suffice that could manage (and authenticate) for each? Who will we – the consumer – trust to manage this? Presumably not a generic 59 pence application from the “app store”? How would I choose which of my various debit and credit cards I want to use for each particular transaction - will ease-of-use compare to simply selecting my chosen card from my wallet and presenting it to the card reader?

Whilst I am glad to see that both Apple and Google are moving in this NFC-enable direction (and where Apple and Google go, others are sure to follow), I don’t see us being able to leave the plastic at home anytime soon.