NFC Chicken and Egg


This week I was surprised to hear unconfirmed rumours that Apple would not be including near-field communication (NFC) technology in the next iteration of the iPhone, due later this year. There’s been considerable hype around NFC and the potential benefits of merging it with mobile phones. Understandably, the majority of focus has been centred on contactless payment methods. Supporters believe that transforming the mobile phone into a mobile payment terminal will unlock a wealth of revenue opportunities.

Unfortunately the multi-layered infrastructure of handset manufacturers, retailers, operators and service providers has meant that progress has been slow to say the least. Attempting to bring players together and agree on various aspects such as technology standards, revenue shares and responsibilities has not been easy. Take the case of NFC-enabled point-of-sale terminals in shops. Should retailers be solely responsible for investing in them, or should the costs be shared?

The industry has lacked a lead figure to take the first step. This has produced an awkward chicken-and-egg situation. Handset manufacturers need to include NFC chips in new devices, but will not do so unless they are assured that the service infrastructure exists to support them. Likewise, operators and service providers want to know handset manufacturers are committed so they can work with retailers. And so on.

Apple hasn’t said whether the next iPhone will include NFC or not, and we’re keeping an open mind. But if Apple has indeed opted out of NFC, I think it’s a missed opportunity. With its database of over 200 million credit card details for iTunes users, it would be in a strong position to get the ball rolling. That said, Apple tends to prefer tightly controlled, closed environments, and I wonder how well it would form partnerships with other NFC players. Perhaps this is where Google’s strength lies. Its Android-powered devices and Google Checkout are arguably better suited to services that rely on collaboration.

I think mobile network operators could take a lead in pushing NFC deployment. They have a strong hand, with existing links to manufacturers and retailers, extensive billing systems as well as relationships with financial organisations. Indeed, it was encouraging to hear at least 16 major operators announce a commitment to NFC at Mobile World Congress. Several plan to launch services by 2012. In the UK, Orange has launched Orange Cash and O2 has its Mobile Wallet Service.

Regardless of who finally takes the lead in NFC, consumers will have to be assured that enabled phones are a viable alternative to credit cards and not simply another gimmick. And to make that happen, everyone has to be committed.