Can NFC payments usurp the large QR economy?
In parts of Asia, particularly in China, the use of QR codes to pay for goods and services has become commonplace, replacing cash and other forms of payment. According to some reports, the so-called QR economy is now about as large as the entire GDP of Germany. Thanks to the technology, mobile users can pay a variety of recipients, from street vendors to friends and family.
Transactions based on QR codes have become embedded in many economies. For lots of consumers, muscle memory kicks in when it’s time to make simple payments. But the NFC Forum believes it has a more convenient solution.
Last week, the NFC Forum released its NFC Money Transfer Candidate Specification. This uses the intrinsic benefits of NFC technology — convenience, speed, security and usability — to create what it says is a better user experience than that of QR codes.
The organization’s money transfer system uses wireless NFC chips inside devices to facilitate payments. It will allow two NFC-enabled devices to send and receive money with a simple tap and through a secure radio connection.
The NFC Forum was launched in 2004 as an industry association by leading handset makers, semiconductor suppliers and consumer electronics companies. It develops standards for NFC technology to ensure that devices are interoperable. Its global members are a who’s who of leading tech players, including Apple, Google, Intel, MasterCard, NXP Semiconductors, Qualcomm, Samsung, Sony, STMicroelectronics and Visa.
Hundreds of smartphone models on the market have an NFC chipset embedded, but usage varies. NFC-based payment systems are adopted in Western markets, but aren’t nearly as popular as QR codes in Asia, not just for money transfers, but also for linking to information about products and services.
The NFC Forum clearly has a vested interest, and with so many smartphones having NFC capability it’s easy to understand why it started this initiative. However, QR-code payments have big proponents in Asia, being backed by major companies including Alibaba and WePay, which have developed smartphone apps based on the technology to enable transactions. The new NFC payment specification also faces the big challenge of changing the behaviour of people who have become accustomed to QR codes. It will certainly take time to disrupt QR economies, but the momentum has begun.
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