Technology and a dilemma

[Dave Birch] I've got into a bit of trouble with a couple of our customers for saying that stickers are the future of mobile proximity payment, at least for the next couple of years. I'm not the only person who thinks this.

MasterCard Inc. is trying to prime the market for mobile financial services by offering contactless payments stickers that consumers can attach to their wireless handsets.

[From MasterCard's NFC 'Interim Solution' - 03.31.2009 - U.S. Banker Article]

Coincidentally, thanks to my good friends at Garanti Bank in Turkey, my splendid new MasterCard PayPass sticker for my iPhone arrived today. Naturally, I went upstairs to the lab to try it out in a couple of POS terminals (it worked perfectly) and have a play with it.

Cool. Now, the reason why I said that the sticker would prosper is that

it's a simple and inexpensive way of piggybacking on the mobile without have to actually integrate anything into the phone, which I predict will bring some new and innovative solutions into the space.

[From Digital Money Forum: Stickers are the future, I'm telling you]

And this is true. But it wasn't that visionary a prediction. Consult Hyperion were also (this was two years ago, remember) already working on some NFC projects for real banks and real operators and I was already able to observe first-hand the problems that were under the surface. So one of the reasons that I was so enthusiastic about stickers wasn't the technology per se but the dynamic around the initial bank-operator efforts. What is that dynamic? Surely, a reasonable person might say, it's better to have NFC integrated into the handset so that you can do all sorts of terrific value-added services around the payment and, indeed, that is exactly what we are doing in our work for Barclaycard. Getting a bank to do something with an issuer, though, is much easier than getting all banks to do things with all issuers. For one thing, there are simply no handsets out there for the operators to choose from. For another thing, it's taken far longer than anticipated for the operators and others to agree on the standards. The most important thing, though, may be much less tangible. It's just that it's taking a long time for banks and operators, payment schemes and the GSMA, to learn to work together. They are just different beasts. It takes a lot of time, and a lot of money, for harmonise technology, business and vision.

mobile, stickers

There are other solutions: it isn't just a case of NFC stickers or NFC handsets. A bank might, for example, use some form of removable media with the handset, locating both the NFC interface and the secure banking and payment applications there.

Tyfone's new NFC product, a platform called u4ia (pronounced "euphoria"), is integrated into a standard memory card that consumers can insert into mobile phones.

[From Tyfone Chip Offers Mobile-Pay Step for Banks and Consumers - 12.18.2008 - American Banker Article]

I'm not sure about this. The great merit of the sticker approach is that it is simple and immediate, whereas if a bank is going to go to the trouble of putting a secure application an SD card (or similar), it might as well wait for the handset manufacturers and operators to get their act together and energise the marketplace. If, say, Transport for London (TfL) or the RATP in Paris were to sell contactless stickers to go on the back of phones, then I'm sure people would buy them and begin to establish mindshare for mobile proximity. Then, in a couple of years time when there are a range of handsets to choose from, those customers can move on to a more value-added service.

Current technology issues aside, there is a useful case study here. In the course of doing some work for a customer, you come across a new technology that you think that they should be using. But they aren't interested, because they already have a strategy (that you know is now out of date)to do something else. Do you give the customer your honest opinion (as I did) and make yourself unpopular, or do you bend your thinking to fit their existing strategy? My personal opinion is that in long run, reality isn't optional, so you should alway be honest: yes, operators would prefer a SIM-based NFC solution under their control, but on the other and service providers want to get working stuff out in the market right now. And stickers work.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]