Dear Readers,
I think one of the funnier and perhaps more insightful editorials I read this week was a piece by Karen Webster, titled 'Where in the world is Isis wallet?'. You can read it here and I encourage you to do so. If you want to see what happens when a product never lives up to its hype (including one publications saying it would “take over the world”) – keep Isis in mind.
To be honest, I don't even think that Karen was being unfair - she didn't have to be. She simply follows the timeline and responses to the Isis wallet from both instigators and implementers. The piece concludes as follows: "People have said that nearly $500M has been poured into Isis, probably making it something on the order of $10M for every Isis customer (they’d much rather have the money)! To me, it seems hopeless. More than 2.5 years into the experiment, there is little traction, and not much of a value proposition to entice merchants or consumers or issuers to play along. And it’s not going to get better any time soon. Being totally tethered to NFC is a losing proposition, in at least the short run, and there are now too many other cloud-based schemes with momentum for them to compete with. If Isis had one side of the platform getting any sort of traction, then maybe, maybe it would have a marginal shot, but its quest to solve the hardest problems in payments all at the same time - using NFC as its enabling platform - has resulted in a big mess of quicksand that even $500M more couldn’t get them out of. I take the point that this kind of money to the telcos is pocket change, but it’s also a resource distraction that multiplies their out-of-pocket investment by at least 5x. I would think that their patience would run out sooner or later."
And in answer to the question posed by the piece itself? Not in many places…
It is easy to write off NFC but it would appear that it really is coming. Berg Insight last week reported that NFC-enabled handsets grew 300% in 2012 (http://wp.me/p1Jrjn-2ly) to reach 140 million units. Growing at a compound annual growth rate (CAGR) of 48.2 percent, annual shipments are forecasted to reach 1 billion units by 2017. However, André Malm, Senior Analyst, Berg Insight anticipates that it will take some time before the stakeholders agree on business models for payment networks and access to secure elements that store the sensitive user information in NFC-enabled handsets. “It is the sum of many possible use cases for NFC rather than one single killer application that make the technology compelling for smartphone vendors already today. Once developers gain experience with NFC and get access to a larger installed base of compatible handsets, we can also expect to see entirely new use cases not yet imagined.”
That is good news for the NFC-IC producers. This was also reflected in an ABI NFC assessment report last week too. NXP, Inside Secure, and STMicroelectronics were judged to be the top rated vendors of NFC ICs in ABI Research’s Competitive Assessment. Companies were scored for eight key criteria under the categories of Implementation and Innovation across both NFC modems/controllers and secure elements. NXP ranked in first position overall and topped the Implementation category. It was the most successful vendor in 2012 and scored multiple design wins with a broad cross-section of OEMs and product categories. NXP was also one of three equal scoring companies coming in joint second for Innovation because of its work highlighting new use cases for NFC across its broad portfolio.
Inside Secure ranked second for Innovation and third for Implementation because it was the first vendor to announce a major OEM contract (with RIM using a SE from Infineon), its input into new standards, and its efforts to develop NFC in new device categories. It continues to develop new form-factors, features and is working with partners to better embed NFC technology into new devices.
Practice director John Devlin commented, “With the NFC market in the early stages of accelerating growth it is important to balance commercial success to date with technical innovation, design features, strategic positioning, and demonstration of new use cases. It is these factors that will have the largest impact on long-term success.”
Reading all that though, it is still easy to feel either a sense of worry, pessimism or even Schadenfreude when it comes to the the idea of mobile payments but when it comes to contactless card-based transactions, the future is looking very rosy indeed. Just last week Visa announced a major breakthrough (next year) in Germany. From Spring 2014 Shell will introduce contactless and mobile NFC payments with Visa at all 2,200 Shell petrol stations in Germany. This also includes payments with contactless V PAY debit cards.
The changeover to new contactless terminals will be completed by early summer of 2014. “Shell stations not only offer high quality fuel, but also products for daily use. In the near future, our customers will be able to pay with Visa contactless cards in a convenient, fast and easy way when buying petrol as well as coffee, drinks, snacks or magazines. Thereby, queues at the counter will be shorter and our service quality will further increase“, says Jörg Wienke, Head of Shell’s Retail business in Germany. Good news for Shell and Visa.
Even better news when Starbucks UK announce that over 550 company owned Starbucks stores in the UK now accept contactless payments. Starbucks follows Marks and Spencer, Co-Op, Post Office, Boots, McDonalds and other major national retailers in the move to contactless. For those retailers where speed is of the essence, accepting contactless payments is rapidly becoming a business imperative – say Visa Europe. Ian Cranna, Vice President of Marketing for Starbucks UK, said, “With only around 1 in 3 of our customers now paying with cash, we recognise the importance and benefits of embracing new payment technologies at Starbucks. We are now able to provide our customers with the quickest and most convenient ways to pay, to speed up service and cut queue times. The roll out of contactless follows other payment innovations that we have implemented across our stores, including developing a bespoke mobile payment app.”
So, to recap. Isis wallet looks to be going nowhere fast. NFC-enabled phones are on the rise and various big brand retailers are interested in contactless payments (even if the customer is slow to fully accept and endorse mobile payments). What went wrong for Isis? Well, I'm no expert but really - Austin, Texas and Salt Lake City, Utah – prime target markets for a mobile wallet pilot? Seriously, who stayed out too long in the sun and came up with those locations? I would like to finish with the phrase, "time will tell" but I think it's more likely that "time just ran out". For Isis at least.
Steve Atkins
Contactless Intelligence
This week on C-ITV
NXP, Inside Secure, & STMicroelectronics are winners in ABI's NFC assessment report http://wp.me/p1Jrjn-2kG
Gemalto provides TSM for mobile NFC ticketing around Caen la mer http://wp.me/p1Jrjn-2kD
Alfa-Bank, Beeline and MasterCard announced launch of NFC-based payment services in Russia http://wp.me/p1Jrjn-2nh
Gemalto deploys first contactless cards in Latvia for SEB http://wp.me/p1Jrjn-2na
Starting 2014, Shell, Germany to be driven by Visa contactless http://wp.me/p1Jrjn-2mr
VIDEO: VeriFone's Raja Ray talks M&S to C-ITV http://wp.me/p1Jrjn-2mk
Shipments of NFC-enabled handsets grew 300% in 2012, says Berg Insight http://wp.me/p1Jrjn-2ly
Starbucks goes contactless in the UK http://wp.me/p1Jrjn-2ls
Orange recognises the winners of the Orange NFC Awards http://wp.me/p1Jrjn-2kS
Payments & m-Commerce
AirPlus and Deutsche Telekom begin NFC payment pilot http://bit.ly/11j38ca
Uganda to tax mobile money transfers http://bbc.in/11j3csy
Finextra VIDEO: Cashing in on the mobile wallet http://bit.ly/17iBG2R
Mobile Payments Make Their Way to Myanmar http://bit.ly/17iBznM
JCB and Hua Nan Bank to Launch Debit Card with Contactless Functionality in Taiwan http://bit.ly/10w4Ic8
Russia's Alfa-Bank taps BPC for mobile NFC payments http://bit.ly/10w4CkM
Retailers to Forge Uber-Like Mobile Payment Pacts, Collison Says http://buswk.co/10w4SQO
iZettle breaks out of Europe, bringing its mobile payments service to Mexico http://bit.ly/10w4Ok6
My Mobile Payments to raise $100 mn to fuel growth plans http://bit.ly/10w4MbY
Bendigo Bank readies mobile payments scheme http://bit.ly/10w4MIR
EMV Migration May Lead Customers to Switch from Cards to Mobile Payments, Study Finds http://ubm.io/15mbY6x
Contactless Rollout at Starbucks UK Part of Wider Trend for Take-Up of Technology http://bit.ly/15mbRbj
Barclays extends mobile payments to retailers with Buyit http://bit.ly/15mclhn
Unlocking the mobile wallet http://bit.ly/15mcmC4
Ghana: Gov’t adopts cashless payment system http://bit.ly/1c2SFTv
Ukraine Revenues Ministry To Further Influence Operation Of Electronic Payment Systems http://bit.ly/1c2SvLM
ABA report profiles evolving payment system http://bit.ly/1c2Ssji
Visa: security and service integration key to driving mobile money http://bit.ly/1c2SpUq
Ghana: Airtel partners with Total to offer mobile payment for fuel with Airtel Money http://bit.ly/1c2SV4W
Where In The World Is ISIS Wallet? http://bit.ly/10CQlTo
KFC gets payment overhaul from Ingenico http://bit.ly/10CUzKH
NFC & Mobile
Software update - Sony NFC starter kit (free) http://bit.ly/17iBuAC
How NFC-enabled phones can offer frictionless access control experience http://bit.ly/17iAZXl
In Nice, *Connecthings equips more than 200 bike sharing stations with NFC tags http://bit.ly/17fTL1n
Nokia Chat gets NFC sharing http://bit.ly/10w4zWa
Texas Instruments Launches New NFC Devices http://bit.ly/10w3X2F
QR codes win the favor of Apple http://bit.ly/15mciSN
Musemini trio gets NFC pairing http://bit.ly/15mcfqa
Czech firm releases universal NFC ID system http://bit.ly/15mceme
Adidas adds NFC to running shoes http://bit.ly/15mc8Lb
Verizon, Discover Join NFC Forum as Principal Members http://bit.ly/15mc6Da
Think&Go debuts NFC video game http://bit.ly/10CSLkS
Transportation, Ticketing, Access, Security & Loyalty
*Connecthings named Best Product for Intelligent Transport for the City and its people http://bit.ly/1c2T1cT
Mobile ticketing usage to rise rapidly in next 5 years http://bit.ly/11j3bVu
All systems go for Translink card http://bit.ly/11j3dfT
Manchester calls its Oyster card the My Get Me There http://bit.ly/17iBQHq
TransLink on track to launch Compass Card program in fall http://bit.ly/17iBMYe
Sofia: Buy a Metro Ticket through Your Mobile Phone http://bit.ly/17iBIYo
How safe are Paywave cards? http://bit.ly/17iBSzd
UK gov offers passport reader http://bit.ly/10w4K3P
Glasgow is to get its own version of London's famous Oyster card http://bit.ly/1c2SMOR
Other News & Opinion Articles
UK awareness of contactless payments doubles - study http://bit.ly/11j39gm
17% of US small business owners use a smartphone, tablet to accept face-to-face credit card payments http://bit.ly/11j3647
Primary Research by Vantiv Shows New Trends in Omnicommerce http://bit.ly/15mc3Hn
ACI Worldwide Survey: EMV Will Accelerate Adoption of Mobile Technologies http://bit.ly/15mbZHA
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