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Most NFC mobile wallet talk is 'half-baked,' analyst says

Matt Hamblen | April 6, 2011
Sprint's entry into the mobile wallet technology space could be as early as this year, according to a Sprint executive.

Holland said some mainstream press reports have often quoted anonymous sources about NFC projects in the U.S., further casting doubt on how quickly the various players will roll out the technology. Sometimes executives will provide anonymous comments in the press to stimulate interest in their stock's price or technology, other analysts noted.

"News reports on Apple and Google and others in NFC are often a lot of conjecture," Holland said, as the various parties jockey to set up a mobile payment system that will be widespread in the U.S. "These companies are just making land grabs."

The biggest drawback with mobile payments in the U.S. is not that smartphones can't easily have NFC chips installed, but that retailers have to agree to install new NFC reader terminals. Also, banks and credit card companies have to agree on sharing fees applied to any purchases.

Holland and others noted that even though there are 150,000 contactless NFC retail terminals running in the U.S., they are several years old and probably need to be replaced to include the technology needed to provide information on customer-buying habits to retailers and advertisers.

"The older terminals are not versatile enough for couponing or loyalty programs," Holland said, meaning retailers might be asked to pay thousands of dollars apiece to install newer intelligent terminals unless Sprint or another party pays for the terminals.

"The fact that mobile operators in the U.S. are making bold announcements of bringing out NFC payments is all well and good, but retailer acceptance is what matters," Holland added. "The announcements by Sprint and Isis seem very half-baked at this point."

Egan agreed. "If Sprint is going to move the needle on NFC, it needs to partner with a large issuing bank and get some major retailers on the hook," Egan said. "Otherwise, it's just another science experiment."

Analysts have also noted that to succeed, Isis needs payment networks such as Visa and MasterCard to join its venture.

If a variety of mobile payment providers come forward with separate payment services for use with NFC-capable smartphones, Holland said it will be possible that a single terminal will need to be programmed to recognize different services or even that multiple terminals might need to be installed in a single retail location.

"We're generally lacking a lot of detail in the talk of NFC, and it's not enough to say that putting NFC handsets in the market will make mobile payments happen," Holland said.

 

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