Thursday, March 7, 2019
Mobile payments are poised to snag a notable share of POS transactions. Juniper Research projects that mobile payments will total $2 trillion, or 15 percent of the value of POS transactions, globally, by 2020. Most of those transactions, however, will be rung up in Europe, the Far East and China; uptake in the U.S. has been slow.
To date, two models have emerged for mobile payments: one based on Quick Response (QR) code technology and the other using near field communication (NFC) technology. Proponents of QR codes say the technology is readily accessible to potential users since all smartphones and can present and read the codes. The popular Starbucks mobile app uses QR code technology, and eMarketer.com estimates that 23.4 million Americans were using the Starbucks mobile app as of 2018. Other chains with QR code-based mobile apps that support payments include Walmart, Target, CVS and Dunkin Donuts.
NFC apps, on the other hand, are touted as faster, easier and more secure. With an NFC app, customers merely hold their smartphones close to an NFC reader, tag or another smartphone to initiate a transfer of funds. There’s no need to pre-select a payment app or scan a QR code. NFC has some market clout, too, as the various “pays” (Apple Pay, Google Pay and Samsung Pay) all use NFC. According to eMarketing.com, 22 million Americans were using Apple Pay last year; 11.1 million were using Google Pay and 9.9 million were using Samsung Pay.
The NFC Money Transfer Candidate Specification, which is now out for industry review, provides an open framework that makes it easy for payment services providers to map defined data exchanges for QR-based payments to support NFC communication, the NFC Forum explained in a press release.
The specification works between all NFC-enabled devices (for example, smartphones, readers and tags). Once approved in final form, the app specification will be made available to payment systems worldwide. The organization added that the new specification will not compete with other existing solutions, such as open-loop and closed-loop NFC-based payments.
“The NFC Money Transfer Candidate Specification uses the intrinsic benefits of NFC technology – convenience, speed, security and usability – to create a better user experience for payments than QR codes,” said Paula Hunter, executive director of the NFC Forum. “With almost 2 billion NFC-enabled devices in use today, the majority of smartphone users around the world have NFC technology as standard feature in the palm of their hand.”
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