But the main challenge to implementation is acceptance, according to Ashim Banerjee, Chief Information Officer at TSYS Acquiring Solutions. He stressed that to gain universal acceptance, the near field communication (NFC) technology that facilitates proximity payments at the POS in brick-and-mortar retail environments must be integrated into the existing electronic payment infrastructure.
And key to integration is that merchants not be required to upgrade software and POS hardware devices, he said. That goal dovetails with consumers' demand for convenience. "Near-field commerce and all those things are very nice, but unless they are accepted everywhere credit card payments are accepted, they are virtually useless," he stated.
According to Banerjee, if cardholders can only use mobile phones to pay in some brick-and-mortar stores and not in others, the purpose of NFC-enabled mobile payments is defeated.
For Teppo Paavola, Vice President, Corporate Business Development at Nokia, convenience also means speed. "Near field communication is one way of actually getting the transaction to happen faster than with cash or card," he said. "And if it's not faster or some other way more convenient, I don't think it's going to go global."
While Paavola believes mobile payments will eventually become commonplace, he predicts NFC-enabled contactless payments will take longer to implement than other types of m-payments.
Only approximately 3 or 4 percent of merchant locations presently accept contactless payments, according to Chris Britt, Chief Product Officer at Green Dot Corp. But that is not a hindrance to the prepaid card distributor and processor, because its targeted customer base, the unbanked, are usually not NFC-enabled smart phone users, Britt said. Instead, the unbanked rely on prepaid cell phones with minimal functionality beyond telecommunication.
"So keeping the services really basic, simple, reliable is where we're focused," Britt added. "And I think largely the services are around information and providing consumers with another way to gain access to that information rather than supporting payments at the point of sale."
Banerjee said TSYS, one of the largest prepaid card processors, is expanding into mobile payments. Banerjee broke down online consumer purchasing behavior into four steps. Consumers first research potential purchases, select certain ones, discuss them with friends and colleagues at places like social media sites, and then make purchasing decisions.
"All of this is done fairly seamlessly on the Web, but not so seamlessly in the brick and mortar," Banerjee said. "The whole point is how well you create applications to enable consumers to migrate seamlessly between the Web and the brick and mortar is what we believe consumers have been asking us for."
But Paavola pointed out that in the developing world, the value proposition for consumers is different. "For most of the world it is basically getting the basic services that they don't get today," he said. "So it is moving from cash and jumping over the card and straight to a mobile device, which is rather logical and cheaper."
Ed Braswell, Chief Executive Officer at edo Interactive Inc. and moderator of the panel, summed up the discussion with a look ahead. "I think the world is changing; we're all affected by it," he said. "But in the end I think these are real interesting consumer applications that drive real value and provide an element of stickiness for the applications."
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