NFC in 2011: Who’s Building Your Mobile Wallet?
NFC, or near field communication, is an emerging technology you’ll start hearing more about in the coming months. In this introductory series to understanding NFC, we’re examining the state of the industry from end-to-end, and we’ll focus on what the technology is, who’s implementing NFC-enabled solutions and how those solutions will work.
One of the future use cases for NFC is to create a “mobile wallet” of sorts – a comprehensive service which houses everything from bank cards to coupons, all managed, accessed and delivered via your mobile phone. But what companies are building mobile wallet solutions today and whose mobile wallet will you use?
This is the second post in a series on NFC here on ReadWriteMobile which will serve to get you up to speed on what NFC is, what notable developments are underway and what commercial programs using NFC will arrive this year. You can follow this series by clicking the tag (or bookmarking the tag) “NFC 2011.”
Before we could begin talking about NFC developments, advances and upcoming commercial programs in specific, we first had to get you up to speed with what exactly NFC is. The first post in the series is the best starting point for those unfamiliar with the technology. In the post below, we’ll examine the different types of mobile wallet initiatives that will use NFC.
How Can a Phone Replace a Wallet?
When you think about a technology designed to replace your actual wallet – you know, the beat up leather-bound bill holder containing cash, credit and debit cards, paper receipts, coupons and discount cards - you begin to realize what a complex undertaking it is for any one company to deliver a complete solution.
A credit card company like Visa may team up with your bank to offer you a way to use your mobile phone as a replacement for a single plastic credit card, but it’s only one piece of the pie. What about the coupons? What about your loyalty cards? What about the rest of your credit and debit cards from other banks?
At present, Apple, Google and other mobile platform providers are likely working on a comprehensive mobile wallet solution for consumers, but they lack experience in some areas where financial services companies excel – providing customer support for issues like the proper handling of chargebacks, understanding the relevant regulations that apply to the industry, implementing the necessary level of security that must be involved when processing transactions from a host of merchants and hundreds of thousands of customers through a large worldwide network built for transactions, and other concerns.
Given these challenges, it’s not a sure thing that your preferred mobile wallet provider will be the one Google or Apple or another mobile platform provider creates – it may be a service from your mobile carrier (for example, here in the U.S., Verizon, Sprint, T-Mobile or AT&T).
A third possibility is that your bank itself ships some type of complete mobile wallet system as a part of their mobile banking/mobile payments product. In this mobile wallet, other third-party services could complement the bank-provided, NFC-enabled debit and credit “cards” you use on your NFC-enabled mobile phone. (Not actual plastic credit cards, but digital ones, stored on your device).
There’s no real answer to the question about who will be the dominant mobile wallet provider, not only because these services have not yet launched (or are just now doing so), but because when they inevitably do, there’s no way to foretell which service consumers will actually prefer.
To begin our overview of mobile wallet, we’re going to look at three different types of players, which we will break down into three categories we’ll call the apps vs. the operators vs. the banks. But first, let’s examine what a mobile wallet actually is first.
But What Is a Mobile Wallet?
A mobile wallet, or an e-Wallet (or in Apple’s case, an iWallet!), is not just a smartphone application that you download from an app store. To the end user, there may be an icon on their homescreen that launches the user interface to your mobile wallet, but that is only a part of the overall solution. The complete mobile wallet solution actually consists of both the user interface itself and the secure element chip on the phone where your personal data (your credit card number, passport ID, shopping history, coupons, etc.) is stored. The user interface allows you to interact with NFC applications and with the secure data stored on the secure element on your device. A third part of the solution is the antenna, which is the piece that makes the near field communication possible.
It’s the secure element on the phone that’s the most important part to the mobile wallet, though, and it’s why the wallet isn’t just “another app.” Sarah Clark, an editor for NFC industry trade publication NFC World, describes the secure element like so: “[it] acts like an electronic version of your wallet and can be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys, coupons and even cash.”
This secure chip, she explains, “can be built into mobile phones and other devices by the manufacturer, they can be integrated into SIM cards issued by mobile networks to their subscribers and they can be added to existing phones via special microSD cards or stickers issued by banks and other organizations.”
Your mobile wallet will likely arrive empty, she says, just like a regular wallet does. You will fill it with whatever services you want.
Next Page: Mobile Wallet Solutions from Mobile Platform Providers