NFC: fixing a problem we never really had

By in banking, management, mobile, products, security, strategy on Monday, 23 May 2011

I love it when I come across great ideas. Like game changing, eureka moments. But it frustrates me when solutions appear for problems that don’t exist.NFC - a great idea - but what was the problem it fixed?
Take NFC payment systems, for example. A clever use of the tech in our pockets. But who said we had a problem at the cash-out?

We, the consumers don’t. The retailers like the short delay as they get to up-sell. Maybe its the payment system providers who have a problem. Like card fraud?

Here’s the crazy thing about NFC. The security is actually weaker. Much weaker.
NFC presents a far higher risk profile than any other system…

The fear of being last to market

Every now and then a product appears that creates a Tsunami of early adoption. Smartphones – well, Apple’s iPhone – started it. We all had to have one.

We queued outside Apple stores, downloaded apps no one would actually use. Everyone went crazy about this new pocket technology.

Google gave us Android. So now we had more power in our pockets than NASA. This was a bandwagon that was just too good to miss.

The banks are normally the last to get an idea. Any new concept has to benefit them massively before they will consider opening up their wallets to invest in it. Then why has the payment and financial sector jumped in so fast?

Closing the credibility gap

Let’s face it, banking and card companies reputation is shot. We don’t trust them. Smartphones give them a chance to look hip and trendy, to join our pocket party. Look how cool we are – we let you use phones to pay for stuff!

Your bank and card company is desperate to get you to spend your money again. Every penny you spend, they process – and make more money from.

But NFC is not just about grabbing your money when you use your Smartphone. They want your dependence on them by cashing-in on NFC’s cool factor.

Building a prison with technology as the wall

Once you’re tied to a bank account, credit card and NFC, moving will be a pain. The banks will have raised a powerful barrier to any new player.

Now, new players can’t just offer service and value, they’ll need the tech as well. NFC will be very expensive for banks to introduce – too much for a new player.

NFC is both a lock-in for you and a lock-out for new financial providers.

The real betrayal of NFC

Let’s ignore the honey-trap NFC represents for just a moment. Lets talk security. Payment systems have been about finding the cheapest means to carry money. Cards cost pennies – but your Smartphone costs on average over £300.

It makes no sense whatsoever to use a high-value device for small transactions. But why are NFC transactions limited in value?

Because they have no transactional security. Like a wallet, you lose the contents. The banks are keeping the values low to avoid a backlash.

Imagine the stories of people losing all their money when their phones are stolen. NFC wouldn’t look so attractive then, would it?

NFC may look clever – but its a con trick to tie you in. And just think for a moment. D’you really want to wave that nice new Smartphone around in a crowded bar – and will it really be that cool when everyone’s doing it anyway?

Comments are closed.