London Underground minimum performance not meet by Mobile Wallet.
We have been waiting for NFC payments to take hold this year with smart phones. Last year, estimates had them taking off by the middle of the year here in the US as more smart phones had the NFC capabilities included. The Galaxy S3 from Verizon does not have Google Wallet as Verizon is working on their own implementation for NFC payments. All of this makes one wonder how much longer it is going to be before things get organized and there is widespread usage of NFC payments. So, here we are past the mid-point in 2012 and we are not hearing much about wide scale adopting of NFC payments.
What is the problem? Is this a Fragmentation problem because of all the competing groups and methods for processing payments? It could be, but there may be some other problems involved with getting things implemented. Things for the future are looking better, but that is still in the future. Recent discussions at the TechCrunch Disrupt New York event had people talking about the future.
“NFC is coming. It’s a wave,” he said. “But there are a lot of hitches in use cases. People can get a discount from an ad. That’s much more simple. But when NFC is in an environment where where 2 seconds make or break the transaction at the merchant level, there are still issues that need to be overcome.” In other words, while NFC sounds like the future of mobile payments, and probably is the future of mobile payments, don’t throw out your credit cards just yet.
And it is that 2 seconds for make or break which seems to have it be a breaking for the future of NFC for some. With the coming Olympics in London, there was a lot of hope for taking advantage of NFC payments there. But, one group has decided to not use NFC payments. In the London Underground, which is often referred to as “The Tube”, they have set the acceptable threshold of processing an NFC transaction at 500 milliseconds. Anything longer than that will slow the movement of people through the payment gates.
And it is because it takes longer than 500 milliseconds to process the mobile payment, they have decided to not use NFC payments in the London Underground. This is a big deal and points out some of the problems with the NFC processing of payments. People expect to Tap and Go, but with NFC, it has turned into Tap, Hold and then Go. The end result is that it slows the process down when you are trying to move large volumes of people.
In the case of the coming Olympics in London, anything that impedes the rapid flow of people onto the rails is not acceptable. And it is those kinds of things which appear to be slowing the acceptance of NFC payments for things like mass transit. There needs to be significant improvement in the process to gain wider acceptance.
If you have to do more than “Tap and Go” to make purchases, people are going to look at alternatives. People may use NFC to purchase a card which has amounts added to it to make purchases. And that is because the “Tap and Go” features currently work best with a card. That is what the London Underground is relying on for their Oyster payment card, which is widely used in the London Underground. Until NFC can break the 500 millisecond barrier, acceptance and usage is going to slower than some had hoped.