Are Card Readers the Future of Mobile

Payments?

Will attachable credit card readers and their companion mobile apps would become the most widely adopted mobile payment technologies in future or the main rival technology, Near-field Communications (NFC)?

According to a recent Mobile payment report from Business Intelligence, which examined the main types of mobile payments, analyzed the state of the mobile payments race, examined the matchup between card readers and near-field communications (NFC), looked at how traditional banks, credit card companies, and card processors are responding to the mobile payments threat, and detailed who is furthest along in developing the all-in-one solution for merchants and consumers, Credit card readers have better chances of Winning the battle.

Where  things  currently  stand?

Near  Field  Communica0on,  also  known  as  NFC,  is  a  set  of  standards  for  smartphones,  credit  cards,  and  similar  devices,   to  communicate  with  similar  devices  by  bringing  them  close   to  each   other.   Nokia   ,   Blackberry,   Samsung,  MicrosoA,   and   Google   (but   not   Apple)   have   all  been  suppor0ng  the  technology  in  their  opera0ng  systems  for  over  a  year  and  a  variety  of  devices  have  entered  the  market  with  the  appropriate  equipment  in  place.  Meanwhile,  the  biggest  players  in  the  credit   card  business  (Mastercard,  Visa,  American  Express)  and  some  of   the   largest   banks   and   payment   services   in   America   (Bank   of  America,   Ci0bank,  Wells  Fargo,  HSBC,  Paypal)  have  rolled  out  some  version  of  technology  across  their  infrastructure.  And  telecommunica0on  companies  like  AT&T,  Verizon,  and  T-­‐mobile  have  all  sworn  to  offer  services  in  2010.

But   s0ll   it   hasn’t   took  off.  Meanwhile,   companies   like   LevelUp  and  Square   are   increasing  their  footprints  in  the  phone  payment  space,  reducing  the  chances  that  NFC  could  take  off  as  a  form  of  payment  via  mobile  phones.

What  is  current  state  of  Mobile  payments?

Mobile   payments   adop8on   is   s8ll   very   low:   As   of   year-­‐end   2012,   only   7.9   million   U.S.  consumers   (less   than  90  percent  of  the  total)  had  adopted  a  consumer-­‐facing  NFC-­‐compa0ble  system   like   "Google   Wallet,"   or   apps   that   use   QR   codes   or   other   methods   to   generate   a  payment.  

In-­‐store  mobile  payments  are  growing  quickly:   It  almost  quadrupled  last  year.  eMarketer  has  es0mated  in-­‐store  mobile  payments  as  adding  up  to  $640  million  in  transac0on  volume  in  the  U.S.,  up  from  $170  million  in  2011.  Though,  this  figure  does  not  include  swipes  on  mobile  credit  card  readers  like  Square  and  PayPal  Here,  only  consumer-­‐side  mobile  payments.

Card  readers  are  really  scaling  up  swi@ly:  Square's  mobile  payments  volume  rose  to  $10  billion  in  2012,  up  from  $2  billion  in  2011.  Starbucks  is  switching  its  credit  and  debit  card  processing  to  Square,   and   as   of   January   2013   accepts   the   "Square   Wallet"   app   at   7,000   loca0ons.   The  Starbucks  alliance  with  Square  is  evidence  of  how  the  card  reader-­‐based  approach  has  already  worked  its  way  deep  into  the  U.S.  consumer  economy.

What  is  current  state  of  Mobile  payments?Mobile   commerce   is   also   helping   explosive   growth   of  Mobile   payments:   PayPal   processed  around  $14  billion  in  mobile  payments  last  year,  which  confirms  the  fact  that  mobile  is  catching  on  as   a   transac0onal  plaform.  PayPal  hopes   to  build  a  merchant-­‐powered  network  based  on  the  ubiquity  of  PayPal  as  a  payment  and  money  transfer  plaform.  PayPal  users  are  already  able  to  pay   at   thousands   of   tradi0onal   stores   by   keying   in   their  mobile   number   and  a  PayPal  PIN  selected  online  (or  in  their  PayPal  app).  

Comparing  NFC  and  Card  Readers

Comparing  NFC  and  Card  Readers

ConclusionThough   it   remains   to   be   seen   who   will   win   the   bagle,   but   as   one   can   easily   see   in   the  comparison,  card  readers  are  currently  winning  on  4  out  of  5  important  areas.  

Credit  card  readers  have  gained  trac0on  because  they  allow  small  merchants  to  easily  transform  smartphones  or  tablets  into  payment  registers  by  agaching  a  plas0c  credit  card  reader  into  the  device's  audio  jack,  while  NFC  solu0ons  though  allow  people  to  pay  for  products  at  retail  stores  by   simply   waving   or   tapping   an   NFC-­‐enabled   phone   at   a   register,   it   requires   that  merchants  adopt  NFC-­‐ready  hardware,  and  that  phones  carry  an  NFC  chip.

Mobile  payments  future  will  also  be  depending  on  Apple,  as  the  iPhone  line  has  not  yet  adopted  NFC,  and  only   if   and  when  that  happens  will  NFC  have  a  shot  at   really  posing   a  threat   to  card  readers.    Otherwise  Credit  card  readers  will  further  improve  their  chances  of  winning  the  mobile  payment  bagle

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Credits:  hgp://www.businessinsider.com  |  www.forbes.com