I’ll be straight with you—I’m an NFC skeptic when it comes to its grand arrival. Near Field Communications, that handy wireless technology that beams data from smartphone to point-of-sale hardware when the two are within a few inches of each other, is one of the most hyped technologies today. And this week, PayPal added to the hype.
It presented a demo of a new person-to-person—not person-to-business, mind you—NFC system that enables individuals to beam funds from one PayPal account to another PayPal account when two people come together, touch their PayPal apps a couple times, then bump their phones together. I’d call that interesting, but not earth-shattering. Especially since the system, to be released in the months to come, only works on Samsung Nexus S smartphones (which have NFC chips embedded in them).
The promise of NFC is in retail. When people can wave their smartphones by a point-of-sale terminal and pay for merchandise.
I see studies and opinions flying in and out of my e-mail box every week saying NFC is right around the corner. Oh please. What are these folks thinking? Only a handful of the scores of smartphones on the market today have NFC chips inside. And it sounds like Apple Inc. is backing away from NFC for its soon-to-be-launched iPhone 5. And then there are the merchants. They have to buy and implement point-of-sale terminals that can recognize NFC transmissions. That’s a giant investment for retail chains. Admittedly one they’ll have to make eventually. But the key word there is eventually.
What PayPal did this week was cool. And it indeed is a sneak peek at the future of payments. But beware the hype you’re seeing floating around the Internet. Yes, having PayPal behind NFC payments is key. It’s a big player that can make things move. But those two big obstacles—NFC-equipped smartphones and NFC-equipped POS hardware—loom large.
NFC will get there, no doubt. But one person-to-person transaction on one type of smartphone does not a revolution make.