The mass adoption of smartphones and tablets has set the stage for a move away from fixed-point, card-based transactions and toward those completed on mobile. The old dream of the “digital wallet” is coming true in a very particular mobile-led fashion. With more than $3.95 trillion of non-cash transaction volume recorded in the U.S. alone in 2011, the stakes are high in this space.
At BI Intelligence we argued seven months ago that attachable credit card readers and their companion mobile apps would become the most widely adopted mobile payment technologies. The main rival technology is called Near-field Communications (NFC).
In a recent report from BI Intelligence, we analyse the state of the mobile payments race, explain the main types of mobile payments, and examine the matchup between card readers and NFC. We also look at how traditional banks, credit card companies, and card processors are responding to the mobile payments threat, and detail who is furthest along in developing the all-in-one solution for merchants and consumers.
Take a look at the breakdown of card readers and NFC, head-to head:
Card readers: have gained traction because they allow small merchants to transform smartphones or tablets into payment registers by attaching a plastic credit card reader into the device’s audio jack. The readers are complemented by merchant-side apps and credit card processing services. Building on their success, the leading providers of these readers, Square and PayPal, are working to popularise companion consumer-facing payment apps.
NFC solutions: like “Google Wallet” allow people to pay for products at retail stores by simply waving or tapping an NFC-enabled phone at a register, but it requires that merchants adopt NFC-ready hardware, and that phones carry an NFC chip.
While the mobile payments race is far from decided, card readers certainly seem far ahead in the mobile payments race. The iPhone line has not adopted NFC, and only if and when that happens will NFC have a shot at really posing a threat to card readers.