NFC – A step closer

The biometric craze is here but the place to invest is NFC

• I have long believed that there are two barriers to the take-off of NFC and mobile based payments.
  • First:  Device security. Using devices as wallets remains hideously limited at the moment because device security is so poor.
  • The advent of isometric sensors in devices looks set to change a lot of that.
  • Second: NFC is a horribly fragmented standard meaning that many devices won’t work with many touch points.
  • Hence the dream of NFC taking over the world remains just that; a dream.
• Last year Apple purchased AuthenTec, a finger print sensor maker, for $350m fuelling speculation (including my own) that it would release a product including this component.
• Since that acquisition, the rest of the biometric world has gone ballistic making investment in this theme a very dangerous game.
• It now looks like Apple will be including a fingerprint sensor in its next iPhone.
• This is important because it means that everyone else will have to follow suit.
• This effectively removes one of the big hurdles to the take-off of NFC and mobile based payments.
• At the moment one can pay with NFC but unless it’s a very small transaction, (like a metro fare) one also has to enter a PIN code.
• This completely destroys the use case for NFC bases mobile payments and users just can’t be bothered.
• With a fingerprint sensor, the user authenticates every time he unlocks the phone, meaning that NFC can be used for much larger transactions and the use case really is; touch and go.
• If Apple also includes NFC in its devices, that too, would be give a lift to NFC, but at the moment this looks less likely to happen imminently.
• This would effectively leave the standardisation problem as the only remaining hurdle.
• While demand outside of travel cards has been pretty muted, there has not been much incentive to solve this problem.
• Hopefully, with better visibility on demand, the NFC industry will realise that it is only harming itself and will get together to create a working standard.
• This is one of the few cases where openness and interoperability is likely to result in a much greater opportunity for all the players.
• From an investment standpoint, I would argue that instead of losing one’s shirt in playing the biometric game, look slightly ahead and take a look at the lateral play; NFC.