Down the Tubes - Ten Years of NFC

Unfortunately, this future has failed to materialise. When I'm commuting home tonight, I'll pass by more than a handful of retailers. And, to the best of my knowledge, only one of them, a purveyor of ready-to-eat sarnies, accepts contactless cards.

Remember the guy commuting by waterslide to a soundtrack of the laid back country rock of the Bellamy Brothers' "Just Let Your Love Flow"? He swooshed through supermarkets and shops and every time he wanted to pay for something he tapped his Barclaycard on a reader and off he went on his aquatic way with his no doubt soggy groceries.

What a marvel! Paying with card without your PIN? Tapping to pay? That's the future right there!

Unfortunately, this future has failed to materialise. When I'm commuting home tonight, I'll pass by more than a handful of retailers. And, to the best of my knowledge, only one of them, a purveyor of ready-to-eat sarnies, accepts contactless cards.

NFC is being positioned by the payments industry as the next step. No longer do you need a card. Your wallet is your phone. Touch your phone to the reader and pay.

The problem is that NFC isn't really new. On the 8th of December NFC had its 10th birthday. And despite all the money invested in both the technology and its promotion it has simply failed to take off. We were promised waterslides with phones!

Why has the tech failed to take off?

There are two key reasons and they both come down to a fundamental failure in communication.

For consumers, it's been a FinTech fraught with security worries and breaches. Financial security is a hygiene factor for consumers. They expect their transactions to be secure. NFC technology is, actually, pretty secure and it's certainly safer than having a wallet full of cash. But, it doesn't seem safe. It doesn't have that extra security layer of a PIN and consumers are suspicious.

NFC's reputation was damaged by contactless cards being compromised - people lost money, sometimes by accident, sometimes by design. How can NFC take off when its less cool parent is accused of not being secure. When contactless and NFC are pushed as safe ways to pay, every hacker and investigative journalist worth their salt thinks "Oh really? We'll see about that!"

From tabloid investigations to academic challenges, the security of proximity payments has been under constant scrutiny and attack since day one.

The payment industry has been on the back foot since day one and haven't been proactive enough in its communication to silence the doubters. This is a real shame as the technology has genuine utility and is a step forward for payments in many ways.

The other side of the FinTech coin is retail. The UK Cards Association has a list of retailers who accept contactless and NFC payments and, at first glance, there are some impressive high street names on there. But, looking at it further shows that the majority are food outlets. There's not much in the way of major retailers or supermarkets.

Therein lies the problem. Earlier this year, Tesco dismissed NFC as out of date and with no added value for retailers. The retail giant also delivered the FinTech kiss of death by referring to it as "un-cool".

The UK cards industry was never able to successfully communicate to retailers the benefits of NFC technology and so the big guns didn't adopt. Retailers had already invested in ways to pay such as Chip and PIN. Despite this, when queues put off customers, surely retailers still want to act?

NFC was banking on retailers being willing to invest to speed up queues. And they did invest. Unfortunately for NFC it was in self-service check outs and not NFC terminals.

This inability to convince retailers that NFC could speed up transactions and increase customer satisfaction could be considered its death knell.

Or is it?

There is one area, though, which gives NFC hope; public transport.

In late 2012, Transport for London unveiled NFC for buses; NFC cards could be used as Oyster cards on the Oyster reader on buses. Forgot your Oyster? Ran out of credit? Don't worry; just use your contactless card.

It's been such a success that it's due to be rolled out on the Tube network in 2014. After ten years of looking for a suitable home for NFC, it looks like it's finally found one. It's the perfect vehicle for a quick, small payment facilitator such as NFC. This could just be the beginning as the technology is rolled out across other public transport operators in the UK.

So, while NFC hasn't got me a waterslide to get home on, it will, very soon, get me home on the Tube. Ten years after the NFC standard was agreed we are only now starting to see its real potential.

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