Enrique posted his slides about “NFC in Mobile Commerce” from the Texas Wireless Summit. It’s an excellent overview of the technologies, but what I’m always more concerned about is the backend billing infrastructure. How are the transactions going to be cleared through to the end user account?
Is the carrier going to expose their billing relationship out through the NFC transactions? If we base the expected charges on “how valuable the carrier relationships with their customer” is we can expect a what? 30 percent cut for the carrier? Maybe 25? What convinces the carriers in this case that they should invest in a new set of infrastructure with a non-trivial amount of risk when they can just sit on their current monopoly? Also, I’ve got absolutely no knoweldge of economics or consumer behavior and stuff like that, but does this mean that the carrier would have to start extending additional lines of credit if we want these things to act like credit cards? Or can you bundle the account with a credit card easily enough that it would seem transparent to the end user? Cause that’s what we would need for mass adoption. I need to be able to walk into either my bank OR my carrier and say I would like a new credit card and walk out with a phone that works for NFC payments.
Or are the credit card companies the ones who end up clearing transactions for this stuff? It would seem like the carriers would be unwilling to allow that to happen across their network without someone allowing them to wet their beaks a bit. So will NFC transactions bear a higher cost to complete than the existing card based transactions? Who’s going to bear that cost? The credit card company? Why would they go through all the trouble to get NFC rolled out just to migrate transactions from a higher margin line to a lower margin line? One would assume they would start to capture more transactions, things done with cash today would be done with NFC tomorrow, and the credit card provider would get incremental revenue from their expanded role.
But money doesn’t get instantiated from nothing in either case, where does that money come from? Aren’t we really talking about sucking additional money out of the consumer in the name of a convenience they might just be mentally detaching from the actual cost? Ask them if they want to pay with stuff using their cell phone and I’m sure they’ll say yes. Ask them if they want to bear an average of 5 percent increase in their spending for the same goods in order to use their cellphone I’m not sure all of them would still say yes. The possible source of the funds would be in fraud prevention. If a handset based instead of a card based authentication mechanism would reduce credit card fraud by 20%, and the cost of deploying and running the service amounted to 15% of fraud loss, we would have something besides a zero sum game going on. But I haven’t seen any meaningful discourse on that yet.
I’m very much down with using tags/barcodes to extending URLs into the real world by associating physical items with online resources. No argument for that happening right away and all over. I’m also very much down with the mobile becoming the major source of transactions in the long run. Korea and Japan have proven that the model works. But any system like this isn’t run in isolation. When you’re booting up a payment system from first principles with very little existing infrastructure and almost no entrenched players it’s much different than revolutionizing an existing system, even if it is an antiquated and broken system. I see it being a while before I’m able to pay for most of what I do using my phone, even as an early adopter in the US.
and feel like trying out Team Fortress 2 without a bunch of whining 12 year olds complaining about what shots you should have taken but didn’t, send me a message (my gamertag is 
