Filed Under: Money, Payment systems

Never mind the last mile, what about the last millimetre?

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Even the man who invented QR codes says that they are an interim technology. But some of the payment solutions built using them should translate into an NFC/BLE world pretty well.

Here’s a quick payment quiz. Have a guess before you click on the link! Which of the approximately 10,000 new payment solutions that are under development right now works this way:

The system generates a unique QR code that allows a payment to be made, but no customer information or shopping data is passed onto the merchant, and all transaction receipts are kept on the app.

[From Samsung Favors QR Over NFC | PYMNTS.com]

Well, if you guessed “all of them” you’re nearly right, but actually it’s a new payment system from Samsung (who make the S5, amongst other contactless-capable handsets) in Australia (which has a couple of hundred thousand contactless payment terminals in place and the highest retail use of contactless in the world). Why are they doing this? It’s not because QR codes are the best solution — they aren’t — but because better alternatives (NFC and Bluetooth Low Energy) have not been available. But they are now, which makes the Samsung launch rather surprising to me.

Dave Birch & Graffiti-0285

I used to think that I was abnormal because I can’t be bothered to scan QR codes, but it turns out that I’m actually quite mainstream.

In all of the time I’ve had a phone with a camera and an application for reading QR codes, which is quite a long time, I’ve probably used the functionality two, or at a maximum three, times. I wondered if this might be because I am old or because I am lazy or because I am insufficiently inquisitive, but actually it’s because I am normal.

[From A quick response to the problem – Tomorrow’s Transactions]

Whereas I can’t be bothered to run a QE application and scan a code, I’m quite prepared to just tap on something or have something auto-open on my iPhone for me to confirm. Having been involved in quite a few NFC trials, pilots and tests I’m confident in saying that most people are the same. Consumers were perfectly happy to tap to get what they wanted and, as far as I can recall, actually rather liked it. It was the supply chain that didn’t work.

In other words, NFC is great but not yet relevant. This, to be honest, seem like a pretty reasonable assessment of the current situation and contains both good and bad news. The bad news is that the money that the payments industry is spending on NFC will have a much longer payback time than had been hoped. The good news is that we (consumers) end up with something that is simple and quick and secure.

[From Tomorrow’s Transactions]

So, as has been known for some time, this is generally true. When people are given the option of tapping, for example, over scanning then they greatly prefer it. The barrier to NFC in the mass market was never the consumer.

An analysis conducted by NFC specialist Connecthings has found that NFC phone users account for a disproportionate percentage of interactions with its NFC- and QR code-based marketing and information services platform

[From Firm finds NFC users interact more than QR code users • NFC World+]

For these and other reasons (to do with security), I’ve always seen QR codes as an interim solution, something that will let people try out ideas (e.g., Bitcoin wallets) while we wait for something better to come along, but never the mass-market strange attractor for next-generation payments, no matter how much I like LevelUp. And it turns out that the man who invented QR codes agrees.

QR codes have seen a range of improvements through its 20 years, but Hara mentions that he believes that NFC and better image recognition will supplant the QR codes’ role.

[From QR Codes Will Be Gone in Ten Years Says Its Inventor »]

For those already in the QR code space this isn’t particularly bad news in my opinion. Or, at least it isn’t for those who used the right consultants to help them to architect their solutions in the first place… The QR code is simply the “last millimetre” connection between the merchant and the consumer. Almost all of the systems that people have built are not to do with this: so if the last millimetre replaces the QR code with the more convenient NFC/BLE combination, then their solution will be even better and more convenient than it was before. We will certainly be advising our clients to structure their solutions so that that swapping out the last millimetre can be painless and cost-effective.

One thought on “Never mind the last mile, what about the last millimetre?”

  1. media@sekur.me' Jack Bicer says:

    While NFC tap and pay is a great technology, it only applies to a part of mobile payments, the Retail payments. Try tapping your phone on your computer’s screen when you are buying online from Amazon or other eCommerce sites. Not a productive activity, is it?

    If you look at the user experience of paying with your credit card at a retail cash register versus tapping your phone, mobile is perhaps marginally faster or more convenient than the old credit card swipe. I do not see which consumer pain is addressed here. There is no payment friction. But on eCommerce sites, it usually takes 5-11 pages to checkout and pay and takes 3 to 11 minutes to do. We lose 12% of transactions because the process is too slow or too cumbersome. This is where the payment friction is.

    In mCommerce, where purchasers are buying on mobile enabled sites on their smartphones, Google says the shopping cart abandonment rate is a whopping 97%. Who wants to type credit card, billing and shipping info on tiny keyboards? And NFC is no good here either.

    QR codes are great for omni-channel payment experience, i.e. the same user experience whether you are paying online, offline or retail. NFC can not match the reach of QR codes.

    While many have had less than pleasant experience with QR codes as they are sometimes hard to scan, especially with older smartphones, good engineering can go a long way in changing perceptions. Just watch some the videos on http://www.sekur.me. You’ll see the fastest scanning QR codes in the business. You can checkout and pay in under 10 seconds, without entering any information. This is how you can solve the payment friction problem and QR codes are the best solution, not NFC.

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