Chief among the questions underlying developers' diverse mobile payments strategies is the future of Near Field Communication. It's a topic hotly debated throughout the industry, including at the National Retail Federation's annual convention in New York.
Some prominent mobile wallets today rely on NFC as the primary method of making payments. These include the mobile carriers' Isis venture and Google's mobile wallet. Others, such as PayPal, consider NFC optional. The mega-retailers' Merchant Customer Exchange (MCX) venture, which has yet to release a product, promises a software-based alternative to NFC, storing card data in the cloud and using bar codes to conduct transactions.
MCX will start with a cloud-based wallet that uses bar codes, says Dodd Roberts, an executive with the MCX venture. He argued that NFC-equipped phones aren't widespread enough for the standard to gain traction right now.
"Bar code is a technology that any smartphone and that most merchants can handle today," he said.
"MCX wants consumers to be able to use the smartphone they have today," he said. However, he added that "we will definitely build it so that as technology evolves, no matter how long it takes, we will be able to shift as necessary."
Regardless of their approach, each company is pushing to make its system ubiquitous as fast as the underlying technology will allow it.
For Donald Kingsborough, PayPal's vice president of retail and prepaid products, ubiquity means the vast number of online — and now increasingly, physical — merchants that accept PayPal, while Isis Chief Sales Officer Jim Stapleton points to the more than 20 NFC-equipped smartphones that now support the mobile carriers' wallet.
Roberts says mobile payments ubiquity can be built with a powerful consortium of retailers working toward a common technology. And Craig Vosburg, MasterCard group executive of U.S. market development, sees the same in the 34 million merchants that accept MasterCard around the globe.
Vosburg emphasized the more than 100 million NFC smartphones that consumers have snapped up and the parallels that exist between the credentials provided by traditional plastic cards and NFC-based mobile wallets, not to mention its usefulness in future card products.
"NFC is a good technology to support payments because of its compatibility with existing cards," he said, adding that "NFC includes support for two-way communication, which is important for EMV." The card networks are pushing most U.S. merchants to accept the EMV standard by October 2015.
Stapleton touted NFC's uses outside of payments as an attribute that will help build adoption, as well as the enhanced security features that NFC can offer. In addition to its two-city pilot in Austin, Texas and Salt Lake City, Isis will soon offer its mobile wallet to iPhone users with an NFC-equipped smartphone case.
"The benefit around NFC is security," he said. "What we heard from consumers when we presented the idea to them is they resonate positively with convenience, savings and security."
Stapleton described the Isis wallet as a digital representation of consumers' physical wallets that provides them another option to securely maintain their existing card accounts.
"We're really leveraging the existing infrastructure and standards," he said, adding that another benefit for consumers is that "if they change phones, their wallet moves with them."
Echoing the sentiment of PayPal President David Marcus — who wrote in a December blog post that "the NFC payments debate will slowly die in 2013" — Kingsborough said many retailers don't want to invest in NFC because they don't trust that it will become a long-lasting standard like magstripe cards, making it difficult for NFC to take hold in consumers' everyday life.
"It's only when they don't have to think about where they have to go to use your product that they've integrated it into your everyday life," he said.