Though they are optimistic that near-field-communication mobile payments can make a splash in the United States, industry executives disagree on whether consumers want to carry phones with the technology.
At a Federal Reserve Bank of Chicago payments conference last week, Wences Casares, co-chief executive of the mobile payments company Bling Nation Ltd., said there is pent-up consumer and merchant demand for NFC.
Others are not so sure consumers are ready for the technology upgrade.
"Consumers in the U.S. don't see a burning need for it," said Jeff Semenchuk, the head of growth ventures at Citigroup Inc.
"They want it but are not clamoring for it," he said.
Consumers in other countries, however, appear to be welcoming the change.
Citi had success with an NFC trial last year in India, Semenchuk said.
The test involved about 5,000 consumers with Nokia 6212 phones that could make contactless purchases at approximately 400 merchants.
Two months into the trial, around 800 participants had made six or more purchases using the phone, according to Citi.
Nearly all consumers made at least one purchase. The trial ended in December.
"It was also a business-model trial," Semenchuk said.
NFC's primary drawback has been how the card brands, issuers, mobile operators and handset manufacturers divvy up transaction revenue.
"For all the partners that were involved in this trial, we all made more money," Semenchuk said.
Besides the lack of a fluid business model, handset manufacturers need to make more NFC-enabled phones, he said.
Until then, U.S. payment companies will continue to find ways around the technology.
Bling Nation, of Palo Alto, Calif., has accomplished that by using contactless-payment stickers consumers may affix to mobile phones as a way to bridge the gap to NFC.
Banks associated with Bling issue the sticker, which consumers may use to initiate debit purchases.
Despite Bling's moderate success with several community banks nationwide, Casares still touts the advantage NFC chips bring to phones.
"Nothing increases the functionality of a phone like having a chip in the phone to pay," he said.
Unlike basic contactless technology, NFC supports two-way communications with other NFC chips to accommodate coupon downloads and other functions using smart phones.
NFC should reduce fraud, and that may help increase adoption in the United States, said Paul Tomasofsky, the president and executive director of the Secure Remote Payment Council.
Indeed, NFC transactions would be much safer than magnetic stripe cards, Semenchuk said.
"We need to do a better job of promoting the security" of NFC payments, he said.
