Subway's Support of Softcard, Apple Pay a Big Boost for NFC Wallets

Subway's substantial support of the telco-led Softcard mobile wallet and the recently unveiled Apple Pay,  which both use Near Field Communication for payments, is a sign that the technology's interoperability is paying off in larger deployments. 

Subway and Softcard plan to launch NFC-based mobile payments nationally on Oct. 1, covering 26,000 locations in one of the largest NFC deployments to date. Over the next few months, Subway will add the Subway Card Rewards Program to the Softcard app, enabling customers  to use SmartTap—a Softcard protocol that adds commerce data to NFC transactions—to present rewards at the point of sale.

For Softcard, which had to dump its original name, Isis, following a branding crisis that was beyond its control, the Subway initiative is a major win.

"This gives consumers thousands of 'everyday spend' places to use their phone," said Jaymee Johnson, head of marketing for Softcard, which is owned by T-Mobile, AT&T and Verizon Wireless.

The national launch is an extension of a partnership between Softcard and Subway that began in 2013 and included a pilot in Salt Lake City. The companies are offering a promotion of $1 off for Softcard transactions of more than $1 through the end of the year if those transactions are funded with the American Express Serve prepaid card.

Subway's deployment of Softcard and Apple Pay also suggest NFC stands a chance of becoming mainstream. NFC payments can co-exist with other mobile payment technology, such as the could-based system technology that Subway deployed earlier with Paydiant. Subway, which did not provide comment on the deployment by deadline, has also worked with Google.

"Over the past two or three weeks there has been a consolidation down to a single interoperable platform that is a global standard around NFC, and that will benefit everyone in the ecosystem because it gives them confidence in deployment decisions," Johnson said.

Apple's long-awaited addition of NFC in the upcoming iPhone 6 and iPhone 6 Plus is seen as a catalyst for mobile wallet adoption because the same NFC merchant terminals will accept payments from other systems such as Google Wallet and Softcard.

"The story is more about the synergies between the Apple, Softcard and Google Wallet," said Rick Oglesby, a senior analyst and consultant at Double Diamond Payments Research, who added it would be difficult for a merchant to support one of these mobile wallets without also supporting the others. "Because the technology used by the three companies is highly compatible, a merchant is no longer thinking about implementing one of the solutions, but rather the merchant is deciding about whether to implement all three."

Because Subway already supported other mobile payment systems, its participation with newer wallets is not necessarily a sign that mobile payments are winning the interest of more merchants, Oglesby said. Also, the Merchant Customer Exchange, which is developing a software-based mobile wallet, has urged its members to wait for its wallet to finish development rather than sign on with an existing product.

"The bigger question is whether Apple's entry into the ecosystem will entice new merchants, and especially MCX merchants, to now adopt NFC wallets," he said. "If that does happen, we'll likely see the acquiring community jump on board, offering NFC packages to enable all three wallets simultaneously alongside EMV upgrades so acceptance could potentially snowball quickly."

Johnson expressed confidence that NFC is building momentum among merchants, largely because of the diversity of options.

"Mobile has been in its infancy because there really hasn't been a standard out there," Johnson said. "People now don't have to pick a winner. They can make a tech investment that is interoperable and is future proof."