Everyone knows that the real key to mobile payments adoption is interoperability combined with consumer adoption. So which form of payment seems more interoperable and easy to understand? Although the first generation of mobile wallets and mobile payments relied heavily on NFC chips, the technology and terminal requirements at the point of sale were a major barrier. NFC for the most part was not interoperable with existing POS systems. Combine this with the less than attractive stickers for mobile phones that lack NFC capabilities and you can squash consumer adoption.
Cloud, on the other hand, is familiar to most consumers. Who isn’t using the cloud in one way or another for things like sharing photos, storing documents and keeping in touch with friends? The cloud has already achieved consumer adoption and many businesses are turning to cloud solutions for their enterprise applications. Cloud also has the bigger advantage when it comes to interoperability and lower technology costs at the point of sale.
According to a recent TSYS whitepaper both business models face significant challenges. NFC has the advantage of being backed by major card networks, while cloud offers a significantly lower cost to the merchant. Cynthia Merritt, assistant director of the Retail Payments Risk Forum concluded in her July blog post that, “In the near term, cloud-based solutions will likely disrupt the payments landscape as merchants look to manage their share of the infrastructure investment ..”
It is clear that mobile payments is a huge market and it will likely be served in various ways based on a number of factors including size of payment, location, and type of purchase. The key to making mobile better than traditional payment methods will be the interoperability between various systems and networks.
Source: FRB Atlanta Portals and Rails