PayPal: “NFC will fail to gain mass adoption”

PayPal president David Marcus
MARCUS: “The NFC payments debate will slowly die in 2013”

In a blog post entitled “Looking Ahead to 2013”, PayPal president David Marcus sets out his “thought starters, perhaps predictions, for 2013” — and at the top of the four-point list is “NFC will fail to gain mass adoption”.

“The NFC payments debate will slowly die in 2013,” he writes. “Is tapping a phone on a terminal any easier than swiping a credit card? I don’t think so – it’s not solving a real consumer problem and its not providing additional value to encourage me (or anyone else for that matter) to change my behavior.”

Other key trends for 2013, says Marcus, will be: The payments, loyalty and coupons businesses will merge, the cash register will go mobile and the emergence of new experiences that go beyond check-in.

• A 42-page market briefing for The Mobile Wallet Report, published today, takes an in-depth look at PayPal’s digital wallet and in-store payments plans. Mobile Wallet Market Briefing: PayPal analyses the strengths of PayPal’s technical armoury, its vision for a digital wallet in the cloud, its ability to scale at speed and the likelihood of it gaining widespread consumer and merchant acceptance — as well as the possible reasons why PayPal is so negative about the prospects of NFC.

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13 comments on this article

  1. Is this guy serious? I hate typing my PIN or having to sign for something. Plus carrying my wallet around is becoming increasingly annoying.
    I think his stance on this is due to his financial status, it may not make sense for his lifestyle but I could make 10 payments via NFC a day.

  2. “The NFC payments debate will slowly die in 2013”

    Less a confident prediction, more a fervent wish, I suspect.

  3. “PayPal’s President Predictions for 2013”

    “NFC will fail to gain mass adoption” …
    Dream on David Marcus (Marcus can’t be seen to be out of step with his boss “Not For Commerce” Donahoe). Regardless, NFC already has gained mass adoption in Australia and Europe; then, maybe Mr Marcus is only dreaming about the US market; regardless, Visa and MasterCard, with 90% of the payment processing business between them compared to PreyPal’s 1%, will drive the adoption of NFC in the US—regardless of what the clunky PreyPal thinks …

    “The payments, loyalty and coupons businesses will merge” …
    Seriously, and who cares about loyalty and coupons anyway …

    “The cash register will go mobile” …
    Without NFC, that’s unlikely …

    Marcus’s predictions are another load of self serving nonsense from the eBay Dept of Spin …

    Once Visa’s and MasterCard’s “digital wallets” are generally available, PreyPal will be dead in the water, if not already so …

    And the ugly reality of dealing with the clunky PayPal …

  4. This is surely a very shallow comment together with a lack of understanding about what NFC really is all about. Suggesting that it is simpler to tap using a card indicates NFC ignorance. With NFC you don’t need a card/s. Part of the whole wallet system is to upload all your cards securely into one place for ease of use. I.e. DITCH THE CARD AND PHYSICAL WALLET for NFC. NFC will also be driving consumer engagement with the media, products, loyalty,coupons, membership cards and so much more

    1. NFC has nothing to do with a “digital wallet”. NFC is simply a contactless way to transfer information. A simple tap of your card, key fob, or mobile phone on a NFC terminal is all it takes to pay at checkout; that checkout process may well involve choices from a “digital wallet”, such as Visa’s, but that is a separate story …

  5. Not sure he’s not implying that the card won’t be replaced by the phone – just the method by which payment is made. PayPal’s assumption is that money can just be transferred without any physical or proximity contact and therefore NFC is not required. Suits PayPal’s business model nicely of course.

    However, there are a large number of flaws to this argument, not least of which is user experience. When you pay for something in the physical world, there’s a security in making a physical action. In the virtual world it works fine but you can’t transfer the same logic to physical stores. They need to operate differently.

    You take the concept of ‘mobile cash registers’. Great if you are PayPal. But you ask any retailer or coffee shop how much extra business they get from people picking up items at the till queue and they’ll tell you it’s not such a great idea. We must have more batteries than we could ever use..

    Additionally, while he clearly thinks that the coupon and payments businesses will merge (something we’d agree with), we see (non-payment) NFC as an integral part of that. The ability to collect coupons in one place on your phone to redeem somewhere else is something that NFC is perfect for. And the consumers understanding that NFC is the link between it all is vital for concept adoption.

    1. Oh my, that might be the most important insight of the year:

      “Ask any retailer or coffee shop how much extra business they get from people picking up items at the till queue and they’ll tell you it’s not such a great idea.”

      Is that the sound of Square’s $3.25bn valuation crashing down I can hear all the way from the other side of the Atlantic?

  6. 1. NFC technology is already used in contact less cards
    2. NFC is used because of its secure element, most people like to know their transaction are via a secure channel
    2. The next step is NFC smartphones, which will provide the base platform for interactivity (eRecipts, location based offers, etc)
    3. NFC Smart phones will provide consolidation of payment and loyalty in a single unit

    From the president of PayPal I find the comments curious, as I don’t know how PayPal will cross in the physical world without NFC. Is this a hint that PayPal will be issuing mag stripe or contact chip cards?

  7. Some people are perhaps forgetting that not everyone has a payment card. What about children and younger people? NFC via phone is definitely the way forward for them.

  8. We have to bear in mind that David Marcus answers to eBay’s chief headless turkey, John “Not For Commerce” Donahoe; maybe that explains the incomprehensibility of Marcus’s absurd statement about NFC …

    And, no doubt, once Visa’s and MasterCard’s (professional) digital wallets are generally available it is the clunky, unprofessional PreyPal that “will not gain mass adoption” or will gain no further adoption in 2013 …

    Goodbye clunky PreyPal; it has not been nice knowing you …

  9. This is not a forecast. Neither is it an evaluation of the merits of NFC.

    Paypal is a pure e-commerce player and despite growth in e-commerce that’s still less that 10% of brick and mortar commerce. Of course they would love to be in b&m payments and have been trying various ploys to get there.
    Whatever the level of success of NFC Paypal just does not have an foothold in the NFC ecosystem. They do not control POS, mobile phones, or even a mobile phone OS. Google has at least the last part and plenty more cash.

    So what’s Paypal’s best strategy when they know that they cannot play in NFC? Try and convince the world that it is not going to happen.

    That’s what I would do in their shoes.

    So this is not a forecast. It’s a defense strategy or even wishful thinking.
    Paypal launched NFC P2P money trasfers Nov 2011

    1. Beautiful …

      ‘“It’s no secret that everyone’s talking about NFC, and rightfully so,” Shimone Samuel, product experience manager for PayPal mobile applications writes on the PayPal blog. … In order to use the new NFC feature you and a friend will each need any NFC-enabled Android phone and the PayPal app with the Request Money widget installed. Requesting money is a simple process: Just enter an amount, and then tap phones. …’

      So, someone at PreyPal thinks that NFC does have a use after all; but in such circumstances why not simply pass over cash? And again the main problem with this use of a PreyPal P2P transaction is the payee finishes up with the funds in his PreyPal “pretend bank” account, a “bank” that has no banking licence (except in the European tax-haven country of Luxemburg); there is no statutory prudential oversight of PreyPal; users’ funds are not covered by FDIC insurance; generally speaking, there is no ombudsman for users to complain to; there is virtually no customer support relative to that supplied by the real banks; and the list goes on, and on …

      So, what is Marcus hallucinating about when he makes a statement about NFC that is so patently absurd? Does the left hand at PreyPal not know what the right hand is doing? Or do they really believe that the average payment card-carrying consumer is a fool? I’m inclined to agree that this statement is simply one more load of disingenuous nonsense from the eBay Dept of Spin …

      Of course what Marcus is probably worried about is PreyPal’s bound-to-fail attempt to make even the slightest dint in the B&M POS market, and the cost of replacing the primitive PreyPal mag strip debit cards with new NFC cards which the payment network providers will undoubtedly eventually mandate for the better security that NFC affords …

  10. People that move to NFC Wallets are not doing so because it is “easier” that a swipe. Granted that simplicity is essential (and NFC is), but the movement to NFC wallets is going to be because of the overall convenience brought by the convergence of offers, loyalty, location, augmented reality, receipts, etc. in the new age shopping experience.

    Add to that distribution of MNOs, recasting of the rules by networks, and value add for merchants and there is a pretty strong case for NFC. The NFC ecosystem ensures that no one gets intermediated (which is why it is complex) and hence has the power to scale verticals, regions, etc.

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