The Not-So-Clear Future of Mobile Payments


For a while there has been a bit of a battle between QR codes (those little codes that you can with your smartphone to tell you information) and NFC Chips. As with most things, eventually one will come out ahead, leaving the competitor in the dust. However, thanks to technological advances, the winner may not be as clear as once believed.

Developed by the auto industry to keep track of inventory and parts, QR Codes can be read by any smartphone after downloading widely available free apps. The square optical codes can transfer information or connect to an Internet site. Another simple app allows the retailer to generate QR Codes. No extra hardware is necessary. On the other hand, NFC requires the smartphone to have an internal chip to read another tiny chip, which costs about 30 cents. One survey estimated that only about 20 percent of smartphones would include NFC capability by 2014. Both technologies can help the retailer offer promotions, advertisements and loyalty programs. While neither merchants nor the public seem to be picking a favorite, the popularity of Apple’s iPhone, which has no NFC chip, might tilt the contest toward the QR Code. While Apple seems to favor the QR Code (or at least gives off mixed signals), big box stores, including CVS and Walmart, have adapted to use NFC readers, which have a slight advantage in security because the chips communicate only between each other and reduce the exposure to hackers on the Internet. However, as with the Target data breach, even NFC readers can be hacked easily.

Regardless of technology, the winner will be the one that meshes the best with consumers. In a recent survey, nearly 70% of Americans said they would never use a mobile wallet. Apparently, Americans are not eager to embrace mobile payment technology. That means proponents of QR codes and NFC still must convince consumers that their technology can be secure and easier to use than credit cards, which are used for two-thirds of in-store transactions.

With technology ever changing, it is certain that preferred processing methods could change frequently among vendors, processors, and consumers. In the end, the only opinion that really matters is the consumer. If one program works well, and has superior security, but consumers fail to garner interest, the product is virtually worthless. The opinions of industry people are beneficial, but what they really need to consider is the ever-changing opinion of the consumer.