I worked in the mobile industry back in 2010s. Every carrier had big shiny projects called "mobile payments" going on. They were exploring, together with banking partners how they could revolutionize contactless payments.
A key factor why all these project failed wasn't the technology. As you rightly point out, the technology was already available back then. It was mainly the vast differences in business models in the two industries: telcos and banking. The telcos were spoiled back then and expected any service to deliver a margin of at least 30%. Banks operated on a very different operating margin for the transactions. They never got that reconciled.
I remember back when Apple introduced Apple Pay many people were stunned by how little they charged. But in the end, that was their key insight to make this work. Quite impressive from a company with very high margins on their core products.
Honestly, I think it was Apple refusing to fully support NFC until 2016 that prevented the market from jumping on contactless payments, at least in the US. They were holding something like a third of the market back from doing it which really made selling adoption to merchants difficult.
Contactless bank cards were widespread in the UK before Apple or Google had their own payment systems. I think the "real story", as it were, is that the banking industry held contactless payments way more than Apple ever did.
Sorry for the passion but i was involved in the mobile payment scene at the time. It was not the banks halting the development of mobile payment.
It was:
1- Apple
2- MNOs (Mobile Network Operators)
3- Samsung
Apple closed off the iphone NFC api which dried up VC funding in the mobile payment scene. This is one of the reason we have QR Codes everywhere today, and not NFC tags.
To securely process mobile payment, you needed to have a secure enclave (SE) on the phone which would keep encryption keys safely. At the time, the MNOs wanted that secure enclave to be the SIM card, so they could control that space. Google retaliated by cutting some circuitry between the SIM Card and the phone: the SWI lines. Banks were charging north of a million $ to embed applications in the SIM Cards, and were charging you the same for any update. Apple at the time started charging 4 million $ as a deposit to acquire a special nfc permission (walmart and starbucks had one) to emulate a credit card.
Samsung was the worst. They were already embedding a Secure element in their phones without giving access to it. They started 2 or 3 years ago giving access to 3rd partys.
>Apple closed off the iphone NFC api which dried up VC funding in the mobile payment scene. This is one of the reason we have QR Codes everywhere today, and not NFC tags.
Yep, this was my experience as well, working in the NFC space at the time. Apple also basically forced the whole IoT space to start focusing on QR codes instead of NFC tags, because they were lagging technologically with the iPhone.
Contactless card payments and mobile payments are the same under the hood.
It's just ISO 14443 at the end of the day.
Mobile payments are just Host-Card Emulation (HCE).
Right, and with the advent of NFC in phones, US consumers didn't need the banks' permission to pay contactlessly. Despite this, contactless payment adoption was still slow in the U.S. even though most phones had NFC, it wasn't critical mass until Apple finally decided to support NFC technology.
It is today with different added features, but back in the 2010s you didn't need your bank to support it. You could do it with your VISA/Mastercard/AMEX credit or debit card.
I would argue it was a myriad of factors. Here in NY the adoption of OMNY and the pandemic contributed far more than Apple rolling out Tap to pay. The biggest issue being merchants lacking having the motivation to move away from outdated readers.
There was an attempt to deploy contactless cards in the US in the mid 00's. I used mine once at a grocery store. Merchants rarely supported them so banks stopped issuing them.
This is correct. The other comment that I can't reply to is incorrect. Banks not supporting apple pay were a significant holdup to NFC payments in the US.
A key factor why all these project failed wasn't the technology. As you rightly point out, the technology was already available back then. It was mainly the vast differences in business models in the two industries: telcos and banking. The telcos were spoiled back then and expected any service to deliver a margin of at least 30%. Banks operated on a very different operating margin for the transactions. They never got that reconciled.
I remember back when Apple introduced Apple Pay many people were stunned by how little they charged. But in the end, that was their key insight to make this work. Quite impressive from a company with very high margins on their core products.