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Google’s NFC Move Thursday—with Walgreens, Macy’s, Subway, American Eagle—Goes Beyond Plastic

Written by Evan Schuman
May 25th, 2011

Several major retail chains—including Walgreens, Macy’s, American Eagle Outfitters, Toys R Us, RadioShack and Subway—have agreed to be guinea pigs for a Google Android near field communication (NFC) mobile-payment system, and the four will announce their effort Thursday (May 26). But the five-city trial will be really riding atop existing contactless-payment systems, specifically MasterCard’s PayPass terminals, so it’s not clear how much new ground this effort will break.

The key question: Why will consumers be more open to this Google NFC effort than they have been with contactless payment? Presumably, Google and the retailers will be smart enough to flood consumers in the selected cities—New York, San Francisco, Los Angeles, Chicago and Washington, D.C., according to Bloomberg—with seriously generous discount coupons to give them a compelling reason to change their buying behavior and try NFC. Among other players in the trial are Sprint Nextel, VeriFone and Vivotech, according to published reports.

With most trials like this, especially one involving Google and Android, there is likely to be a very short-term high level of consumer participation, given the excitement of using a new technology toy. But short-lived will be this factor of newness. (Please shoot me if I say “coolness.” If I try saying “hipness,” a stoning may be more apropos.)

To avoid the unhappy current state of contactless payment, Google must put in place permanent incentives. As a practical matter, card-swiping is not significantly less convenient than waving and it has fewer perceived security hiccups.

Fortunately for Google, it’s going to be getting a lot of help. Now that Google has made its introduction, Apple will quickly jump into the battle. ISIS, of the Verizon, AT&T and (maybe) T-Mobile genre, is also still out there. That effort, though, has been finding it almost impossible to stay relevant.

Some have argued that the trick of making NFC work will not be in a strengths/weaknesses battle with rectangular pieces of plastic, but in the power of the mobile phone to be comprehensive. In other words, if the mobile device truly gets to the point where it can handle all payment and other functions—where no leather wallet is needed at all, where the ubiquitous mobile truly does have everything the consumer wants—then the payment card will go away and mobile payments will reign supreme.

When that happens, NFC will be the obvious choice for broadcast efforts. The battle will then move away from cards to approaches, such as the ones Square is pushing. Square’s efforts are very much mobile, leveraging geolocation and text messaging, but they don’t involve wireless payment. The payment transactions are handled back at headquarters, relieving the consumer of waiving or swiping and relieving—potentially—the retailer of PCI headaches.


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