Blog Post

Watch and Learn US; the UK Shows Mobile Payments Done Right

While the U.S. is still doing lots of talking about using smartphones for wireless mobile payments in lieu of credit cards, the U.K. continues to put plans into action. Network operator Orange UK is rolling out a national mobile payment service called QuickTap, allowing consumers to use their handsets to pay for transactions at 50,000 retail locations. According to the Mobile Business Briefing site, Samsung’s Tocco Lite handset with an NFC-enabled SIM card is the first of many smartphones to work with QuickTap.

Perhaps the U.S. should look to the QuickTap initiative to learn how to speed-up adoption of payments by way of NFC (also known as near-field communications). Orange UK partnered with both Barclaycard and Master Card (s ma) for the new program, and each consumer participant gets a free £10 ($16.20 USD) deposit from Barclaycard to begin using the system. Consumers can later load up to £100 on their handset, and as an incentive, all purchases using QuickTap earn a 10-percent cash back reward in the first three months of the program. Purchases are limited to £15 per transaction under the program, although I’d expect the program to raise that limit in the future as adoption increases.

Between the consumer incentives and widespread retail support, the U.S. can learn from the Orange UK QuickTap initiative. Wireless payment terminals are already in a number of locations here. I use them at convenience stores, McDonald’s(s mcd), and other venues. The NFC chip that enables my transactions is integrated in my credit card, but there’s no reason that small wireless chip can’t be in a handset or SIM card instead. Google’s (s goog) Nexus S phone already has an NFC chip, for instance.

But we’re still trying to figure out if the NFC functionality should be in the phone, on the SIM card or on a microSD card. And because mobile payments are expected to generate more than $633 billion in transactions by 2014, network operators, payment processors and banks are all fighting for a piece of the pie.

What all the participants are failing to realize is that even after a solution becomes viable, it’s going to take even longer for consumers to adopt the technology. Incentives for wireless mobile payments are sure to help, but the first step is implementing a functional wireless payment system to begin with.

7 Responses to “Watch and Learn US; the UK Shows Mobile Payments Done Right”

  1. I consider myself somewhat of an early adopter, having dropped my landline over a decade ago & cut cable 3 years ago. However, I can’t see myself ever adopting NFC wallets.

    I don’t really see a revolutionary convenience in it & I’ve never been a fan of pre-paying – locking part of my money in a non-interest bearing account. I wouldn’t be comfortable with the other option of giving my phone full access to my bank account either.

    I could be wrong, but if I had to place a bet, I’d say NFC never gets any more popular than any other touch payment system in the US today.

  2. Jahan Khan Rashid

    This has been all over the news today in the UK, the majority of people here seem pretty psyched for it!! You can only charge it with a max of £150 which is pretty sensible, if your phone gets lost/stolen, and apparently your moneys as safe as it is on a credit card if your phone goes missing. Another First for the UK, we seem to get everything first lately!!

  3. Are mobile carriers going to become banks?

    People are dropping land lines to save the $30/month in fees, so why not drop your bank account to save the $12/month and the hassle of having a second account.

    Carriers could still offer online checking. We would deposit checks by using the phone’s camera. Cash could be dropped at the carrier’s storefront.

    This is the only justification I can see for using a phone as a payment mechanism. Otherwise, I’d rather have something lighter, that can sustain a drop from 6 feet, that doesn’t require a charged battery, that I can have a couple of in case one is stolen.

  4. It’s taking a while to get a mobile payment system in the US because it’s not easy to come up with a system that stifles competition, guarantees unwarranted profits, and extracts a disproportionate share of revenue, while coming up with a plausible defense for politicians that approve it with a straight face.