Stafford Masie, entrepreneur and former CEO of Google South Africa, has criticized local banks’ recent efforts to pilot NFC payments as “farcical,” asserting that NFC payments are “complex and unnecessary” and will remain a niche technology, reports TechCentral.
Masie cites several reasons that NFC will fail as a payment technology. First, handset makers will likely integrate their own proprietary versions of NFC into their products in order to best serve their individual interests. Masie says this lack of standardization will fracture the market.
Masie also claims that universal NFC adoption will require a massive investment in new point of sale equipment and other reader technology – far too great to justify replacing a working “cumbersome” system with a new “cumbersome” system.
Additionally, Masie says banks will be reticent to switch over to any sort of revolutionary payment model, as the current card-based system allows them to squeeze “huge” amounts of money via processing fees and service charges levied on consumers and merchants.
“Banks know they have been screwing us for years,” Masie told TechCentral. “They know they have been getting away with murder and they continue to do so. They want the picture not to change.”
“The way NFC is being adopted by banks is farcical,” Masie added. “You’re seeing a herding effect around it. This is not what next-generation banking will be. Maybe Bidvest will use NFC for their truck drivers. Massmart might use NFC in its supply chain. But don’t come and tell me you are doing mainstream payment applications based on NFC because you are lying.”
Masie sees “geo-fencinng” as a far more viable alternative to NFC for next-generation payments. According to TechCentral, a geo-fencing payment application, like Square’s Card Case, creates a virtual perimeter around a merchant, and customers within that perimeter with a supported device, e.g. smart phone, can make a transaction without having to swipe or tap anything at all. Rather, the merchant’s point of sale terminal recognizes the customer automatically and displays their face along with the customer’s tab, says TechCentral.
“The banks won’t talk about it because they don’t have a play, but geo-fenced payments are an example of lighter-weight technologies that completely nuke the value proposition of NFC,” said Masie.
Masie argues that social media enhanced payments like geo-fencing will outstrip NFC solutions because consumer trust is no longer with banks – in no small part due to the financial crisis.
“We don’t see much value in banks anymore, and the next generation sees it even less,” said Masie, adding that the misplaced trust has found a home in Facebook, Google and other social media companies, and it is these, Masie asserts, that will lead the charge to next generation payments.
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