NFC payments: the great disruptor

A few days ago BilltoMobile announced (PDF) that it would open up Verizon’s carrier billing system to third party billers like Zong and Boku.

Jim Greenwell - CEO - BilltoMobile

Jim Greenwell CEO BilltoMobile

From the press release: Jim Greenwell, BilltoMobile CEO and Mark Britto, BOKU CEO, issued a joint statement: “BilltoMobile and BOKU’s cooperative agreement is a landmark in US mobile payments cooperation. The real winners today are the many wireless subscribers who are excited about access to convenient, secure online mobile payments and the merchants who provide these consumers with a wide array of digital goods, content and services.”    Boku and BilltoMobile merchants benefit from attractive merchant fees that are significantly lower than traditional PSMS rates.

Buying digital goods may seem like a side show but the real story is providing access to carrier billing systems.  As we will see access to carrier billing systems is a similar sea change event to the inclusion of NFC chips in mobile devices, including cars.

Take a look at this very small picture from the “How it works” section on BilltoMobile’s site:

Billtomobile payment option

Selecting the BilltoMobile payment option

Sorry for the fuzzy image.  So you can see what’s at stake here, either pay with your credit card, and give them a cut of the deal, or pay through BilltoMobile and let the carrier billing system take care of the transaction. It may seem like BilltoMobile is the underdog in an unwinnable situation, but let’s continue on the NFC.

As Google and Apple roll out NFC chips in their new mobile devices they are enabling a new type of consumer payment option.  If I could walk into a Starbucks and buy a coffee with my iPhone via my iTunes account, that would cut out VISA from the front end of the transaction.

Starbucks mobile payment app

Starbucks mobile payment app

As it happens Starbucks is already moving ahead with a non-NFC mobile payment system that leverages its existing relationship with consumer account data through its existing loyalty program.  Yet another company looking to replace the front end transaction from running through a credit card company.

Between access to carrier billing systems and NFC payment options on the mobile device, the credit card companies are on the run. It makes sense that they would try and innovate much the same way they American automobile companies did in the 70s, which is to say not at all or lipstick on a pig.  (12-15-05) (2-21-06) (5-5-06) (3-28-07)

All of this leads me to the article I wanted to write, if I was a real journalist, by Parmy Olson at the Forbes blog Distributors ( I swear I had my headline before I saw this article!)

First she quotes Ewan from Mobile Industry Review, who echo’s Techcrunch analyst M G Siegler from a few days ago: “I’ve written before that once Apple integrates NFC into their devices, it will be game over for every other provider in the marketplace. Of course, there’s a good few billion customers out there who, in the short and medium term, will never be able to afford an iPhone. Those people are not relevant when it comes to the opinion machine. The rest of the world is irrelevant. America is a massive market and that’s where the opinion machine lives and is focused.”

Parmy Olson - Forbes

Parmy Olson - Forbes

Then she goes in for the kill: “Does Nokia even stand a chance of beating Apple in the NFC mobile payments arena? It may be unlikely, thanks to Apple’s marketing prowess, intuitively-designed software services and dominance in the United States.

But Apple may also be invading the space colonized by credit card and payment system providers MasterCard and Visa, by offering heavily-subsidised, or even free NFC payment terminals to merchants, to work with the service embedded in its mobile devices. It is unclear if these payment terminals will work with devices other than those made by Apple.”

This last point is exactly what I have been thinking as I posted about Google’s NFC play earlier this month: “To me the biggest hurdle after any psychological end user fear is replacing the point of sales systems.  I know that the Google Places program is a way to accomplish that and that Google has street cred in the local business directory category but there are so many systems to replace or augment and will one NFC system work for all of the NFC solutions coming out? Can your Apple iPhone’s NFC payment app work across a Google Places business device? I mean I hope so but not much past history would support that assumption.”

Its not so much will Apple crush Nokia, which it probably will, but will alternate consumer point of sale systems provided either through access to carrier billing systems, through device providers via NFC or through existing consumer credit card relationships like Starbucks kill a big portion of the credit card industry’s business model?

About Daniel Davenport

Daniel is a digital media executive with internet and broadcast experience. Daniel is currently the executive strategy director at THINK Interactive.


  1. Verizon partners with mobile billing platform Payfone | thinkd2c - June 13, 2011

    […] Verizon has announced a partnership with mobile payment company Payfone to allow one click purchases via cell phone for online goods and services. This is in addition to the Isis payment consortium and the BilltoMobile relationship. […]

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