QR (Quick Response Code) vs. NFC (Near Field Communication): Which Will Reign Supreme In The Battle To Replace You Credit Card
QR codes (Quick Response Codes)
- Mobile payment system: Mobile devices' cameras scan a code to unlock the user's payment information and complete a transaction.
- QR codes can be displayed at registers in stores.
- Codes can be printed on restaurant bills.
- Cash and credit cards never change hands.
- The progress can be used on any device running Apple iOS or Google's Android software.
- QR can be displayed on phone and scanned by POS or other smartphone or tablet.
NFC (Near Field Communication)
- Mobile payment system: Enables radio connection from one device to another.
- Similar to Bluetooth technology.
- Devices must be within range of each other.
- Secure element for storing sensitive data that is separated from the rest of the system.
- 2-way communication (real-time) between devices (payment and acceptance).
- Across a broader spectrum: 1) Data transfers; 2) Keyless door entry.
- EMV compliance: Ensures usability/accessibility for NFC mobile payments.
NFC and QR code usage
- NFC usage: One study shows an expected growth of NFC usage by 28% between 2011 and 2016 in 2016, the NFC market expected to reach more than 10 billion dollars.
- By 2012, more than a quarter of all mobile devices will be NFC-enabled (Keys: Worldwide mobile phones with integrated NFC capability; Worldwide mobile phone shipments): 1) 2011: Worldwide mobile phones with integrated NFC
capability - 100 (6%); Worldwide mobile phone shipments - 1.557; 2) 2012: Worldwide mobile phones with integrated NFC capability - 185 (11%); Worldwide mobile phone shipments - 1.718; 3) 2013: Worldwide mobile phones with
integrated NFC capability - 290 (16%); Worldwide mobile phone shipments - 1.854; 4) 2014: Worldwide mobile phones with integrated NFC capability - 405 (21%); Worldwide mobile phone shipments - 1.971; 5) 2015: Worldwide
mobile phones with integrated NFC capability - 545 (26%); Worldwide mobile phone shipments - 2.076.
- QR code usage: Only 9% of US adults used a QR code in 2012. While QR code usage is increasing, the overall percentage of smartphone users leveraging this technology has dropped.
- US adult mobile barcode users and penetration, 2011-2014: 1) 2011: Adult mobile barcode users (millions) - 21.2; % change - 146.9%; % of adult smartphone users - 25%; % of adult mobile phone users - 10.1%; % of adult
population - 8.9%; 2) 2012: Adult mobile barcode users (millions) - 26.3; % change - 24.4%; % of adult smartphone users - 25%; % of adult mobile phone users - 12.4%; % of adult population - 11%; 3) 2013: Adult mobile barcode
users (millions) - 32.4; % change - 23.2%; % of adult smartphone users - 26%; % of adult mobile phone users - 15%; % of adult population - 13.4%; 4) 2014: Adult mobile barcode users (millions) - 38.5; % change - 18.7%; % of
adult smartphone users - 27%; % of adult mobile phone users - 17.6%; % of adult population - 15.7%.
Apple: Betting against the industry
- Apple is the only major player in the mobile device industry that does not offer any products with an NFC chip. This could be a big roadblock for merchant adoption of NFC.
- Possible reasons #1: NFC security. Security issues come from traditional wireless network attacks. Another possible security problem: Users can generate their own near field tags. Some tags can be activated passively.
- Possible reasons #2: Apple often waits. "Time and time again. Apple has lagged behind the vanguard of the industry in adopting the next big thing", Nikhil Bobb, former Apple file system engineer.
- Possible reasons #3: Cost. manufacturing of the iPhone 5, one NFC controller cost about $5/unit, $5/unit would have added about $125m. to Apple's cost.
- Possible reasons #4: QR. QR is already integrated with Apple iOS. Passport uses QR to organize membership cards, boarding passes, event tickets and much more.
Major players leveraging QR codes/NFC in the battle for your mobile payments (=hardware requirements)
- #1 ISIS (merchants & financial institutions): 1) 1.000 participating merchants to date ISIS is only active in Austin, TX & Salt Lake City, UT, so numbers are small; 3) General information: National mobile commerce venture;
Backed by AT&T, T-Mobile and Verizon; Software-based mobile wallet; Organizes credit and debit cards, loyalty cards and special offers in one app; Contactless payments through NFC; Allows merchants to engage with customers
via mobile; Will enhance merchant marketing programs; Has been tested in Salt Lake City and Austin; Plans to launch nationwide in 2013.
- #2 PayPal (merchants & financial institutions): 1) Nearly 20 million PayPal mobile users. As of 2013: 23 national retailers accept PayPal payments in stores; 2) For consumers: Works on iPad, iPhone, Blackberry and any Android
device. For retailers: A free card reader and/or PayPal's pay here app can be used to process cards or checks; 3) General information: Enables consumers to manage finances through mobile devices; Allows for PayPal's "Bill Me Later"
option to be used for mobile purchases; Current versions allow easy flexibility for in-store payments; The "Shop" feature allows consumers to locate places where they can use their PayPal app.
- #3 Google Wallet (merchants & financial institutions): 10 Any store that supports NFC payments. Over200.000 merchants in the US; 2) NFC enabled terminals; 3) General information: Users can store credit and debit information on
the app; Payments are made through NFC technology; Free and compatible with devices that are NFC enabled; Cloud-based version supports credit and debit cards from Visa, MasterCard, AmEx and Discover; Drive the right traffic
to merchant's stores; Retain more customers; Merchants are featured on Google's "Where It Works" map.
- #4 PayDiant (merchants & financial institutions): 1) PayDiant is currently working with leading issuers, networks, acquirers, retailers, banks and credit unions; 2) In September 2012, Bank of America launched a test cycle with
PayDiant; 3) In August 2013, Pulse announced a partnership with PayDiant that will include all of its retail partners and financial institutions participants; 4) Options for loyalty, offers & discounts. Users can use PayDiant to redeem
offers at POS; 5) General information: PayDiant is the only mobile wallet and payment platform that works with existing payment tools: PIN debit, credit, signature debit, prepaid cards; There are no third-party apps; Free and
compatible will all Apple and Android devices; PayDiant keeps payment card numbers and cardholder data securely stored in a certified data center; PayDiant offers a more convenient way to pay; Allows merchants to engage with
customers mobility; 6) QR codes at POS.
- #5 Level Up PayDiant (merchants & financial institutions): 1) Within a year of launch: Level Up had over 3k merchants and 200k consumers using the product. Average users make 2-3 Level Up purchases/week; 2) Strictly QR code
based. Works for iPhone, Android and Blackberry; 3) General information: Operates on the premise that mobile payments should be easy and free merchants and consumers; 2012 - stopped charging merchants for payment
processing; Consumers credit or debit cards are associated with a unique QR code.
Looking to the future
- Estimates for 2007: 1.5 billion smartphones will be used globally.
- US mobile consumers will spend $90 billion on mobile payments.
- 50% of smartphone users say they will use their mobile wallets for daily transactions by 2016.
Presented by Merchant Warehouse | Dveloped by NowSourcing | Sources: http://www.thelevelup.com; http://www.paydiant.com/about/paydiant-backgorund.html; http://merchantwarehouse.com/the-mobile-payments-revolution-
whitepaper; http://datacardedge.com/articles/emv-vs-nfc-technology-setting-the-record-straight; http://www.emarketer.com/newsroom/index.php/report-shows-adoption-qr-codes; http://www.paypal-media.com/assets/pdf/fact_sheet/
PayPal_mobile_fast_facts.pdf; http://www.accenture.com/us-en/outlook/Pages/outlook-journal-2012-upward-mobility.aspx; http://nfcme.com/near-field-communication-market-is-poised/to-grow-by-28-in-2016; http://news.cnet.com/
8301-1035_3-57521614-94/bank-of-america-tests-qr-code-mobile-payment-service; http://www.mainstreet.com/article/smart-spending/technology/why-apple-doesnt-support-nfc-payment-iphone; http://onlinebanking.banking-business-
review.com/news/pulse-to-implement-paydiants-mobile-payment-platform-020813; http://news.cnet.com/8301-1035_3-57596211-94/mobile-payment-provider-isis-readies-national-rollout; http://www.boston.com/business/innovation/
blogs/inside-the-hive/2013/09/10/mobile-wallet-firm-paydiant-closes-round; http://www.internetretailer.com/2013/01/14/paypal-says-23-retailers-accept-its-payments-inside-their-stores; http://www.mobilecommercepress.com/