BIG Changes to NFC: Payments Part of the OS

26 July 2013

This will be a very short blog. I’m just amazed at how poorly this topic is covered… As I stated in Stage 4 Evolution – Distributed Innovation, the future margin in mobile will be in value “orchestration”.  We can see that phones are “good enough” through current sales (see WSJ article – Wow Factor Fades). How will Apple, Google, Samsung keep their margins moving? Well it certainly does NOT involve turning over the keys to anything (ie NFC, KYC).  Why on earth would Apple want to enable a 3rd Party TSM? They already have your card information, music, pictures, …etc. In an orchestration role, owning the customer is Paramount (identification, authentication, Authorization, access, credential storage, preferences, …etc). Telecos were best placed to take this role.. but have lost it (See ISIS – Platform or Desert)   

I outlined what I believe to be Apple’s hardware strategy in Apple and NFC – Part 2.

Broadcom’s BCM4334 combo chip (dual-band 802.11n, Bluetooth 4.0+HS & FM receiver) is already in the iPhone 5, and other versions in  iPad  yet other possibly extending into Mac  success as well. What I find most interesting is the BC 2079x family of “stand alone” controllers.Broadcom has also contributed its NFC software stack to the Android Open Source Project. A generic controller with software stack which manages both secure storage and multiple radios in multiple frequencies. This is NOT the NFC which MNOs and Bank’s envisioned (see SWP).

 Apple’s go to architecture is outlined well in this patent PICApple NFC 

The 12 Party “Mess” of NFC is being simplified as the TSM role is assumed by either the PLATFORM or the “Network” (Payment or Telecom), what was a separate stand along NFC SE is now being integrated into both Software and Hardware. Payment Networks are working feverously to stake out new ground and “certify” these new solutions (necessary to be classified as a card present transaction).  Banks are working to develop their own “tokens”, Visa/MA are also working to develop their own “tokens”.. all of these fold into what was previously classified as NFC.. but is really a much broader category of mobile payments at the POS.

NFC Change

The picture has changed from this



To this

 new nfc


What does this all mean?  Payment will be part of the mobile platform..  It could manifest itself as NFC, or a QR code, Bluetooth, … or it could be a restructuring of services that that make up payments (authentication, instruction, settlement, confirmation, receipt, …).

 The teleco’s seem completely clueless.. ISIS is rumored to have a $200M launch coming up in next few months. Not only will they face challenges in finding phones that support SWP, they will face a future where “platforms” have gone around them completely. 12 yrs of NFC work down the drain…  

Start ups/VCs.. there is a network war going on right now. The payment area is high risk as the platform players make payments part of the OS.

Long term, this is very GOOD news for payment AND COMMERCE Innovation. New payment networks like MCX, RuPay, Alipay, ELO, Sepa DD, can now work directly with a platform to create and certify their “App” that could take on ANY form factor.  Beyond Payment, these platforms have the potential to create/support 1000s of new physical commerce interactions.   



5 thoughts on “BIG Changes to NFC: Payments Part of the OS

  1. Pingback: Payments Part of OS: What does that mean? | FinVentures

  2. Pingback: Paypal at a Cross Roads | Starpoint Blog - Finventures

  3. Pingback: Selling tech companies | ICON Corporate Finance

  4. Pingback: Payments Part of OS: What does that mean? | Starpoint Blog - Finventures

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