In the Cannes Lion ad conference, Eric Schmidt made quite a stir on a number of fronts. One of his most ambitious declarations, however, relates to the recently released Google Wallet. Google Wallet, the Google NFC (near-field communications) payment processing system that would allow users to pay for any number of goodies with just a tap from their cell-phone, has yet to see much excitement – or even broad testing. Nevertheless, Schmidt has predicted that a third of all terminals will be NFC-enabled within the next year.
The reason, according to Schmidt, is that the credit card companies will want to make the change as quickly as possible. More specifically, credit card companies will do this “Because the fraud rates are so much lower. Nobody knows how quickly this [NFC adoption] will occur, but it’s in their interests to convert as fast as they humanly can.” The lower fraud rate is due to knowing that the actual mode of payment (the phone) is physically in the store. Additionally, security precautions such as a PIN for both application installation and payment processing help ensure that stolen phones won’t become a major financial bleed for the person who lost it.
Schmidt’s prediction is “an educated guess,” he said, continuing, “How long does it take an infrastructure player to upgrade a significant percentage of their infrastructure? It’s on the order of a year. It’s not a week, it’s not a month, but it’s also not five years.” With the technology and software available now and small-scale testing with Citigroup in New York and San Francisco launching in the near future.
Saying that the motive will come from the credit card companies is a new line, and one that may make more sense than other predicted paths to success. If credit card companies can see a verifiable decrease in fraud, there’s a real dollar-sign incentive – unlike the minor, almost negligible, convenience bonus to consumers who use the NFC payment.
[Sources include: Google Watches & the Financial Times]
