January 10, 2012
The Mobile Wallet - a Conversation with Jeff Miles of NXP Semiconductors
By Paula Bernier, Executive Editor, TMC
The Internet has turned the world of retail on its ear, creating both challenges and opportunities. But the mobile wallet could create new opportunities for retailers to ring up sales via smartphone-based purchasing and promotions.
TMCnet recently interviewed Jeff Miles, vice president of mobile transactions at NXP Semiconductors, about what’s happening on the mobile wallet front. NXP offers near field communications, a short-range, contactless radio technology. Its core NFC technology has been and is being integrated into more than 90 devices ranging from the Nexus S and Galaxy based on the Android platform as well as devices from Nokia and Sony Ericsson (News - Alert).
What’s the background on your company’s NFC solution?
Miles: NXP Semiconductors co-founded NFC with Sony in 2002. Since then, our NFC chip sets have been part of every significant NFC shipment to date, including Google (News - Alert) Wallet, the Nexus S (and upcoming Galaxy Nexus), and next year’s Windows 8 tablets and future smartphones from Sony Ericsson.NXP is working with all the major handset providers, carriers, banks and credit card companies to support the integration of the technology.
Define mobile wallet.
Miles: At the highest level, the mobile wallet means synergy – between our physical presence and digital future. It brings the smooth, intuitive efficiency of modern ticketing solutions in public transport to applications ranging from mobile payment to identification (e.g., ID) and social networking (e.g., tap to check in). At a more basic level, the mobile wallet is a combination of secure mobile hardware, application and services that puts traditional physical wallet contents (cards, receipts and coupons) into your mobile phone and allows use via wireless and contactless/NFC communication.
The net result is increased convenience, organization and interactivity with brands/retailers/service providers. For NXP, this is a convergence of our core ID businesses that include banking, transit, access, e-government, payment infrastructure and RF tags that are being enabled by industry standards and NXP products.
At CTIA last fall, Dan Schulman of American Express (News - Alert) said the payments industry and the mobile industry are on a collision course that is changing the way companies in the payments industry do business. How is that changing the way payments companies do business?
Miles: For decades, mobile phones and payment instruments (cards, checks, cash) lived separate lives. Suddenly, contactless/near field communication and security advances allow mobile phones to incorporate traditional cards-based payments, traditional online payments and much more. This is something NXP has helped enable from co-founding NFC in 2002 and refining the technology to put secure payment capabilities into mobile devices. Now the blending of these boundaries brings together unfamiliar mobile and payment players in one platform, both servicing the same customer. Conflict is bound to happen as are some interesting collaborations.
Miles: For years, major players in the financial and technology space have waited for the right time to move. And that time is now. The cost of NFC-powered mobile wallets, shared across financial institutions, retailers and OEMs, is minimal. Meanwhile the benefit of NFC as a feature helps all partners, ranging from handset makers to Macy’s – realize new revenue streams while differentiating services and hardware to customers. Essentially, the mobile wallet enables becomes a targeted, measurable and new location-based marketing and commerce platform for retailers, service provider, brands, and technology companies to engage with users.
What do you see as the role and prospects of the cellular/wireless service provider in mobile wallet?
Miles: Some of these wireless service providers will help bring the mobile wallet innovations to market as early adopters. For example, Sprint was the first official carrier partner for Google Wallet (offering the Nexus S). Other major wireless service providers such as Orange (News - Alert) now also feature NFC smartphones enabling consumers to use mobile device for payment, loyalty and ticketing. Because of their large customer base and infrastructure, these wireless service providers will continue to play a critical role.
What do you see as the role and prospects of Google in mobile wallet?
Miles: Google is playing the role of catalyst. They have tremendous talent and a significant online advertising presence that lends itself into mobile and payment as an offer redemption vehicle. Their leadership in search, Android operating system, advertising sales and investment ability makes their prospects bright.
What do you see as the role and prospects of online retailers like Amazon and eBay in mobile wallet?
Miles: Amazon and eBay are both mobile wallet providers and low-overhead, low price, competitive threats that potentially drive mobile wallet adoption in brick and mortar retail.
Amazon offers Amazon Mobile and Amazon Price Check to complete online product price comparisons while shopping offline, along with its online wallet to complete a purchase.
eBay, with its PayPal business, offers innovative means to blend online and offline wallets with mobile access to their online wallet and ability to transfer funds by tapping two NFC phones. In a world where retailers and consumers value speed and convenience at the checkout, these are promising offerings.
What do you see as the role and prospects of traditional bricks-and-mortar businesses in mobile wallet?
Miles: Traditional brick and mortar businesses play an important and often time overlooked role. These businesses are where consumers conduct the majority of their shopping, service and dining experiences. For these businesses, their role is to support the acceptance of mobile wallets with appropriate infrastructure and understand and innovate in terms of delivering information, service and convenience via these new mobile channels. Loyalty, rewards, special suggestions, and fast and secure check out are all enabled by mobile wallets and remain relevant to brick and mortar business. Several brick and mortar retailers face challenges from online retailers and must refine their scope of business and related services to prosper.
What do you see as the role and prospects of advertising firms in mobile wallet?
Miles: Advertising firms will play a supporting role with tremendous long term potential. They must understand the marketing and promotion possibilities in mobile wallets. These firms and the brands they represent will begin to understand and participate in mobile wallets as a means to connect to consumers and drive to purchase. Such participation will accelerate adoption of mobile wallets and bring new creativity to the marketing campaigns that could span smart posters, in store display, viral offer sharing through to redemption.
What is the status of mobile wallet availability today in the U.S.?
Miles: Availability remains limited today but is expanding since introductions started in the second half of 2011. Google Wallet is currently available on the Nexus S and Galaxy Nexus with additional smartphones from numerous OEM’s. ISIS has announced its launch OEM partners and initial 2012 markets. NXP expects additional mobile wallets to arrive in 2012 giving consumers choice.
Also important is the increasing prevalence of contactless payment terminals at major retailers including Macy’s, 7-Eleven, American Eagle, The Container Store and Banana Republic.
What needs to happen for mobile wallet to reach a tipping point in the U.S.?
Miles: Thanks to an improved NFC ecosystem, we’re fast approaching that point. With the support of the major technology (Google), hardware (Samsung, Sony), service providers (Sprint), financial institutions (Citibank) and retailers (Macy’s), mobile payments made huge strides in 2011. With the growing support of further OEMs and service providers, alongside either incentives or payment security mandates for retailers to upgrade point-of-sale systems, few barriers remain to widespread adoption.
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Edited by Jennifer Russell