Many of the problems that plague contactless cards, such as a dearth of merchants equipped with contactless readers and the lack of consumer awareness that their cards are contactless-enabled, could come to haunt mobile phone-based payments – writes American Banker.
“The issue of the readers not being turned on or not working – this is an issue that happens when you have a lot of readers without a lot of cards or a lot of readers without a lot of cards that consumers know they have,” says consultant Todd Ablowitz. “It’s a matter of, when something does go wrong, which is inevitable, if nobody notices, then it doesn’t get fixed.”
Still, mobile payments technology developers are cognizant of the potential challenges and intend to tackle them. Discover Financial Services’ Troy Bernard says lost or broken phones, for instance, would be managed similar to the loss of a plastic card, in that the consumer would have to contact a wireless carrier for a replacement and remotely wipe the handset if required.
Bernard and others project that merchants will likely be spurred to upgrade to contactless terminals by the advancement of mobile payments. Bernard says NFC technology demonstrates more promise than contactless cards via its two-way communication at the POS and location-based services. Yankee Group analyst Nick Holland speculates that people will still be carrying wallets for the next several decades because there will always be places where contactless payments are not accepted.