PayPal CEO David Marcus: Why NFC Is Still A Solution Looking For A Problem To Solve

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NFC - near-field communications, or 'that thing where you tap a phone to a thing and it does a thing' - was out in force again at the Mobile World Congress in Barcelona this year, pushed heavily by device makers, organisers and app builders.

The badge to get into the conference? That was NFC - and it was checked by an attendant, with an NFC-enabled phone. Along every corridor giant posters implored visitors to bang their NFC-phones to the wall to receive vague information and content.

Meanwhile the GSMA, the mobile operators association which organises MWC, was handing out phones to journalists pre-loaded with NFC 'Digital Visa' cards. And all the big devices, including Sony's Xperia Z tablet and the Asus Padfone Infinity, included demos of this life-changing tech.

So why, over three days of wandering the MWC halls, did HuffPost not see anyone use NFC except when mandated by the organisers?

Right at the back of Hall 3, in a makeshift office buried deep behind an eBay demo stand, one CEO things he knows the answer.

"It's still the 'next year NFC is going to be big' thing," PayPal CEO David Marcus told HuffPost in an interview.

"I still think that it won't."

paypal here

Above: PayPay Here

PayPal, the digital payments service owned by eBay, has consistently resisted NFC even as it tries to move its core digital payments business into the real world dominated by the mainstream banks and credit cards. Instead it has launched new 'real world' products like PayPal Here, a chip-and-pin solution for small retailers recently arrived in the UK.

So why so critical of NFC?

"To change habits you need to provide a lot of value. You're going to have to solve something fundamental to change behaviour," Marcus said.

"We did that online in the good old days of eBay. Before PayPal got on the platform people were literally sending cheques in the mail. Or cash. But if you use that as a parallel to the way people are paying in stores - [the current method] is not a problem. No one is actually thinking about this as, 'this is so hard I need a better way to pay'."

Or, put simply: "Why in the world is tapping better than swiping?"

Marcus argues that the presence of NFC at MWC despite customers reluctance to embrace it represents a crucial problem in the wider tech world - what's good for the companies involved isn't always what the consumer actually wants.

Only certain companies - Apple in particular - have the power, will or obliviousness to ignore those pressures. NFC isn't - and has never been - in Apple's phones, and it's unlikely to happen anytime soon. PayPal isn't Apple, but Marcus's design sensibility and focus on 'customer first' rhetoric has pointed it in a similar philosophical direction.

Even the box the PayPal Here payments console comes in looks, well, iPhone-like.

"I think [the push for NFC] is an inside-out view of the world," he said. "It's what's good for carriers and handset manufacturers, but they're not asking what problem is this going to solve for consumers. That's why I'm not a big believer."

david marcus

Above: PayPayl CEO David Marcus

For PayPal, the key to solving the issues that do exist in payment systems - waiting in line, paying securely, looking for overworked waiters to take your money - is not requiring customers to learn anything new.

That's why it's gone for PayPal Here - which uses existing chip-and-pin cards. That's also why it's using its own 'remote sale' mobile apps to make payments in stores more efficient - ordering before you arrive, for instance, and paying automatically - rather than waiting for banks to switch the bulk of customers to contactless cards or NFC-enabled digital wallet phone apps.

Despite PayPal's decision to focus elsewhere, the slow transition to contactless payments is happening in the UK. The Oyster system on London transport is fully embedded in daily life, for instance. More 'swipe' panels are turning up in retailers and restaurants all the time, and the concept of NFC is starting to gain traction.

Meanwhile the Payments Council is developing an industry-wide scheme to let people transfer money by text. Clearly there is a solution to slow, insecure payments in all this tech somewhere.

As such PayPal's move is still inherently risky. By not embracing NFC, even in tandem with its other products, it risks being left on the back foot once banks, card issuers and retailers decide that NFC has hit critical mass.

In any case, so far NFC remains an unproven contender, like QR codes before it.

"If you want to change the consumer behaviour you have to go for something problematic," Marcus said. "Payments is not one of them. We're not focusing on the payment side but on the shopping experience… that is the beginning of a consumer value proposition that will start to change people's lives."

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For all that, there were interesting uses of NFC on show at MWC this year. Over at the GSMA's own stand - Connected City - several current or near-future tech demos showed off everything from coffee machines with embedded SIM cards to a network of electric scooters, all enabled by... NFC.

"Over half the exhibits are live. We wanted to show how mobile connectivity was already in people's lives, but they might not see it. In the new model there are things around you that you just don't know about," said GMSA Connected Experiences marketing director Andrew Parker, in an interview.

"We're seeing a new level of connectivity where things just happen around you - hopefully positively - and make your life better. It's like walking into a room and the lights come on."

Ultimately that's the key - everyone at MWC, whether pro NFC or not, wants to find ways to make things easier. It's just finding the easiest way to do that which is - still - the problem.

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