Looking Forward to Cash Equivalents

Electronic cash cards, or rather the infrastructure to accept them, are a necessary precursor to mass adoption of mobile phones as payment. After all, the two things you need to use your phone at a physical point of sale is a way to present the data faster than you can reach in your wallet and a way to read the data. The current best technology for this is Near Field Communication (NFC); it's the same stuff going into US passports and on smart cards all over Europe.

Of course it is a chicken-and-egg problem: most folks won't bother carrying a special card when the only place they can use it is a single restaurant chain, but most retailers won't bother installing the special reader when almost nobody carries the card. Similarly, mobile phone users won't purchase a special phone when it won't be useful many places.

That's why I'm enthusiastic about transit payments, for things like subways and highway tolls. These are payments that people make very frequently, and have motivation to make them fast. The plethora of automatic readers for specific highways illustrates this need; even out here in Kansas we have the K-Tag for the Turnpike. We'll learn if NFC in the London Underground works out very soon.

To look forward, it is useful to look to Japan and Korea. Events there can suggest (but not predict) events here. What Japan Thinks is an easy and sometimes entertaining method to look at what "real people" are doing in Japan, and its reported surveys frequently cover the mobile space. As of last month, over half of Japanese carry a cash card, dominated by Edy and Suica. The vast majority of those who carry one use it at least once a week.

This is a complex space, one which involves banking regulations, devices, operators, retailers, payment processors, things tried and failed, and more. It's also one that the mobile industry is entering. The Mobile Payment Forum has worked since 2001 to build all of the relevant processes to make it work. We even helped them with their use cases.

It isn't far from electronic cash cards to NFC phones. The infrastructure to support them are the same, and the phones have more flexibility: they can support multiple accounts on the same chip. We of course would like to see the system built to support multiple accounts seamlessly, but that is looking unlikely based on our various research efforts and conversations.

Instead, retailers can use multiple readers to start interacting with customers the way that online sites do. Possibilities include:

• The required Starbucks example: walk into a coffee shop, scan the reader, and your standard order appears on the screen. Verify or edit, and go sit down. No need to wait in line.
• Walk into a grocery store, scan the reader, and go shopping. Don't know what passion fruit is? Snap a quick photo, get recommended recipes and nutrition information, and where in the store to find the best wine to go with it.
• Scan your phone on the way into the hardware store. Select your project from the application, or just get help finding those #2 screws. Store map, related products, and so forth.
• Oh yeah. You can pay with your phone.

Strictly speaking – Half of the respondents to an online survey said that they carried some form of IC-chip electronic cash card.
You can be sure that the people who belong to goo Research’s online research panel are “early adopters” – so the figure is not representative of the entire population.
Living in the big cities, it sometimes seems that everyone is using e-money to ride trains and so on. But you can get a very false picture of Japan if you spend all your time looking at the hipsters in Shibuya.

Amusingly enough, that’s much the experience we have. We are in a small city in a small state. Based on the press, you’d think everybody who was anybody here has an iPhone. In reality, the only time I see an iPhone is when I go onto the college campus nearby. In my neighborhood, only 30% of the households are interested in high speed Internet, let alone mobile.

I feel like this gives us a perspective that our fellow designers in urban environments can miss.