Barcode vs NFC Payments on iOS6 and iPhone5 – Why Barcodes Are Better

With Apple’s eminent announcement of iOS 6 today, mobile payments will get yet another major boost. Now my barcode-scan based payment scheme won’t be restricted to only the beloved Starbucks app, but will open up to lots of other applications too. A few thoughts on Barcode Scan Payments vs NFC Payments. Certainly not fully fleshed out, but a few items that were on my mind as I watch the clock tick down to the big announcement.

Tricky tricky. In support of scanning a simple barcode to make a mobile paymentis first and foremost the reduction of need for new hardware. Virtually every retail outlet has a simple barcode scanner hooked up to the cash register, and every smartphone can display a barcode on its screen. Barcodes can be generated securely and dynamically, allowing a unique code to be generated for each transaction. The hardware is already out there, so why not use it?

Sure, NFC is a nifty contact-less radio-based technology, but the big detractor is its need for new hardware. Users must purchase new phones with new chips, and retail POS terminals must be equipped with new NFC sensors and radios. The one big advantage NFC has over Barcodes is device range. NFC chips can be built into not only mobile phones, but also into credit cards, key fobs, and all sorts of other form factors. They’re not reliant on the powerful workings of a smartphone (in RFID flavor), and so they can be rolled out into lots of different forms. With barcode payments, the phone must always be there to generate a dynamic barcode. It could be argued that static barcodes, like what’s used in my current Starbucks card app could be use, however I believe the ability to dynamically generate secure barcodes could be a sticking point.

Another big advantage that barcode-based payments has over NFC based payments is legacy device support. I already use my Starbucks Card app to display a barcode on my iPhone 4 – SO really it’s all about having software to display and manage the codes, and retailers supporting them with their existing (or slightly upgraded) hardware. Apple’s “Mobile Wallet” Passbook will come on the new iPhone5, and can also be a simple upgrade for legacy devices. Instantly, everyone has Passbook, everyone can start making payments – no annoying hardware upgrade necessary for the user.

But, device sales – is such an easy solution, such a flexible scheme, so backwards compatible really right for Apple? Aren’t they in the business of making money, and doesn’t adding a new chip to their phones and forcing users to buy new phones to get the latest functionality help sell more? Yes, absolutely. But I don’t think NFC is the right technology for make users pay for.I think there will be other enticing upgrades to the iPhone 5 that will still get users to upgrade.

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