Google did recently reveal a tiny bit of insight about how well its Google Wallet cloud-based app, introduced in September 2011 on its Nexus S smartphone, has done. A Google official in October said that NFC transactions doubled in the first six weeks after the Aug. 1 launch of the app, which now runs on more than 10 different smartphone models.
Still, that Google official, Osama Bedier, said at the time that NFC is a "three-to-five-year game."
Why NFC has been slow to catch on for payments
NFC needs to be rolled out on more smartphones and installed in more payment terminals to catch on in the U.S., analysts and vendors agree, but public acceptance is probably NFC's biggest obstacle.
While Juniper Research and others put the percentage of smartphones containing NFC chips at 20% in 2014, the number of NFC-ready payment terminals that can communicate with NFC phones is still a tiny percentage of the total. Aite Group estimates that only 2% of merchants globally have NFC reader terminals, with even fewer in the U.S., the probable reason why Apple skipped putting NFC in the iPhone 5.
In addition to the sheer number of smartphones and terminals on NFC, the growth of NFC for payments is complicated by the jockeying of competing groups in banking, merchandising and wireless networking.
"The mobile payments ecosystem is extremely fragmented," observes Bob Egan, an analyst at The Sepharim Group. "Even Apple can't figure out how to control the ecosystem to maximize profits. There are lots of players and lots of ways to do it."
An even trickier question for credit card companies, banks and merchants is how to make consumers want to use a smartphone to make a payment when debit cards, credit cards and cash -- and even paper checks -- are so widely used already.
"There's a pretty significant behavior change that must take place to get people to pull out their phones versus plastic or cash," says Egan. "To make this really convenient for consumers, the technology has to be absolutely hidden from consumers, and the industry hasn't hit that technology point yet."