NFC Update – Zenius/InsideSecure

I met with the Inside and Zenius folks last week, and am impressed with both teams. Their mutual objective is to make development of NFC applications “easier”. Both have developed a chipset independent framework (common API layer) which creates a layer of abstraction between an NFC application (ex wallet) and the underlying hardware.

7 March 2011 

Previous Blog: OpenNFC 

I met with the Inside and Zenius folks last week, and am impressed with both teams. Their mutual objective is to make development of NFC applications “easier”. Both have developed a chipset independent framework (common API layer) which creates a layer of abstraction between an NFC application (ex wallet) and the underlying hardware. Both have also developed example applications that leverage this API layer (wallet, ticketing, loyalty, … ). My summary thoughts on the 2 teams are I like them both. Inside has expertise from hardware through software delivery. Zenius’ expertise extends from POS to Handset across multiple hardware architectures.

Comparison

Zenius

  • NFC API framework
  • Chipset independent (proven)
  • Vendor independent
  • Handset Applications
  • POS Applications
  • MNO experience

Inside

  • NFC API Framework
  • Marketed as Chipset independent (no proven)
  • Handset NFC Applications (5 of them)
  • Discourages Multi SE environment
  • Discourages Application Development (Use on of its 5 Applications)

What I struggled with was Inside’s insistence that there should only be 5 NFC applications. In other words, its NFC middleware layer was only for its own internal use to ensure that its applications work across all (competitor) NFC chipsets. The implication is that there will only be 5 NFC applications… for eternity. For example, ISIS selected the C-SAM wallet that sits on top of a custom built NFC stack.  In the Inside model, ISIS would need to jettison both CSAM and its custom middleware.  (Yeah, I had the same reaction).

Zenius has a much more mature model, driven from their legacy working within Verifone and VivoTech. The Zenius guys had to make their applications work across multiple hardware solutions, and hence developed a framework that is now productized. They have also developed 5 standard application, that are “reference implementations” of their APIs, you can use them in a white label fashion, customize them.. or take them apart to see how they leveraged the API layer. This is a better approach hands down.

Inside’s approach seems a little unrealistic, and could be perceived as a “land grab”.  What do I like about Inside’s OpenNFC? The middleware and their end-end experience. In the end they are driven by chipset volume.. my guess is that they would be willing to give away OpenNFC if it would drive their chip sales. Problem is that giving it away may only commoditize their core product, hence they would be tempted to ensure that their product “works best” with OpenNFC. This is one reason that middleware vendors (MQ, Tibco, WebMethods, ..etc) developed separate from software companies.

Given that developing native NFC applications is difficult, the experience largely sits within companies like: Inside, NXP, Verifone, VivoTech, Device Fidelity, Tyfone.. .  People within these organizations all know each other.. after all it is a very small community. I asked them how many of their colleagues are at Apple. The answer across the board is that they don’t know of anyone.  This tells me that Apple is probably more than a few months away from launching an NFC wallet, or that they are dependent on a vendor (?Gemalto) for all development.

Since ISIS has already completed development of its own NFC wallet (not on iPhone), what are Apple’s plans?  I’m told that Apple wants a wallet tied to their 200M Apple accounts, this could be mere speculation, but it seems logical. I’m also told that Apple has their own NFC wallet. If Apple does indeed have an NFC application, it is something they have procured (licensed and modified) from Gemalto.  This is not a bad thing, particularly if Apple is more focused on hardware architecture, and plans for managing secure elements (SEs). The first wallet will undergo significant testing, through a new hardware and software stack. They must have something they control (not ISIS) and that is tested (Gemalto) to reduce complexity. Apple will likely need additional applications, but they must start somewhere.

All of this just spells further trouble for ISIS, who was hoping to focus more on POS issues now that they have a working wallet application. If RIM and Apple are successful in keeping control of the NFC wallet, ISIS can only hope to be another “card” in the wallet… one that speaks Discover ZIP initially. Quite a different value proposition than what they started with 6 months ago.  

For Apple, this allows them to strike a strategic relationship with a card issuer (like Chase) who will likely invest in both marketing and POS infrastructure. I’m sure that Apple’s plan is to also integrate iAd… although it can’t possibly make it for 2011 (my guess).

NFC Tea Leaves

9 February 2010 

Previous Post http://tomnoyes.wordpress.com/2009/12/23/visa-att-mobile/

In the last week of December I made an “informed” prediction on a major NFC announcement…. the predicted time has now past.. and… no announcement. This seems to be common place in this space.. NFC presents the best chance for development of a new ecosystem and a new “boom” for small companies… Unfortunately the keys to the “ignition switch” are held by multiple established (read entrenched) overlapping and competing networks (bank, mobile, card, …). Apologize for getting hopes up.. it does look like more of a slow burn than “break out”..

Visa’s mobile apps at CES 2010

[youtube=http://www.youtube.com/watch?v=c3Ff6uYXBD0]

VivoTech

[youtube=http://www.youtube.com/watch?v=Kzyy6ZLbDZk]

All of the activity listed in the previous post has been validated:

– FirstData is acting as a TSM (in vein of Germany’s Giesecke & Devrient)

– Visa does have €200MM planned for NFC (See here)

– Top 3 US bank is planning a major mobile initiative w/ Visa to roll out in early 2Q

– AT&T has TBD initiatives into pre-paid card and pre-paid plans, I do have conflicting information on whether this will be led by AT&T or Apple and time period has extended significantly.

 

 

http://www.youtube.com/watch?v=330RZpwrmAg

http://www.youtube.com/watch?v=z0BwYz1P0BE

 

 

Visa – New Mobile Payment “Rails”?

Word on the street is that Visa is set for a major mobile payments announcement in next 6-8 weeks. Separately, US MNOs are also rumored to be collaborating on Near Field Communications (NFC) payments with acquirers. Could it be that the log jam on NFC is about to be broken? Is Visa developing new rails to support mobile payments?

25 November 2009

Word on the street is that Visa is set for a major mobile payments announcement in next 6-8 weeks. Separately, US MNOs are also rumored to be collaborating on Near Field Communications (NFC) payments with acquirers. Could it be that the log jam on NFC is about to be broken? Is Visa developing new rails to support mobile payments? Let me say up front that this blog represents “connecting the dots” more than a definitive market projection.

The US market is ripe for a break from the 6 party political “fur ball” that is hampering delivery of mobile payment (Card Issuers, Acquirers, Network, Merchant, MNOs, Handset Mfg). For those outside the US, MNOs have substantial control over handset features and applications, and have been leveraging this “node control” to “influence” direction of payments. The central US MNO argument being: “it is our customer, our handset, our network we should get a cut of the transaction rev”. Unfortunately existing inter-bank mobile transfers/ payments are settled through existing payment networks that provide limited flexibility in accommodating a “new” MNO role and the network rules leave much room for improvment in: authorization, authentication and consumer “control”. 

Outside the US, the situation is much different, as consumers have great flexibility in switching MNOs, have ownership of their handsets, and are largely on pre-paid plans. The MNO challenge for payments in this environment is largely regulatory. Many countries (EU, HK, Korea, Japan, SG) have open well defined rules for MNOs role in payments (example: ECB ELMI framework within the EU), while other countries are highly restrictive and are in the midst of developing their legal and regulatory framework. Even in the countries where MNOs participation is defined, they have largely benefited from the complimentary role that the service plays with pre-paid plans (not in interchange at POS).

Globally, MNOs are looking for a payment platform where they can benefit from interaction between consumer and merchant, with flexibility to deal with a heterogeneous regulatory environment. The competitive pressures on Visa/MC are much different then they were 5 years ago (when both were bank owned). The network fee structures and rules were written with banks and mature markets in mind. Emerging markets present a much different set of opportunities, as MNOs lead banks in brand and consumer penetration within every geography.

All of this leads to the case for a new “Mobile Payments Settlement” network, a network which will alienate many banks. I expect to see Visa roll out the initial stages of this network in the next 2 months with an emphasis on NFC. Quite possibly the best kept secret I have ever seen from a public company. I’m sure many Silicon Valley CEOs are crossing their fingers (with me) on this, as a “new wave” of innovation is certainly close at hand that will drive growth (and valuations).

For those not keeping up with the 50 or so product announcements a day on NFC, handset manufacturers committed to have NFC enabled phones to consumers in mid 2009 in the GSMA 2008 congress. NFC capabilities are numerous (Vodafone YouTube Overview), and may represent a true disruptive innovation surrounding payments. There have been many very recent product announcements that will enable existing phones to use NFC, and P2P Capability. All of which will blossom in a more “fertile” mobile settlement environment. See one example “future” Visa mobile service here: http://tomnoyes.wordpress.com/2009/09/24/googleoff/

Side note: This is not all bad news for Banks, as the structure will certainly provide for existing cards (debit/credit) and may deliver substantial revenue through cash replacement (small < $50) transactions. More details on structure of MNO in settlement 2 weeks….

Select Product/Alliances Below:

[youtube=http://www.youtube.com/watch?v=2AmeM33r7wM]