May 30, 2012 5

NFC in Kenya?

By in Mobile and Business
Google Wallet in Action

Google Wallet in Action

Near Field Communication or NFC is by far one of the main buzzwords in the mobile tech industry today. It can be described as a secure short-range communication standard for use in smart phones and other compatible devices that establishes a high speed link when the two devices are in close proximity.

Google made its foray into the new technology with its Google Wallet mobile payment application back in September 2011.

The technology has met stiff resistance so far in the US with Google managing to scare up a few retail partners, carriers and banks.

Google Wallet still only works with one credit card and bank combination: Citibank MasterCard. And the only major carrier where Google Wallet phones can be found is Sprint Nextel. (Virgin Mobile, one of Sprint’s prepaid brands will also soon offer a Google Wallet device.)

So what went wrong? According to this article snagged off CNET, one reason the service may not have gotten much traction is because it relies on the NFC tap-to-pay technology. While the technology itself has been around for a while and works fine, the problem with using it for payments is that it requires a broad ecosystem to get it off the ground.

First there’s a hardware problem. Devices need to be equipped with tiny NFC chips. And terminals at the point of sale must also be equipped to read the information from the NFC chips installed in devices.

The second big problem is that there are still business issues centering around who controls the customer via the NFC technology that’s embedded in the device.

But what does this mean for Kenya’s potential adoption of NFC?

Let us start by noting a two key differences between our markets:

The US has had a long history with credit cards while Kenya first experienced widespread ‘cashless’ payments through mobile, specifically M-PESA. NFC based payment solutions in the US would have to compete with the traditional widespread credit card systems already in place. This would require retailers to dump billions of dollars worth of credit card infrastructure country wide for a technology that is still in its infancy. In Kenya, the use of mobile payment systems is far more common amongst retailers, possibly making NFC the next logical step into POS integration.

Much of Kenya’s population still remains outside the formal banking sector. This closes the door to widespread adoption of online payment alternatives such as Paypal, which launched its own in-store mobile payments solution. It relies on a combination of a four digit PIN and mobile number for authentication or if you prefer, an old-school Paypal magnetic card. Paypal relies on your bank account for you to transact, a liberty a lot of Kenyans do not have at this point in time. NFC infrastructure provides an open playing field for all of Kenya’s mobile payment solutions and banks to converge; certainly something that is overdue in our market.

Other interesting developments in the world of NFC also suggest that Kenya may be prime NFC real estate in the short-term. Visa are set to launch their “” NFC based payment solution in Europe by the fall while in the US, ISIS, a joint venture between AT&T, Verizon and T-Mobile is pitted to launch over the summer. Meanwhile in Kenya, Google have launched the ‘Beba Card‘ which uses simple inactive NFC tags to pay for bus rides on Citi Hoppas.’

In essence, Kenya should experience a rapid adoption of the technology, as its performance in the mobile payments arena coupled with low access to banking services have opened the door to convergence. NFC may be the answer.

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5 Responses to “NFC in Kenya?”

  1. Martin Kiarie says:

    This is a very interesting article Allen. Based on your article I truly see that NFC could be Kenya’s next big thing, MPESA 2.0.

    • Allen Kambuni says:

      The adoption of this tech has to solve real world problems and hinge less on the theoretical. The Beba Card is a good idea. M-PESA 2.0 should be just as intuitive.

  2. Iceman says:

    Awesome stuff..sad that Google Checkout for merchants is still only available for users in the UK and USA..and also sad that that tiny NFC chip is only found in a selected few smartphones (most of the new Nokia..galaxy s3 just got it and if that’s the price users have to pay for efficiency..the technology stops being practical..)

    Not so confident in the MPESA 2.0 lingo however :-)

    • Allen Kambuni says:

      I agree with your sentiment about technology having to be practical. Good thing is that by around 2015, about 30% of all phones will come NFC enabled. Long road, but worth watching.
      –M-Pesa 2.0 will be the next catch phrase!–

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