The future of mobile payment is NFC or QR code?

The development of mobile payment has to go through three days.

On the first day, there was nothing on the earth. Everyone said that on the small island on the east side of the sea, there was a magical light called NFC. Everyone had been discussing the sunset in the evening, and it was dark, and the people who were not willing to be dark finally fumbled. The NFC fire was ignited. Some people who are optimistic about the "money way" picked up at night, and from time to time there will be a figure of government and state-owned enterprises next to the fire. They may throw a big wooden stick and fire it. The child was a little more prosperous, but soon returned to normal. Near the morning, there were many NFC fires in the dark, but they were not burning.

The next day, the dawn has arrived. The new light is called the QR code, but the group is still continuing to surround the NFC fire, and firmly believes that NFC is not dead. At this time, a person from the West brings a new NFC flame. - ApplePay, it's cool, burning a kind of fuelwood with Chinese characteristics - X grid, a few well-dressed people began to gather toward him, they are not even willing to face up to the already bright day, rather the warmth of the fire, Gradually, the NFC fires that were built in the past have also prospered. During the day, many people gather in front of the fire. Some of them know that the fire can cook their treasures, and others may not even know what they are.

The third day has not yet arrived.

How far can ApplePay go?

As a practitioner in the mobile payment industry, talk a little bit about it.

Mobile payment is already the second round of stir-fry

Mobile payment / mobile payment / mobile e-commerce / mobile wallet / ... These words are irritated in the country around 2007, about the new "big data" and "cloud" that were sizzling around 2012 The new words of the four-shot have covered the limelight, and then disappeared into the mainstream media, occasionally taking the lead but relatively low.

Although it is not at the forefront, several top Internet companies have been smashed in the past few years, imperceptibly advancing, and now they are all paying treasures. From the user side, it feels like subversive innovation. In fact, the mobile payment system has fully developed in China.

Brush Alipay to brush WeChat, the experience is similar to the bus card, but the system supporting this system is far larger, more complex, more sophisticated and more perfect than the bus card system. I wrote an article in 2009 - "Based on 4P and 4C's Mobile Payment System Construction describes how a company can build a mobile payment platform – covering mobile wallets (mainly based on NFC RF communication, supplemented by QR code communication), B2C mall, back-office accounts, order systems, etc. A series of frameworks, and designed a variety of information channels and customer interface, the article is more focused on marketing, it was also very forward-looking, and today, in addition to the NFC chain has been basically achieved, the article is similar to the current content I have already searched the Internet and I am familiar with it.

But why did the author not take this article to fool VC entrepreneurship? This is the two topics to be said today: the technical dispute between NFC and QR code, the system dispute, these two topics are difficult to split, will There is overlap, and the general conclusion is that NFC is no longer an opponent of the QR code.

The technical dispute between mobile payment and QR code

ApplePay is a topic that looks like a high X, so there will be a lot of people paying attention, but there is nothing new in technology. Many great gods have a basic knowledge, especially technical knowledge, so I will not repeat it. In the field of payment, NFC technology and two-dimensional code technology are only different in the front-end near-field payment technology, and the background technology is completely the same. The technical dispute between the two is also at the front end.

Why do Chinese people always think that NFC is reliable because the NFC in Japan is really developing very well? At the beginning of the 21st century, the 13.56M mobile phone RF payment promoted by DOCOMO and other companies has been fully applied. You can use the bank card to consume it. It used to be the dream of Chinese telecom operators and financial companies. Put the bank card data into the mobile phone, and click OK (also for near-field consumption and remote consumption), but many Like the industry, a good model made by others is different when it comes to China.

NFC started its action in China around 2008, but it also has a lot of twists and turns. The beginning is that China Mobile has made a series of mobile payment innovations (such as the mobile subway ticket launched in Guangzhou in 2008). The mobile phone pays near-field and uses 2.4G communication frequency.

China Mobile has its own abacus, because the SIM card needs such a high frequency to penetrate the back of the phone, and the SIM card is the only operator to control the payment market, so the SIM card must be used for communication and information carrier.

This model is technically different from the communication frequency used by the public transportation system and the financial industry smart IC card 13.56M. It is not in the interest of the latter two to control the market through SIM in business, but because the Chinese mobile operators are strong. The status, control of the mobile phone market, and the establishment of a consumer environment everywhere, so 2.4G has been plagued for nearly two years in a questioning period. During this period, China Mobile has squandered huge amounts of RF SIM cards and transformed a large number of them. The reading equipment has rushed to the market in the near-field payment market, and there have been some breakthroughs, but it has not gone far.

After two years of squatting, 2.4G was on the stage in a buzz because of various technologies, policies, personnel and other reasons. But this twist has ruined the best time window for China's NFC development. In the past two years, the QR code has risen rapidly due to the maturity of various conditions, resulting in the decline of NFC.

(1) The camera accuracy of smartphones has changed the competitive landscape

Before 2009, the camera pixel of the mobile phone could not reach the accuracy of identifying the two-dimensional code. At this time, the QR code interaction must use the special identification device. There are also some specialized companies in China to undertake such business, but the QR code at that time. Near field communication has not become mainstream.

At that time, mobile phones had to use radio frequency to interact with devices such as ATMs and POSs in the near field. The development of NFC in Japan was already in place before the camera had improved accuracy. The trend has already taken shape, and the QR code has entered a mature market. Customers are used to NFC, and spending habits are not so easy to replace.

However, in China in 2011, the basic conditions are different. At this time, the intelligent machine is popular, and the accuracy of the camera is greatly improved. The various APPs of the smart machine can also generate the QR code on the mobile phone interface at will, which can both shoot and Can do it, a mobile phone will be all done.

In the domestic market, Alibaba's Alipay and Tencent's WeChat have become a climate, and when they are paid online, they are also anxious to intervene in the near-field payment field. The QR code can be read with a mobile phone. At the same time, the smartphone can generate the QR code at any time, which is so efficient and simple, and it is easy to be seen by both.

(2) The lack of strong promoters for the transformation of terminal equipment

The simplicity of the QR code is reflected in the upgrade of the existing payment system. NFC requires older POS machines to have RF capabilities, so either pay for it or replace it with a new one. For the national market, this money is not enough to describe the word.

The financial industry has long implemented the 13.56M financial IC card, which is a bank card that can be used, and upgraded the cash register equipment such as POS. These machines can be directly used by NFC, covering the first-tier cities and parts of China. Second-tier cities, but the coverage is not high, but POS Bank and UnionPay squad, their own things will also change their own money. But this is just a financial consumption POS, there are a lot of public transportation POS (bus POS is the most used equipment for near-field payment), campus POS, etc., these equipment changes, there is no rich father. Once China Mobile made a dad, but Dad went the wrong way, sprinkled so much money and didn't even hear it. Finally, the gold was sent back, and it was hard to find such a thing in the market.

Without reading the device, the NFC mobile phone is useless.

Speaking of the use of the modified POS, because the consumption habits of Leica payment are far from being cultivated, the POS used in the early years of transformation is rarely used, and even many merchants will not use it. The menu of POS operation is complicated, and NFC has There is an online payment for the near-field payment, and the 8-word operator is blinded. At the same time, the convenience store staff has a high replacement rate. Even if the training is changed, it will not be used. These devices will be aged there.

The threshold for equipment renovation has almost become the Yangtze River Scorpio of NFC development.

The booming QR code is different. There is no need to make any changes to the existing terminal equipment. What you generally see today is that in the convenience store, the salesperson holds the bar code reader and clicks on it. This is compared with NFC. Too cheap, too easy, the salesperson has almost no training.

Some people may say that the security of the QR code is actually simple. When you type the QR code, you can enter a password or a text message to receive a password. This basically reduces the risk to a very low level. In retrospect, the RFID algorithms used by NFC are not unbreakable, so there is not much difference in security between the two.

So in just two years, the QR code has easily replaced NFC, the customer's consumption habits have been cultivated, and it is easy to replace it with homogenization or even more complicated operations, and the customer has to change the NFC mobile phone. Set a bank card, set a bunch of passwords, even if the artifact like ApplePay, many people try to play with the attitude of playing, or being promoted by the bank, this is not the same thing as popularization.

System dispute between mobile payment and QR code

The technology dispute NFC has been lost, but the technology is only on the surface, the competition behind the QR code and NFC is the core of the contest. The competition between the two is essentially a battle between the mobile Internet giants and the domestic financial and state-owned enterprises, communications state-owned enterprises, mobile phone manufacturers, and local governments.

The support system of QR code is not even called the industrial chain, because the development and operation from the mobile phone interface to the back-end system are almost all taken over by mobile Internet companies, and the connection with financial enterprises and merchants is also responsible for the mobile Internet companies themselves (also A small number of agencies), so the company has a very high degree of control over the entire system, and can fully cope with market competition. NFC is different.

NFC is a small module that is much more expensive than a QR code. Because it involves hardware, it is a more complicated small system. Under the same user experience, NFC needs to be more refined, which requires the cooperation of the entire NFC industry chain upstream and downstream, and the current chain does not seem healthy at present.

Technology is often not a problem, and the root of the problem lies in the business model. Throughout the entire industrial chain, state-owned enterprises, mobile phone manufacturers, and local governments in the industrial chain have not regarded this as the benefit of the lifeline, and the promotion based on win-win will prompt the maturity of the production industry.

(1) Insufficient power of large state-owned enterprises

Most of the domestic large state-owned enterprises are doing Internet, but who can say a few famous products, some banks do not even have their own mobile client, have you used the UnionPay client? NFC? NFC Involved in financial payments and mobile phone hardware, think about these two industries are super giants, from the perspective of these giants, first think about the following issues.

Is mobile payment their lifeline? What is the lifeline of the bank? What is the lifeline of the operator? What is the mobile phone payment for them in the enterprise development? Building a mobile payment system requires a lot of system construction and technology development, and the giant state-owned enterprises have such a Development team? Development partners to cooperate with them for what? NFC should not be the system of the giant state-owned enterprises, who will promote excellence? Can not be better and better?

The author had an opportunity a few years ago to have a meal with the management team of Tencent Tenpay. During the meeting, it was said that state-owned enterprises could not compete with Tencent in the Internet market. They surrounded so many software manufacturers waiting for food, we It is possible for the technical team to work overtime to develop a new product in a week. They are not sure who will come to work for a week. We have always accumulated more and better technology. Their development partners can only do products for the benefit. How to fight with us.

Yes, state-owned enterprises are the driving force in the NFC industry chain, and there are problems with the power, how can they work well.

However, NFC is not necessarily inefficient. One of these giants is different. That is UnionPay. I also had the privilege of having had several contacts with the top of UnionPay. In 2008, they thought that Alipay was a child’s house, not It was because I was too lazy to start killing it. It was tense in 2013. It is true that Alipay and Tenpay have seized the cake of UnionPay and have replaced it. NFC-based mobile payment is now the battle of life and death of UnionPay. This is the lifeline of its current and future. Therefore, the only thing that NFC can rely on in terms of NFC's driving force is that NFC has the hope of survival and the hope of survival. It is necessary to use the ApplePay to invest heavily in POS machines and to focus on the market. However, "Flash Pay" has appeared for so long, and several people have used it. UnionPay does not have the same as the bank's branch network marketing network. In the promotion, it may be necessary to find a bank or a bankruptcy bank to suppress the bank. Can banks not want to push their own apps to spread their own POS? This power is scattered and may offset each other.

In addition, perhaps UnionPay and the bank will vigorously push preferential subsidies to cultivate user habits, and learn more than N billion from Alibaba. But can the current state-owned enterprises do this?

The development momentum of NFC is still very good.

(2) Who can pick the big beam of mobile phone manufacturers?

ApplePay is cool, Apple's top technology company in the world, but in China's mobile payment industry chain, Apple is just a mobile phone manufacturer, his greedy heart of the industry chain is struggling in China's market environment, China The strictness of supervision, Google's foresight has not gone far, Uber's pain is also vivid, and it is not easy to move the cakes of banks, UnionPay and communication state-owned enterprises. I want to develop into a pervasive ecological company like Tencent and Alibaba. It is almost impossible. Therefore, Apple currently only sells mobile phones, and cooperates with financial companies to draw commissions, and it is a little bit in the bowl of others.

But this also gives hope to countless mobile phone manufacturers.

NFC is already standard in mainstream mobile phones, and major banks have already launched NFC-based services. The technology threshold is almost zero, but no one has ever done it. Apple's entry has given the manufacturers a new stimulus. I believe that XXPay will follow up soon, and then if there is NFC in the sales price, it will be expensive. However, manufacturers that are responsible for Apple are very rare. Most manufacturers still aim at sales. So, will NFC models be a good thing? If there are more NFC models, is it still an empty shelf? Hear the following conversation:

——Does your bank's APP and our mobile phone NFC function not match? What is the relationship with my manufacturer? Are you looking for someone to develop and debug? Can't change your station.

——Customer complaints? I am here with technology and sales. Not many people handle NFC customer service. Let's do it yourself.

The more models, the bigger the stalls, the worse the service, the level of mobile phone manufacturers is uneven, and they are truss each other. Everyone makes their own applications. Finally, it is likely that XXPay is hung up, and the rest is only ApplePay, or Samsung Pay. Plus millet Pay.

The mobile Internet product is the most user-friendly experience. If the customer is bored, they will vote for it.

(3) Software and hardware industry chain manufacturers still have big waves

These software and hardware manufacturers who walk in the industrial chain should be the most called the NFC industry chain, and the most incapable of the game, but it is the most arrogant small shrimp in the blue sea.

Many companies saw the NFC business opportunity of Dongpu a few years ago, followed the operators to the water, and took advantage of the cost to develop, but they always could not get up, but also wanted to turn the QR code, but that little development and NFC can't be compared, it may not be enough. Continue to shout that NFC is the future direction!

Then you will see the news of the continuous NFC on the Internet coming out. Today, there is another system. There is another product tomorrow, and the thin and bright ones are not bright.

Today out of ApplePay, it is estimated that there will be such a dialogue: Apple has support, XX always have to keep up, this is a work highlight, you have no technology, I have, you have no system, I built, you have not Talent training, I will sign a contract for you to help you.

In this way, these manufacturers have closed up this year, and posted the previous system changes to the gold master to send the past, lying down to make money, but the NFC payment system is not a building block, it is a financial system, the system is complex The standard is high. These manufacturers are all for making money. Can they do it well? But everyone wants to be clear, the gold master has a core business to be busy, this new thing can run on the line, the user's good or not is not the manufacturer to worry about.

Called the highest, the most profitable, but the high can also be understood as the sound of water does not open or half a bottle of water, that is, Zhao Benshan said the big flicker. There are still too many speculators in the NFC market, and it takes time to sneak.

Looking at the entire NFC chain, there are not many healthy places at present. Apple’s access to UnionPay does not mean that the entire industry chain is mature (after all, iPhone users are only a small subset of Chinese mobile phone users. And WeChat and Alipay are far from being able to compare. It is difficult for the interests of the NFC chain members to achieve a win-win goal toward a common goal. Of course, many people can say that it is so easy to do something in China. If you are healthy and healthy, you don't have to struggle. This is true. So the two Internet giants saw that they had touched a bag and they found out the QR code. Parallel chain, and do not touch the bus, do not change the ATM / POS machine, develop the app yourself, talk about the business by yourself, and strive to be better, earn a small amount of commission and the proceeds of the deposit, the small days have also passed well.

There are still many mountains in front of NFC's road, but there is still no shortage of Yugong (or pretending to be a fool), so it seems that Apple is indeed a respectable company.

The author is not optimistic about NFC mobile phone payment, at least not the opponent of QR code at present, no matter from the cost input or market cultivation, but NFC is the mainstream direction of future near-field communication, and there is also UnionPay in the battle for survival, perhaps Apple enters Later, he will lead some companies to take a bloody road in China's NFC payment market. Later people will walk along his footprints, but this road will take time, and the time should be long. We need to wait. Apple came out or quit.