Google managed to cause controversy well before they imbued the Nexus S 4G Android phone for Sprint with NFC (near-field communications) technology in hopes of getting in early on the mobile payment market. Last May Paypal brought up a lawsuit against Google and Paypal ex-senior executives Osama Bedier and Stephanie Tilenius for breach of contract and employee poaching. Bedier left Paypal to head up Google Wallet and this lawsuit comes as no surprise.
From October 2010 forward, Google and Paypal have entertained the use of NFC to transition the masses to digital wallets but they have decided to take different approaches. Google has adopted NFC as the method of choice, for now, and there has been a lot of discussion between major payment processing companies like Square, Visa and Mastercard about the widespread adoption of NFC technology. The general consensus at Mobile Future Forward this year was that NFC wouldn't see its day for another 3-5 years but Google is pushing forward and has entered into discussions with Visa, Discover and American Express about integrating their services.
The director of communications at Paypal, Anuj Nayar, recently offered insight into their take on NFC and how they intended to approach mobile payments.
Ebay CEO John Donahoe made a joke on a recent earnings call about merchants referring to NFC as "not for commerce" and that sentiment seems to be echoed from the top down. Nayar pointed out some of the fundamental problems with NFC and Google Wallet to TechCrunch in a recent interview using the argument that NFC technology was still years away from widespread use to kick things off.
There simply aren't that many NFC enabled phones out there and we don't see NFC as something that will happen very quickly.
This doesn't mean that Paypal is ignoring NFC; they are making their own integration efforts but aren't going to heavily invest themselves in it. Nayar also mentioned that if NFC takes off in the future that it won't take over the market as the primary solution.
The approach Paypal is taking on is intended to provide a comprehensive solution designed for in-store merchants that involves the targeted use of data. Paypal wants to be able to give customers access to live inventory counts as well as real-time advertising and store deals. Most importantly, they want to do it in a way that doesn't ask retailers or consumers to do anything different than they are now, such as purchase a new mobile device with NFC or convince merchants to spend money on technology to support it.
Which method will be more successful? Only time will tell.