According to a recent Harris Interactive survey, most consumers feel smartphone payments will eventually replace credit and debit cards and cash for most purchases but it’s likely not going to happen within the next five years.
That bodes well for the long-term outlook for chip makers like NXP Semiconductors NV (NASDAQ:NXPI) and Skyworks Solutions Inc (NASDAQ:SWKS), which are leaders in the field of near-field communications, or NFC. That’s the technology that allows mobile devices to securely communicate with a payment terminal. Wave your NFC-enabled smartphone in front of an NFC-enabled terminal and you can easily make a payment.
Objects are closer than they appear
The interest expressed in the survey is part of the reason behind why NXP Semiconductors NV (NASDAQ:NXPI) feels 2013 is the year that NFC technology takes off. Google Inc. (NASDAQ:GOOG) has been in the forefront of the issue through its Wallet mobile payment system and Android smartphones like Samsung’s Galaxy have been equipped with NFC chips to take advantage of it wherever it’s available. Indeed, Samsung recently partnered with Visa Inc (NYSE:V) to provide an NFC platform that financial institutions can trust.
Banks will be able to load payment account information to a secure chip embedded in Samsung devices using Visa Inc (NYSE:V)’s mobile provisioning service linked to Samsung’s service that creates secure data storage domains for card issuers.
Notably, however, Apple Inc. (NASDAQ:AAPL) has yet to jump into the fray. Although many watchers had anticipated the iPhone 5 to include an NFC chip, it was not to be, even though it had acquired such capabilities through its AuthenTec acquisition last year. And with Skyworks Solutions Inc (NASDAQ:SWKS) already a chip supplier for the iPhone, should Apple Inc. (NASDAQ:AAPL) decide it needs to be a part of the NFC revolution, it has ready access to a key player in the field.
Scanning the horizon
Yet retail king Wal-Mart Stores, Inc. (NYSE:WMT) may be leading the way in killing off the chances of NFC gaining a real foothold. Rather than investing in the expensive new terminal upgrades that would be required to make NFC in its stores a reality, it’s rolling out an iPhone app called Scan & Go that allows consumers to scan and bag their purchases while shopping and simply scan a quick-response pixilated QR code square at the checkout terminal to complete the purchase.