Over the past few years much of the innovation in payments has centered on the consumer experience with the mobile handset for purchases at point of sale (POS). NFC payments is the topic du jour in many countries. Mobile network operators through consortia like ISIS are driving an amount of buzz in the industry, as is Google Wallet - and then there's the constant debate on when/if Apple will announce NFC capabilities in their phones. Just for the record, Windows Phone 8 does support NFC. It is a technology with a wide range of uses far beyond the emulation of contactless cards. For example, tagging an offer from an NFC-enabled smart poster.

With that in mind, here's the challenge with the NFC payments experience - it only focuses on a single payment scenario on a single device, in a whole sea of different device types. Although an important technology to pursue, long term coalescence around NFC for payments is not certain, particularly given the adoption of quick response (QR) codes for redeeming offers and payments. In fact - that's somewhat true for all POS experiences by mobile phone. Why? Well let's get real for a second and acknowledge that once the consumer gets beyond the 'that was cool' factor of using a phone to make a payment - it is actually very easy to swipe a piece of plastic - especially since no signature is required for low amounts. 

 So where does that leave the mobile payment and the digital wallet? At Microsoft we believe that banks needs to be present in the financial lives of their customers through every channel possible. Of course that means online and mobile - but customers do much more than that; such as gaming and watching movies on Xbox, or chatting to friends on Skype. The key enabler of this is the digital wallet. My perspective is that a digital wallet that is accessible from multiple channels and devices needs to be cloud based, with device endpoint localization as necessary.

As mentioned at the start of this post, most innovation has been at controlling the end user experience. Many banks ask how they can control or lock-down the wallet. But that will not be successful. Just as I choose what cards to put in a leather wallet, the same has to be true for digital wallets. The question for the bank is not "how do I control the wallet?" - but, "how do I float my payments brand to the top of the wallet?" The key to that is understanding and anticipating customer behaviors.

For any payments initiative to be successful, there needs to be value between the payer, receiver and the enabler of the transaction. That transaction starts before deciding how to pay. It starts when an individual decides if and what to buy. These days I talk with more and more banks that ask how they can influence the shopping behavior of their customers - in other words to be more relevant in their lives. Payments are a strong connection in customer experience, and the information about the payment is as important as the payment itself. By using a combination of big data social analytics, and the payments and spending patterns of customers, banks can now start to direct very targeted offers to their customers - providing they use that bank's payment instruments. Extending that to mobile devices, bank customers can now search for bank-offers in the mall they are visiting by using the geo-location positioning integrated to an app on the phone. Offer redemption can either be through cash back, or instant rebate/reward - whether customers pay by card or by phone. In that realm, the payment technology itself is secondary to the overall value created by the wallet.

This is where Microsoft comes to the table - as an enabler of solutions throughout the payments lifecycle - for the bank, the merchant and of course the customer. To understand more - and to explore digital wallet development - I would like to invite you to join Microsoft for an event in London. For the week of March 18th we are hosting the Digital Wallet Foundry (#DWF).  The #DWF’s primary goal is to encourage the development of wallet applications.  Developers, designers, industry leaders and ‘people with a view’ will make up the attendees and contributors.  Click the link or graphic above to learn more and to register. I hope to see you there!