“Groupon doesn’t make 2 percent of the ticket. They make 50 percent of what’s paid,” Todd Ablowitz, who is the president of the Double Diamond Group, another company that does consulting for the electronic payments industry, told CNET. “Everyone is chasing that promotional revenue, and that’s where the focus is going to be,” he continued.

That everyone includes Google, which recently added support for NFC in its Android OS though has not yet offered up its payment tools for retailers or developers. Near the end of last year, Google came close to buying Groupon and has since refocused its efforts on social deals with its Google Offers platform . There’s also Facebook, Amazon, and start-ups like FourSquare, Gowalla, and Loopt, which have carved out deals with retailers to attract mobile phone users with coupons and discounts.

So what would it take to get there? Will Apple simply partner with some of these existing point-of-sale hardware makers or go its own way with boxes that go out to retailers? According to Ablowitz, it’s unlikely to go the latter way.

“The world of retail does not happen at the same speed as the consumer,” Ablowitz said. “You can get consumers to pitch their cell phones and get a new one, or pitch their Walkman and get an iPod. Getting retailers to change their business practices, you need a return on investment. They don’t do it just for cool.”

Further proof that Apple would opt to partner over starting from scratch can be seen by looking at the way the company has already approached payments with its own products, Ablowitz offered.

“They haven’t been trying to their own consumer payment application, they’ve been partnering with whatever you have in your wallet today on iTunes. So it’s a fallacy to think that they’d be unwilling to work with a player,” Ablowitz said. “They just know the difference of when they should build, and when they should partner.”

One thing that sets NFC apart is that your phone doesn’t have to be on or even connected to a carrier’s network to have it work with NFC readers. The technology can also be set to require a PIN or password code to authenticate its use. That security decision, Ablowitz explained, was still something that was up to the payment provider. But there’s a greater level of control being given to the carriers with NFC chips as far as security goes.

“What needs to happen with Apple, is much bigger than a simple chip,” Ablowitz offered. “They have to make a business decision to bring a service to market. That’s every bit as big as iTunes was, or iBooks. They have to deal with the approach for how you get people’s payment types onto the phone.”

Cnet News, March 23, 2011
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