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Swing and a Miss: Why DigiMo Won’t Upstage NFC

It’s been exactly one month since I downloaded the Google (Nasdaq: GOOG) Wallet app to my smartphone. And it’s safe to say that I’m hooked.

Not just because of the ease of use, either.

Much of the appeal actually comes from the reactions from those around me. These have ranged from simple murmurs of excitement as I left the store, to outright cries of praise like “Google Wallet? That’s so dope” and “Oh my god, that’s the coolest thing I’ve ever seen.”

Sure, these responses are bound to subside as mobile payments proliferate more aggressively this year. But for now, it’s a nice added bonus.

Sadly, though, I’ve only been able to use the application five times. And it’s not for lack of trying, believe me. In fact, the first thing I do when I get in a checkout line is see if the register has a MasterCard (NYSE: MA) PayPass terminal (the only technology that currently accepts Google Wallet’s NFC payments.)

It continues to be NFC’s biggest hurdle. There just aren’t enough retailers with registers capable of communicating with NFC chips.

Not all mobile payment providers require NFC, however. Israeli startup, DigiMo, for instance, has created a novel technology that allows businesses and consumers alike to begin using mobile payments without having to update their registers and phones.

A New Angle on Mobile Payments

DigiMo showed off its new mobile payment technology at Mobile World Congress (MWC) in Barcelona earlier this week.

Here’s how it works…

Essentially, DigiMo hands out unique QR codes (like the image below, for example) to retailers, one for each register. Businesses also receive a special credit card for use at the point-of-sale.

Consumers download the DigiMo application on their phone and establish an account through the company’s secure servers. Then during a transaction, the customer opens the app and scans the register’s OR code using the camera on the back of the device.

After the customer enters the PIN code associated with the account, the payment is sent through DigiMo’s servers. Then the cashier ends the transaction by swiping the store’s own credit card.

Check out the video below to see the technology in action. It also shows how the app offers social networking features, location-based coupons and personal money transfers, too.

DigiMo Overview

As you can see, it’s certainly unlike anything we’ve seen before in the mobile payment space. And DigiMo is in the process of raising cash in order to test out its unique solution in the United States.

But once that happens, does this mean the end of NFC as we know it? Hardly…

Long Live NFC

TechCrunch’s Jay Donovan says that DigiMo “cracks the code” in mobile payments. That’s because it bypasses the need for merchants to update their existing payment systems. Not to mention consumers won’t need to purchase new NFC-enabled smartphones, since the app leverages your phone’s camera to process the payment.

Makes sense.

The problem is, while I agree that this technology certainly makes it easier to implement mobile payments, I’m not convinced that merchants and consumers would actually want to use it.

Why not? Because it looks, well, awkward!

One of the main things I like about Google Wallet is how fast the checkout process is. You unlock the phone, tap it to the point-of-sale terminal, punch in your PIN and you’re all set.

With DigiMo, the process isn’t nearly as simple. It adds steps like opening the application, waiting for DigiMo’s servers to respond and then having the merchant swipe the card.

In addition, QR codes can be a hassle. As Dan Frommer from Business Insider says about scanning the unique barcodes…

“There are the inevitable delays… for the camera to prepare itself to shoot photos, getting the right distance and focus on the barcode, and hoping the mobile data network responds to your query quickly enough to be worthwhile.”

Not the most thrilling prospect when you’ve got a line of impatient shoppers behind you.

Besides, getting people to ditch the comfortable routine of swiping credit cards in favor of mobile wallets is going to be difficult enough. The idea of awkwardly holding your phone out like you’re trying to take a picture of the cashier isn’t likely to sway any fence-sitters.

And forget about being rewarded with looks of awe. Instead, steel yourself for the annoyed peripheral glances from fellow store patrons.

With that said, the technology should at least spread the word about the benefits of mobile payment technology to the masses. Which, in turn, should lay the foundation for NFC’s rise.

Good investing,

Justin Fritz

Justin Fritz

, Executive Editor

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