Despite hefty investment by some retailers, near field communication (NFC) – what some thought would become the payment norm – has not taken off.

Despite hefty investment by some retailers, near field communication (NFC) – what some thought would become the payment norm – has not taken off.

Only four months ago, Best Buy and 7-11 shut down NFC capability in their stores. However, digital payment protocols using mobile are far from dead: it is likely one technology will emerge in the next two to three years which will break through and gain mass adoption.

Candidates today include Zapp - the UK bank coalition and Apple’s iBeacons. It may yet be that body recognition capability, retina or fingerprint, will leapfrog device-based recognition: again take up by retailers, financial services and customers will determine this.

Given this scenario, significant innovation effort has been pointed towards simplifying the traditional credit/debit card payment interface for both retailers and customers.

For customers, banks have been driving contactless payment using existing cards for small transactions. For retailers, several companies have been trying to disrupt the payments industry by creating physical devices which attach to tablets/smartphones and allow retailers to accept cards, as well as providing analytics and data services.

Most successful has been Square, which has successfully positioned its offer to the smaller retailer: those too small to use banks’ terminals. The big appeal for these is the low set-up cost and the flexibility of attaching to a smartphone.

Other companies successful in this space include Sweden’s iZettle, India’s Ezetap and most notably PayPal Here, which has the advantage of consolidating data and analytics with PayPal’s hugely successful online payment system.

In to this relatively crowded space, Amazon has arrived with their Local Register proposition. While unashamedly a ‘Me Too’ player, Amazon has priced the technology very competitively, undercutting Square and others by a magnitude of scale.

Of course, this is because the relationships Amazon will form with physical retailers and the data they will collect are of greater value than the margins generated by the device. It’s unlikely customers will even notice that they are using an Amazon device compared to the myriad other payment devices they come across for cards.

However, there are obvious flaws in Amazon’s plan; while Square and others do provide analytics and data collection on their platforms, they have not, to date, made a play for monetisation of that data asset, though PayPal has been experimenting.

While Amazon is equally unlikely to pursue a monetisation approach, they will absolutely be interested in analysing that data to gain an understanding of the customers and sales paid for on the Local Register system.

And therein lies the rub: not only do retailers - small and large - know this, they also know that Amazon is a direct competitive threat to their businesses. Therefore, expect some penetration in the marketplace, based on the competitive price point of Local Register, but it’s hard to see how Amazon will achieve any scale success with this offer based on its obvious commercial constraints.

Jason Nathan is global multichannel capability director at data specialist Dunnhumby.