QR vs. NFC: The Beta vs. VHS of Mobile Payments

Jay Rivera |

December 17, 2012

Mobile Payments

In cleaning out one of a number of boxes in my basement (that I haven’t touched in the years since we moved to our house), I ran across, “The Hunt For Red October,” “Days of Thunder,” and “Heat”, all on VHS.  Yes, all of these selections are true to my Y-chromosome nature, but it eventually got me thinking of how I don’t even have a VCR to play these videotapes anymore. Anyone that remembers Fox being on UHF also remembers the decade plus long war that was waged between Beta and VHS. 

Released in 1975 by Sony, many audio and videophiles judged Betamax (Beta) to be the superior format in regards to quality. However, VHS, released by JVC in 1976, ultimately won out. There are many reasons up for debate, even today, as to why VHS won the videotape format war. VHS licensed more content available than on Beta, Beta machines were more costly to manufacture than VHS, and the VHS format recorded in three different speeds, allowing the user to trade quality for recording duration (the recording length shortcomings of Beta were well noted, often being limited to 60 minutes). By the time that Sony addressed many of these concerns, many consumers had already adopted the VHS format, which also helped spawn the video rental industry. (Anyone still have a Blockbuster video card - that’s another story..)

Coming up the stairs from my basement, my phone let me know I had a new email message. Pulling it out of my pocket to check, still thinking of those VHS tapes and assessing the best way to recycle them, it got me thinking of that other “war” being waged on the new format and device used to consume entertainment nowadays. Being an active LevelUp consumer, it got me thinking of QR versus NFC and the battle being waged for the mobile wallet. There are many benefits and drawbacks of each:

Mobile Wallet Format

QR

NFC

Examples of Mobile Wallets

Apple Passbook, LevelUp, Kuapay

ISIS, Google Wallet

Payment Transmission Standard

Visual representation on device screen, read by payment terminal. Phone must be unlocked and active to render QR code. 

Proximity of NFC-enabled device to reader. Depending upon mobile wallet configuration, payment can still be transmitted while phone and screen is locked. 

Current Manufacturers Supporting Standard

In theory, all current Smartphone manufacturers can display a QR code on the device screen. 

HTC, LG, Samsung, Sony, Motorola

 

Here in the United States, while it was no one specific or major reason that VHS “won” over Beta, it was a number of factors that added up to make the format widely accepted, not only for companies to manufacture, but ultimately the end user to consume. The value chain, all the way down the line, was easily accessible and cheap. Mobile wallet providers could learn from this battle that was started over 30 years ago. While different mobile companies have drawn their battle lines as to which format they’re going to support, and the value in which they feel they bring to the end consumer, the winner of this particular war will achieve “victory” in the same way – by making sure the barriers to entry are low for all, from manufacturers to end consumers (which means making standards as open as possible), and getting the technology (as many devices as possible) in the hands of the masses with the content (compatible apps, loyalty and rewards automatically built-in) readily available.