March 16, 2014
There is no clear winner in the cashless, cardless and contactless payments+commerce space. There are some strong contenders but Payment/Commerce/Marketing pundits believe the right solution has yet not come while there is a need for it. Beacons has a lot of potential and should be a front runner along with NFC. But MediaTek, a Taiwan based smartphone chip manufacturer, recently announced that its latest technology helps connect devices wirelessly, with the help of newly invented proximity technology. NFC (Near Field Communication) may be facing another rival in the form of this new invention termed HotKnot.
HotKnot will make use of special capacitor touch sensor ICs for touchscreens to send communication protocols. In the case of NFC, Antennas and RF communication chips are used while HotKnot detects the presence of nearby devices through the use of a special capacitor touch ICs for touchscreens, combined with data from the smartphone’s proximity and gravity sensor. MediaTek says that any job that can be done utilizing NFC, can also be done with their HotKnot technology.
HaoJung Li, product marketing manager of MediaTek's wireless communications business unit estimates, that only 10 per cent of smartphones sold in China are integrated with NFC. MediaTek's game plan is to get Hotknot designed into smartphones almost free, while emphasizing the 'fun' elements of physical touch, and promoting its ability to 'pair everything' among consumers, Li said. 'But our first job is to build the infrastructure, making sure that millions of smartphones used in China will actually come with Hotknot.
Why we are taking notice of this at Let's Talk Payments:
- Chinese have developed a great fascination to have their own wireless standards (TD-SCDMA, etc.) and fighter planes. They have also developed their own card network called Unionpay which has more cards issued than Visa or Mastercard.
- If Hotknot is what China starts looking at as their contactless technology, everybody would be tracking it by next year. The shipment numbers in China will start looking big and mind-blowing if it is adopted by just the early adopters. And in no time it will start going global. As with Unionpay if the government decides to give it monopolistic powers there is no stopping Hotknot.
- NFC has shown weaknesses. Technologies like Beacons and Hotknot which address those issues and provide all the functionality have a huge chance to win in the long term.
- Its cheaper NFC with a cherry on top. China has shown it with toys and hundreds of other manufactured goods that Cheap is good if done well. If this is the contactless method that will bring the next billion people to use tap and go then so be it. Mediatek (its a global power in chipsets now) and its handset partners could bring it at an in-significant or no additional costs for the buyers of these phones. Its a win win.
- HotKnot will come along with the new 8-core MT6592 chipset and so all of this is not too far in the future.