And Square, Inc. is making a brilliant "Trojan Horse" series of business moves to bootstrap adoption in both users and vendors. They get vendors using the Square app by providing plastic processing, they get users using the app by providing convenient tabs... as smartphones become ubiquitous, they don't have many limits to growth.
NFC on the other hand... Who is going to be the jockey that rides NFC in the race? Google? What will Google be able to offer to vendors that Square doesn't? I can't think of a single benefit of NFC over Pay With Square from the vendor's point of view. And Google will never pound the pavement the way Square is. They just have too many other fronts to fight on.
A geofenced app -- if not Square, then Apple Passbook or others -- could prompt me on my own device's screen: "The vending machine here requests $1.50 to dispense your Snickers. Press 'pay $1.50' or 'cancel'."
The soft-interface device screen is much more flexible than the NFC-tap/wave-in-the-right-place gesture. Your own device screen will be better for doing things like:
• pre-authorizing a purchase before buying a tank of gas
• requesting an emailed receipt
• offering immediate feedback (or adding a tip)
• avoiding possible confusion/chargebacks about amounts paid.
That could mean 'app-style' payments have not just usability benefits, but also cost and legal benefits over 'NFC-style'.
- constant location polling is a battery drain
- GPS reliability/speed degrades quite a bit indoors (are you at Starbucks or the shop next door? What happens when another Mr. Gojomo next door orders coffee and the cashier is rushed and doesn't notice the different face?). WiFi isn't much help here either if you're in a large urban area.
You can still do all you listed starting with a NFC handshake instead of playing with GPS. Geofencing is helpful for getting payments onto existing phones (not to downplay Sq's achievement here), but NFC or another more localized technology will be necessary to make payments more reliable.
Care to evidence that assumption just a little bit?
According to the Square App, I have to drive 11 miles away to find the nearest accepted location.
Ultimately, I think both will operate in parallel for quite some time until Apple decides to release something and takes over the world of payments overnight. :)