The case for NFC

The case for NFC

I read with interest Simon Rockman’s assassination of NFC’s future in his recently published article (Mobile, 14 October). If his absolute dismissal of NFC as a credible mobile technology were true, then I would be hitting the bottle or walking towards the edge of a cliff. But I’m not.

Lack of consumer demand

Don’t get me wrong. Simon did raise a number of issues worth debating. But having been involved in the development of MasterCard Paypass, I believe I am well positioned to put up a stern defence of NFC.

He cited a lack of consumer demand for NFC. Yes, that’s true, for two simple reasons – not many people know about it and there are very few phones currently in circulation. Like any other new technology, until it’s out there and people have an understanding of what it can do, it won’t have an immediate demand. That’s why we need to invest some time and resource in educating people to its use.

One of the biggest issues is that until now NFC has been mainly associated with mobile wallets and card displacement, but there are many more commercial opportunities to exploit. More of that later.

Who’s going to foot the bill?

So, who is going to foot the bill for implementing NFC payments? Well, it’s likely to be those who have most to gain.

Retailers will gain from deploying contactless payment terminals (which are NFC-compatible anyway) because of the speed and lower costs of contactless card or mobile transactions. Many will include this capability in the natural replacement cycle as contactless/NFC support is now a standard feature on new payment terminals. And, once the terminals are in place, it will open up the NFC capabilities for coupon distribution and redemption and loyalty card inclusion in mobile wallets.

Despite the incremental cost of the technology, network operators will benefit from being able to provide new sticky services to customers to increase loyalty and usage revenues. Operators know
that while they won’t be able to get a percentage of the transaction revenue, they will be able to generate revenue by having their own cards in mobile wallets.

There will also be longer-term revenues for service providers such as banks, transit operators and retailers for having their cards in the wallets that network operators are providing.

Networks and handset manufacturers will also be able to recover implementation costs through the wide range of revenue-generating services that NFC enables, just like other mobile hardware such
as cameras and GPS.

The NFC location-based marketing opportunity

Before mobile payments become commonplace, we will experience NFC ‘hyper-local’ marketing campaigns delivered by brands wanting to engage with us or incentivise our buying decisions. This is likely to be an area where increased sales, repeat purchases and customer loyalty will drive the revenues to more than repay the investment in NFC technology.

And don’t forget that NFC also reads contactless cards and allows for fast peer-to-peer sharing of content.

Creating differentiation in the market

Manufacturers and operators will be able to arrange exclusive deals for their customers with popular high street brands and outlets. This will give their customers tangible reasons for choosing a specific brand or model of handset or an operator’s tariff.

One of the core benefits of deploying NFC is the immediate impact it can have on driving sales. Vouchers and coupons are going to be one of the first areas where NFC is used. Because NFC tags can be embedded in virtually anything, we are going to see retail stores and convenience outlets offering passers-by, or in-store customers, incentives to purchase by asking them to tap on a point-of-sale display or poster to download a voucher that can then be redeemed at the payment terminal.

High street impact

But maybe the more immediate impact of NFC will be felt on the high street. New life will be breathed into traditionally passive out-of-home (OOH) media like bus shelter posters, shop fronts and signage. Soon they will be at the forefront of customer engagement for marketers.

And since NFC requires mobile users to make just one tap to interact it will generate greater uptake than other mobile technologies, such as Bluetooth or QR codes, where the process is a bit laborious and involves opening apps and activating links.

In addition, the incremental costs associated with embedding tags are small when compared to the costs of installing the host media, i.e. posters, signage or print. Just a few taps will justify the costs.

Tracking customers ‘post-tap’

NFC also gives advertisers the ability to track customers’ behaviour once they have tapped a tag – whether this is to make a payment or responding to a promotion. For 21st Century marketers, being able to demonstrate the effectiveness of campaigns and account for every penny spent is of paramount importance. With NFC, data relating to downloads and redemptions can be recorded on a campaign management system, providing sophisticated analytics and tracking.

So before writing off NFC, you must consider the full range of benefits it provides, such as enabling things like Oyster card top-ups, card present transactions and reading contactless cards.

And if you still want some reassurance of NFC’s potential, it’s worth remembering that Google has developed its very own mobile wallet.

Written by Mobile Today
Mobile Today

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