With all the recent announcements surrounding NFC in the last few weeks, including news of the cross carrier JV, Apple recruiting experts in this area etc., it has given me pause to wonder if we’re finally going to see some real adoption of NFC in the US over the next 2 years.
To answer this question we must start with the consumer benefit, as that will drive adoption (or not). Does the consumer need NFC? This is like asking do consumers need LTE or WIMAX – consumers need faster mobile broadband, they don’t care how technology delivers it. Near Field Communication is a radio frequency standard, not a consumer-facing payment type. What consumers really need is more convenient ways of making payments – although I think solving remote payment is more pressing than solving proximity payment issues. How many times have you not had quarters for a parking meter or failed to get crumpled bills into vending machines? Sybase 365 mobile payment implementations in Europe and Asia focus on a server-side mobile wallet, which can be triggered by a variety of mobile channels, SMS, Browser or Apps. We have not been waiting for NFC handsets and terminals to start offering consumers the benefit of paying by mobile. In the parking example, there is the added benefit that you can receive reminders and auto extend when time is running out on the meter. We are now starting to add NFC as an additional trigger method for remote and proximity payments, but in most cases the payment instrument remains server side in the cloud as it is for other mobile channels
In the US, where credit and debit and the terminal infrastructure is so established, do we really need a different way of doing proximity payments? Where mass transit is prevalent there is a case for NFC combined with payment card instruments stored locally on the handset (be it through sticker, SD or in handset). For speed through turnstiles, transactions and utilization can be driven by pricing (as London Transport does with Oyster on the Contactless card side). Outside of areas of mass transit, I struggle to see the user benefit or where we will see significant uptake. The convenience factor of tapping a phone vs. swiping a card (outside of mass transit) is not significant enough to change user behavior, so I remain somewhat dubious about widespread adoption. In fact the main clear benefit of driving payments from handsets is actually for the retailer rather than the consumer. A handset is a 2-way communication device that can receive offers and promotions in a way that a physical wallet cannot. However there are ways that we can entice consumers into opening up that 2 way channel with the retailer or brand that are not dependent upon NFC – based on our existing mCRM products.
At the end of the day, if our industry can find ways of improving remote and proximity payments via Mobile, we will see adoption, but we should see NFC as part of the enabling technology mix and not as the solution to push at consumers.