Yesterday afternoon at Mobile World Congress, a panel gathered to discuss the opportunities and challenges facing NFC in the retail space presently and in the near future.
Before diving in to what was covered, there’s an important technical detail to discuss that is often not covered at the lab because it is a little too in-the-weeds technical, but is relevant in this context. When we tap a phone to read an NFC tag, the phone is acting as the reader and the tag is being read. In a mobile payments scenario, the Point Of Sale system (or in the UK, “The Till”, as was discussed today) is the reader and your phone is being read. Specifically, it is the secure element that is being read and more often than not that circuitry lives inside one’s SIM card. The carriers in particular are enthused about this arrangement since they control the SIM card and would enjoy having the future of payments standardize around their equipment.
In any case, SIM-based NFC is gaining momentum. There are now 80 million NFC-capable handsets out in the world and 40 million NFC SIMs in those handsets. So to recap, if an NFC-capable device has a regular SIM in it, then it can act as a reader but cannot itself be read, or at least cannot be used for payment.
The panel identified 4 core challenges facing the wide adoption of NFC:
- There needs to be a robust ecosystem of services across multiple verticals to entice consumers to demand the technology of their providers
- There need to be killer apps for the technology beyond payment. Transportation is a good example of a space that could take advantage of this.
- The specification needs to be standardized globally, and the testing and certification process needs to be streamlined
- There needs to be common iconography and a standard global customer journey. If that sounds difficult, consider that there are only 1 or 2 customer journeys that are standardized for plastic credit card usage globally. So there’s hope it can be achieved.
Retailers are not feeling pressure right now to adopt NFC-capable terminals. Consumers are not demanding it yet. One suggestion would be to add some kind of analytics layer, or some kind of mechanism of consumers tapping a check-in when they enter the store. The extra data stores could stand to learn about their customers could sweeten the pot enough for them to invest in new equipment.
Retailers are feeling some confusion right now because lots of vendors are trying to sell them lots of divergent payment systems and their POS cycles are too long to make a big investment in the wrong technology. They by and large need more certainty before they can bet on a particular technical standard.
One hope about increasing consumer demand for paying with their phones is the general theme that phones are increasingly becoming central to people’s lives in many other ways. The hope is that by 2014 or 2015, the demand to pay with one’s phone will organically grow out of this trend requiring less assistance from big industry programs.
A possible manifestation of NFC payment that could speed this process would be a mechanism where readers are built into laptops, and users can tap their phone to their laptop to pay for items. This solves a pain point for consumers, that of having to key in their credit card number to make a purchase online.
One strongly held view among many of the panelists was that payments will not be the killer app that launches NFC. There’s got to be something utilitarian that improves people’s lives in a more substantial way that gets them interested in the idea od tapping their phones. This may not even be a tap-your-phone-to-a-terminal type interaction. Perhaps it could be a peer-to-peer tapping experience like Android Beam or tapping a phone to tablet.
In terms of non-payment use cases for NFC, many general ideas were discussed. A retail expert suggested the ability to tap as you enter a store to load your loyalty account with special deals just for you. A town manager form the UK suggested civic and public interest uses of NFC out of home in the city centers might help spur adoption.