As more players enter into the mobile wallet arena, consumers need to know why should they invest?
The term NFC is now commonly used among the mobile industry, mostly talked about with anticipation of when this technology will see widespread adoption. Mobile payments are coming – that we know. Near Field Communication (NFC) has received a lot of attention recently in the form of U.S. launches from Google Wallet and most recently the ISIS venture, now live in Salt Lake City, UT and Austin, TX. Payments are becoming more digitalized and consumers want the convenience and control of having access to all of their information in one place – their phone. Industry market research firm ABI Research predicts that dollars spent using NFC mobile payment systems will break the $100 billion mark in 2016. So how exactly would NFC affect your daily life? A few of the more popular uses cases are listed below.
A day in the life
NFC is not just about mobile payments – this technology will soon impact your digital lifestyle, from exchanging personal information via tapping your phones to accessing your daily train on the commute to work. Because NFC is a wireless technology that allows multiple devices to communicate with each other over short distances, the opportunities are endless and will start to become more common in the immediate future. The future of NFC will allow consumers to operate most of their purchasing and access activity through their phone. As detailed in a recent explanation of NFC, a day in the life of NFC could look like this:
• Mobile payments: This is by far the most talked about use case of NFC technology for consumers. In this scenario, the phone would act as a credit or debit card at point of sale. Consumers would store credit card and loyalty card information in a virtual wallet and then use an NFC-enabled device at terminals that also accept NFC transactions. An example of this can be seen through the new ISIS venture – purchasing a smoothie at Jamba Juice from your phone via the NFC POR terminal located at the register.
• Ticket purchase: Widely used in the UK, this scenario allows for consumers to purchase (and/or use) a boarding pass on a public transport system with your phone. Transport authorities will have the ability to offer additional added value services with NFC, including route planners, delay bulletins, time tables, as well as retail, and loyalty programs. Many countries currently rely on NFC for ticketing, including Orange’s rollout in Nice, France.
• Smart posters (or smart tags): In this use case, consumers would touch their mobile phone against an NFC tag printed on a poster, and would provide a small amount of information to the device. This could be used for getting information about a product in store or even for downloading information about medication in a pharmacy. Marketing material could also use NFC chips for special promotions to those with NFC-enabled devices.
• Physical and logical access: NFC-enabled devices may also be used for security and identity purposes. Using NFC technology to enter doors through a tap of your phone on a censored lock, or gaining access on computer through readers are also becoming more popular use cases for NFC, especially in the enterprise space.
Benefits of NFC
There are several benefits to NFC technology – the most obvious being convenience. Hosting payment information, coupons, transport tickets, and loyalty programs directly on the mobile phone not only eliminates the need to carry a wallet, but enabling security factors like passwords add another layer of protection. If you lose your phone, cancelling your cards can be done with one easy phonecall (image the headache if you lose your wallet – how many credit cards are in there? How many calls would you have to make?).
The technology behind NFC is also much safer (in regards to payments) than traditional magstripe credit/debit cards. All payment information as well as transit data can be stored within the mobile phone, turning a device into a virtual wallet. Secure channels have been created for sending this sensitive information and are usually managed by a third party, or TSM (Trusted Service Manager). When using NFC for payments, this TSM bridges the mobile network operators directly to the bank or financial institution to authenticate transactions. All of this data is managed over the air and happens instantly. If by chance an intruder does intercept data, the information is encrypted, and would often be useless to strangers. Like protecting any other data on your phone, users should always create a password to access their phone and install anti-virus software to protect from any malicious downloads.
While mobile payment trials continue to launch, many countries around the world use NFC on a daily basis – for payment and beyond. Major launches like those seen in France, Turkey, and Japan are leading the way in the mobile movement. In total, there are 54 countries experimenting with NFC services either through trials, pilots, or commercial-scale launches. The U.S. might not be on the forefront of the NFC movement, but Google Wallet’s launch in 2011 and the ISIS venture have helped open the doors to user adoption and merchant interest. Changing consumer behavior will stand as the largest obstacle NFC faces, but with more consumers relying on their mobile devices more now than ever, the future of NFC may be closer than we think.