The latest innovations for the mobile payment market will provide a much needed technology leap for the industry. The advent of near field communications (NFC) and smart poster technology offers vast improvements the over mundane and conventional purchase processes in the mobile payment world. Both provide technology advantages that could provide a big spark to the market. This new technology addresses many of the end-user hurdles that providers have continually faced in implementing mobile payment solutions.
The Business Case
Smart poster technology makes NFC a compelling story for informational, promotional, and transactional services. It can be used actively or passively. When used passively, smart posters are like billboards on a lonely stretch of highway. They only function when a mobile device gets close to them and reads them. Then, the poster sends a coupon or a Web link to the mobile device, which acts like a mobile wallet. The cost of entry for this technology is relatively low, making it quite attractive for business owners. It’s also easy to use.
Active posters are a merchant’s portable, flexible, and transaction-oriented self-service kiosk. They are an extension of the merchant’s mobile strategy by providing a remote physical point of presence for goods and services. Whether deployed in a university cafeteria, a grocery store, or a mobile network operator’s retail outlet, active posters enhance the purchase and upsell process, provide efficiencies, and deliver control of the purchase flow to the merchant.
Users can engage in more sophisticated interactive transactions with active posters, such as recharging accounts or making a purchase. With passive posters, the mobile wallet simply receives information such as a coupon. With active posters, users can redeem the coupon on the spot. The self-service experience gives the brand or retailer a direct and personalized interaction with the consumer, instead of leaving it to a clerk.
Several deployment options can shift the processing to and from the active poster and the consumer’s handset or tablet. They depend on the needs of the merchant and the overall goal of the active poster initiative. For example, a university that has enabled its student ID cards with NFC likely will have an “ATM” approach where users tap the NFC ID on the poster, and the poster performs the entire transaction.
Or, the logic can be included directly on the handset, perhaps complemented by the merchant’s proprietary store application. Users then could download custom content or store product information from an active poster to their handset as part of a retail “check in” experience.
Alternatively, back office services can use logic on both the active poster and on the handset to provide, for instance, the sale and fulfillment of a movie ticket. The event could be charged to a payment vehicle residing on the handset wallet. The active poster then would contact a fulfillment agency that would electronically deliver the ticket or voucher to the user.
These experiences are possible today on active posters. They only require an NFC-enabled smart phone or an NFC tag on a standard cell phone.
NFC-Enabled Capabilities Now
Being able to share and then access data over short distances is the key to simplifying transactions and the crux of NFC technology. The simple fact that there isn’t an existing omnipresent set of NFC-enabled smart phones isn’t hindering the traction needed to make NFC a viable technology. Adding an NFC-enabled sticker or tag to a phone, and not necessarily a smart phone, adds smart poster technology to the equation. The technology, then, has the potential to become ubiquitous. The tag ultimately allows the user to add active poster technology too.
The paradigm will shift as consumers learn the correct tapping procedures and select the proper options to engage the features necessary to take advantage of the technology. These features center on informational and transactional procedures and are currently necessary to engage the technology at the consumer/retail level. Adoption should come fast, and handset manufacturers and the telecom carriers are already on board.
Experts estimate that mobile payments will reach $245 billion by 2014. NFC technology will likely serve as the catalyst for this massive growth, and a large amount of it is expected to come from technology aimed at point of sale (POS) at the retail level. A chicken and egg scenario hopefully will play out quickly between the phone (or smart phone) and the POS appliance adaption. One does beget the other. The adaption of NFC will start at the phone with either the manufacturer or user providing the technology.
Conversely, POS technology will need to be engaged as well to make the process seamless. The mobile wallet or smart phone will trigger an event, either a payment or possibly a coupon or some other enhancement to motivate the user to engage. This “wallet” either resides on the mobile device or in the cloud. Then, during the buying process, the user taps the device against the store’s POS appliance. This creates a transactional link and consummates the sale or event between the two devices.
Growth And Opportunity Abound
According to IMS Research, the number of worldwide locations accepting NFC payments is expected to grow to over 12.5 million by late 2013. Interestingly, mobile operators are getting into the fray with their own mobile wallets, offering a wide array of new services for purchase via mobile devices. AT&T, Verizon, and T-Mobile have partnered in a joint venture simply called ISIS that will address the technology and offer a wide portfolio of services for their users. Sprint subscribers already can use their Google Wallets to make purchases. Subscribers do nothing more than link their credit/debit card to the device, and the handset then acts as a mobile purchasing system.
MasterCard, Visa, American Express, and other influential financial institutions have lined up to participate in the technology and are betting big that mobile commerce will be a blossoming flower with continued growth and abundant opportunities taking commerce and technology in many new directions. With all of the interesting bells and whistles being added to the mix, technology drivers for the business owner using NFC will help tailor a unique advertising/marketing approach while adding value and services to provide a very unique customer experience.
Mobile payment technology has the eyes, ears, and R&D dollars of most of the important players in the marketplace. Enhancements of services alone make the story interesting enough, but the efficiency of the technology and the positive customer experience make NFC and smart posters game-changers in mobile commerce.
Smart posters will usher in a new era of interactivity for retailers and offer increased revenues for mobile operators. The technology is poised to create a wide array of features and offerings that should propel the fledgling industry into the proverbial big leagues. How fast the technology can be adopted and the various ways to provide value to all participants will be the only things slowing this new era of mobile commerce.