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Is the pause in NFC hurting adoption?

By
July 5, 2013

Still in the out field

Still in the out field

A number of near field communication-enabled devices are constantly hitting the market and many marketers are experimenting with their own mobile payment technology. However, consumer education about NFC is still rather low and although the technology is somewhat new, 2013 may not be the year of contactless payments.

Yes, companies such as ISIS and Google Wallet are constantly looking at ways to drive adoption and make paying with a mobile device easier. However, more marketers need to come on board and educate consumers about the advantages of NFC.

“The more NFC-enabled consumer devices on the market, the more likely NFC will be successful when marketers choose to embrace the technology,” said Spencer Burke, mobile strategist at appboy, New York. “In 2012, global sales of NFC-enabled devices tripled to 140 million, and that number will rise to one billion units by 2017 – all without Apple’s participation.

“But there’s still a lot of work that needs to be done to educate consumers,” he said. “I don’t think you can stick an NFC-enabled label on something and expect people to know how to interact with it yet.

“We need a more intuitive approach and there’s certainly an opportunity for marketers to lead the way here.”

Into the future
According to Mr. Burke, the mobile space is not at a point where marketers can say NFC has taken too long to adopt.

The technology is still relatively new and has an opportunity to dramatically increase the ease of mobile payments and ticketing.

However, the biggest barrier marketers face right now to increased NFC adoption is most likely Apple’s decision to not include it in the iPhone.

“Mobile marketing, and digital more generally, have been taking an iOS-first approach in much of their strategy,” Mr. Burke said. “This also puts a lot of pressure on Apple, who is very careful about decisions like these.

“Apple will essentially choose a winner here when they adopt NFC or a similar technology,” he said.

The executive believes that marketers will consistently see adoption of NFC in Android devices.

NFC is already being used to facilitate connections with bluetooth devices. Therefore, the technology can take a lot of the pain out of pairing devices by doing a simple tap to pair that creates the bluetooth connection.

As Android increasingly gains the attention of mobile marketers, there will be more adoption in marketing materials, particularly where the call- to-action is an app download.

And an Apple announcement of an NFC-enabled iPhone would almost certainly cause a flurry of digital wallet initiatives and digital ticketing systems focused on NFC.

“Marketers should be most interested in NFC as an enabling technology,” Mr. Burke said. “NFC takes the place of QR codes or URLs to connect users from physical media to digital content.

“Retail stores can include NFC tags on shelves or near products to provide more information or ways to purchase out of stock items online. Venues and events can have tags that link to download their app,” he said. “Really any call-to-action that’s asking a customer to pick up their phone can be facilitated with NFC.

“NFC tags can be sold as a consumer product to attach custom actions to tags, but I expect we won’t see a huge uptick in adoption there.”

Is there a pause?
According to Christopher Barnard, president of Points, Toronto, the mobile payment landscape in the United States already had nearly eight million consumers using NFC as of the end of last year.

And in-store mobile payment revenue was up to $640 million in transaction value in 2012.

“It’s true that NFC came with a lot of hype back in 2006 and 2007 – and there’s very much a chicken and egg adoption issue here,” Mr. Barnard said. “Merchants have to install new hardware to read NFC chips and phones have to have NFC chips.

“Both developments require the other before critical mass can be achieved. But someone has to start,” he said. “European merchants seem to have taken the plunge.

“Regardless of the region, there’s no denying that NFC was the pioneer in mobile payments processing. Now, half a decade later, there are numerous ways mobile payments can be processed and mobile engagement accomplished. NFC is just one part of the mobile landscape.”

Nowadays, it seems that NFC is taking longer to be accepted in the U.S. as opposed to internationally.

In places such as Africa and China, mobile cellular networks trump traditional landlines and smartphones are a primary Internet access point.

For example, in Kenya, a mobile phone company saw its subscriber base increase more than 500-fold between 2000 and 2010.

Rwanda saw its number of mobile phone users increase by 50 percent.

With fewer payment options available and other nations’ penchant for embracing new technologies faster, NFC has filled an important payment and transaction niche.

Moreover, tech-savvy Asia-Pacific nations such as Japan and South Korea have also long embraced cutting edge technology as well as new usage trends.

“The U.S. NFC adoption lag is partly due to a multitude of payment options and a plethora of mobile wallet payment platforms,” Mr. Barnard said. “In essence, too much of a good thing – this is a common shortcoming when dealing with new industries.

“There’s no question that NFC remains a technology that continues to mature and find new converts,” he said. “NFC has still been instrumental in beginning the world’s transition to a truly all-digital mobile wallet.

“Eventually, pioneering mobile wallets like Google Wallet, PayPal and Square Wallet, among others, will be appreciated for those efforts. While technology advances at the speed of light, just because NFC hasn’t fully matured doesn’t mean it won’t eventually be indirectly responsible for ushering in future mobile wallet growth.”

Final Take
Rimma Kats is associate editor on Mobile Commerce Daily, New York

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Rimma Kats is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach her at rimma@mobilemarketer.com.

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