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Summary:

NFC will arrive in handsets in a big way in the coming months, but other components of a viable “mobile wallet” scenario aren’t in place yet. Here are some possibilities for the technology beyond using it to pay for goods at the retail counter.

mobilepayments

As I’ve said before, the concept of an NFC-powered mobile wallet faces plenty of challenges, especially in the short term. Sustainable business models have yet to emerge, retailers must invest in expensive readers and — not for nothing — credit cards and cash work just fine. (Not to mention that many customers are simply uncomfortable with the idea of paying for stuff with their phones, according to a study released last week.)

But NFC is nonetheless coming to handsets in a big way, as evidenced by a slew of announcements at Mobile World Congress in Barcelona last week. So while NFC-enabled handsets will come to market before other crucial elements for a truly mobile wallet fall into place, there are still some possibilities for the technology in the interim. Here are a few possibilities:

  • Mobile marketing. RFID-enabled posters and stickers can be used to transmit product information or promotional discounts with just a click or two (which makes them potentially more effective than mobile barcodes). And brick-and-mortar retailers can install readers that let users join an e-mail list with just a wave of their phones.
  • A virtual fingerprint. Brick-and-mortar sites like restaurants and concert venues can use NFC to get their customers to advertise for them through social networks. Google is pursuing that strategy in Portland, Ore., by packaging NFC with its Google Places window stickers for retailers.
  • Application discovery. Countless businesses are using smartphone apps to engage with their customers on the go, but those apps are too often lost amid the hundreds of thousands of titles in Apple’s App Store and Google’s Android Market. Instead of asking consumers to wade through those vast libraries, NFC can deliver an app directly to a phone quickly and easily.

The mobile wallet may never gain traction the way some hope it does, but a powerful new tool is coming to handsets in the form of NFC. Savvy advertisers and app developers should be paying attention. For more potential uses for NFC, please read my column this week at GigaOM Pro (subscription required).

Image source: Flickr user kawanet.

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  1. NFC is already being talked about by large Brands and ad agencies. They are getting behind NFC and will come out spending large dollars to bring it into marketing applications within 12 months.

    Across the board, the belief that NFC is going to usurp QR/2D barcodes at the location-level is already a “given” (unless you’re a 2D/QR barcode provider). Why, because NFC is so basic and intuitive — It’s not “techie,” it’s friendly.

    NFC is a massive threat to QR/2D companies, who will be relegated to print campaigns, while print continues to wane.

    1. You could be right, Bob, but it’s worth noting that NFC will only begin to come to handsets in the U.S. this year, and it will take quite a while for the installed base of handsets to be NFC-enabled. Which leaves plenty of opportunity for QR/2D in the coming months.

  2. NFC: Please Make “Internet of Things” Work! « Hard Tech Startup Saturday, February 19, 2011

    [...] post on GigaOm today entitled Near Field Communications is More Than Just a Mobile Wallet is right on.  Developers have a new tool that relies on the security of physical [...]

  3. NFC and 2d-barcodes will coexist quite nicely.
    boarding passes, tickets, vcards, url’s are all well served by
    2D-barcodes.

    However, the game changer with NFC is peer to peer.
    mobile multiplayer games and whiteboard-like apps will be entrants for NFC beyond the wallet apps.

    1. Peer-to-peer could be huge, Steve, and I discuss that in the Pro column. Thanks for mentioning it here.

  4. Delivering apps from a store to a handset instantly sounds great.

    Except, 2 of the mobile platforms, iOS and Windows Phone 7, are tightly controlled walled-gardens, that forbid you from obtaining apps from other places.

    Only Android gives enough freedom to make NFC app distribution viable. Also MeeGo OS would allow it, if it ever becomes a reality.

    1. As with bar codes, the data read through NFC wouldn’t be the application itself, but just a URI from which to download it. On all of these platforms, you would want that URI to be to the platform’s market where the app is maintained and updated.

    2. I’d disagree. Once NFC chips are integrated into the phones, a few major players will develop the apps to power them. Even if a somewhat walled garden developed, providing deals with struck with the major in-store payment processors like Moneris – it wouldn’t matter. Wave your MasterCard, Visa, Android or iPhone in front of an NFC POS terminal and Moneris would accept it (that will take a bit of time to sort deals out – but it will be faster than people think).

  5. We are just starting to look at the future and see how (NFC) Near Field Communication Technology will change the way we conduct our daily lives using contactless payments and smart posters for proximity markeing.With companies like Visa and master card investing in NFC enabled payments systems and McDonalds installing NFC Readers in 1200 UK outlets its not a matter of will it happen but when.

  6. Why can’t I pay for this with my phone ? « Greg Poirier's Stuff Sunday, February 20, 2011

    [...] Update: Colin Gibbs has some updates on NFC (Near Field Communications) being more than a mobile wallet. You can check them out at GigaOm [...]

  7. I agree that NFC is going to become popular for far more than mobile payments. But, I believe that discounting the impact that mobile payments is going to have will be a mistake. With NFC chips being pre-built into phones and with readers already having wide-spread installation (thanks to the chips in credit cards), the adoption will be faster than people expect. I wrote more about this here http://bit.ly/gnVqDh

  8. I am not too worried on consumers being uncomfortable in using mobile payments; the same attitudes were observed in plastic payment several years ago. The ecosystem that will emerge around NFC with location based targeted advertising coupled with NFC payment systems enable merchants to more effectively engage consumers at POS resulting in higher consumption as studies in Europe indicate creating a win win situation for all involved.

  9. “The mobile wallet may never gain traction the way some hope it does, but a powerful new tool is coming to handsets in the form of NFC”

    Kind of contradictory, so you want your cake and eat it too.

    It will become big time once the early adopters show how user friendly it is.

    1. Agreed. Additionally, as it becomes pre-integrated into every Smartphone, retailers won’t be able to resist it.

    2. I don’t understand how that’s contradictory, AdamC.

      NFC-based mobile payments could eventually “become big time,” but consumers must have a good reason to use their phones rather than credit cards or cash (both of which are pretty user-friendly already).

      Coupling location-aware ads with NFC could move the needle, as Mwangi said above, but there are still big challenges like user privacy issues and the build-out of local mobile ad networks.

  10. According to language in a pending Federal Reserve Board Notice of Proposed Rulemaking, forthcoming regulations on debit card interchange fees and payment networks will apply to the networks used to process mobile phone based payments. The effect of this is murky — the Fed has no idea what the impact might be — but it introduces considerable uncertainty into the field.

    For the FRB language and a link to the NPR – see
    http://www.digitalsociety.org/2011/02/mobile-payments-the-durbin-amendment.

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