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NFC: More Than Just a Mobile Wallet

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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 (s goog) 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 (s aapl) 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.

Related content from GigaOM Pro (subscription required):

29 Responses to “NFC: More Than Just a Mobile Wallet”

  1. It does sound like a fantastic idea, and when I first heard about this kind of thing a couple years ago, that Japan had this technology, I had wished we had this too. But now that it’s gonna be launched here very soon, I’d worry about the security since it’s contactless payment by way of simply “swiping” my mobile.

  2. To make NFC come any faster is on the shoulders of the carriers. The hardware and the software companies are already there and just begging for scale and patiently waiting to let the dogs out. Barriers to scale also include government regulations which are lagging; security is another hurdle to make NFC widely acceptable. Where NFC will get the greatest traction is when mobile wallets make it easier to get alerts for consumer goods and purchase items without really ever walking through the front door of the store.

    Mobile Computing Disruptions for the Connected Era

  3. GregPoirier makes a great point that discounting the impact that NFC will have on mobile payments is a mistake. One of the main obstacles to widespread consumer adoption/implementation of NFC technology will be assumed security issues. I work for Kony, and NFC technologies are actually more secure than the magnetic strips on existing credit cards due to the fact that there’s encryption in NFC. Also, in many cases the card number changes every few seconds using a shared secret, meaning that if someone were to steal your number it would be rendered useless within a few seconds. Couple the heightened security with the increased speed and ease of transactions, and I believe that we’ll see rapid adoption of this technology once it becomes more readily available. Like you said, NFC goes beyond the mobile wallet, and it wouldn’t be surprising to see many of these uses also gain widespread adoption, but the potential it brings to mobile payments should not be overlooked.

  4. The availability of new mobile devices, such as smart phones and tablets, has made it easy for end users to connect to each other, from anywhere in the world, at any time. However, while mobile technology has improved social connectivity for consumers, and increased the flexibility and productivity of business people, it has also introduced a new set of dilemmas for IT managers who need to protect the confidential business data stored on these devices.

  5. It seems that whenever new technology comes out the obvious wins over the creative when discussing implementation. We’ve seen it countless times before with other tech (including many social media tools). Businesses can use this type of tech quite readily if they make it work with their marketing and communications strategies. The same could have been said about QR codes. Marketing requires creativity and strategic implementation. NFC is wide open for all sorts of strategic implementation strategies. Great post, really got me thinking.

    • Colin Gibbs

      I think NFC is far superior to Bluetooth in proximity marketing because NFC is voluntary, Shakir. I have to wave my phone near an RFID chip to receive an ad/coupon/promotional message, while Bluetooth pings me regardless of whether I’m interested in the pitch. (And sending me a message to ask whether I’m interested in receiving an ad isn’t much better than just sending me the ad in the first place.)

      • Hi,

        I agree with what you’re saying, but the irony is that those opt-in measures were largely put in place for the sake of security and preventing spam.

        Now if Advertisers have active sensors that they can just ping without opt-in necessity for each business, how long before a torrent of nefarious people devlop various schemes, from skimming a few pence here and there, to the problem of spam sms made even more effciient by virtue of no cost beyond the transeiver for nfc, and then the real-world cookie potential – forget about the credit card companies being needed to track a user………..

        Kind regards,

        Shakir Razak

  6. 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

  7. “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.

    • Colin Gibbs

      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.

  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. 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

  10. 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.

  11. 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.

    • 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.

    • 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).

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

    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.

  13. 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.

    • Colin Gibbs

      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.