By Diarmuid Mallon, head of product marketing, global messaging and mobile commerce, Sybase 365
In 2011 NFC was described, by some, as being in a year of transition, which is a very accurate description as mobile NFC finally broke free of the labs, transitioning from small scale trials and moved on towards Main Street USA with Google Wallet.
Google officially launched Google Wallet, 'the app that makes your phone your wallet,' at the end of September last year for customers of US telecom operator, Sprint, with a Nexus S 4G phone. Hot on its heels were the announcement from Isis, a consortium formed by AT&T, T-Mobile and Verizon, that a number of handset makers including HTC, LG, Motorola, RIM, Samsung and Sony Ericsson, had committed to make near field communications (NFC) enabled devices that use the Isis standard, along with Device Fidelity, maker of microSD cards that bring NFC functionality to devices that don't have it.
Yet in the UK, despite the expected Google Wallet launch ahead of the Olympics, NFC is still years away from becoming mainstream. According to a survey of attendees at this year's Mobile World Congress, NFC won't become a driver of widespread m-payment adoption for at least another two to five years.
Buzz buzzAlbeit the ongoing buzz around NFC, what has not been addressed are the challenges faced in getting all the systems and operational systems in place to enable the widespread use of the technology. Cross-operator initiatives such as Isis in the US and the UK's Project Oscar will do much to move NFC mobile payments closer to the potential of a mainstream service. But, there is still a long way to go.
Currently there are 40-plus million NFC capable mobile devices in the world; however, this number does not give any indication of how many have been provisioned for mobile NFC payments. In the UK, the NFC-enabled credit cards have been available since 2007, and mobile NFC capable phones were introduced in mid 2011. Despite the availability of NFC enabled phones and credit cards currently on average, each of the approximately 60,000 contactless point of sale terminals in the UK that support NFC are only used four to five times per month. For contactless payments, in the UK, the challenge is not the lack of 'devices' (cards or mobiles) but rather consumer behaviour and merchant acceptance.
Own the customerDuring 2012, we will see companies accelerating activities and experimenting with mobile in order to engage their customers. Whether anyone can completely own a customer is yet to be seen, but there is an opportunity to fully own a customer at a moment in time for a specific transaction. Mobile commerce, be it through couponing, loyalty, engagement or payment via NFC, will be the catalyst for growth in helping the consumer make choices, while offering value in the form of saving money or improving convenience.
Obviously with Google's involvement around CRM opportunities, looping in discount offers, coupons, barcodes, location and loyalty, and more, it does make NFC more interesting. However, as mentioned earlier there are still some hurdles to overcome, apart from just the handsets and readers. With that in mind, it is becoming clearer that the real potential of mobile NFC is how it can integrate coupons, loyalty and payment in a near frictionless manner.
The jury is still out on what will be successful among these early NFC services and who will succeed, but it is clear is that just enabling payment is not enough to create a successful service.
Sybase 365 enables mobile information services for mobile operators, financial institutions and enterprises.