NFC: A coming revolution
Have you ever left your home without your wallet or credit card? What device do you always have with you? For the majority of people, this is your smart phone. And, Google and others would have you using that device to pay for your real-world goods. Near Field Communication, or “NFC” for short, is a technology that is poised to take on retail by storm. NFC is a technology that allows for wireless communication when two devices equipped with NFC radios touch or come in contact with each other. This communication can then allow information such as credit card payment details, website links, personal contact information, and other data to be transmitted wirelessly.
So, why hasn’t this happened yet? The issue is that most people don’t know what NFC is nor what it can do, and most retailers are slow to adopt these new technologies, however, you can see progress throughout our town. Home Depot and other retail business have recently added new credit card readers to their registers. If you notice, there is a large “pad” at the top of those readers. This is where you touch to make a payment.
Most Android-based phones have had NFC for years, but it is still not a very widely used or known technology. So, how is this all going to change? Apple. Apple recently introduced their “Passbook” software which will make its debut in iOS 6 – their new operating system for iPhone and iPad devices. Passbook is perfectly poised to take advantage of NFC, but Apple has yet to confirm that the software or their new device will include NFC capabilities. Their new iPhone is rumored to be introduced on September 12 with a release date of September 21.
I speculate, as well as many pundits, that the new phone will include NFC technology with Passbook serving as its “wallet” on your phone. Apple has a very good way of taking complicated, or geeky, technology and making it appeal to the lay consumer. This is when, in my opinion, we will start seeing more and more merchants moving to NFC and consumers beginning to accept it as a convenient way to pay. What about security? What happens if someone brushes up against me at the theater? Is all of my data gone? No. Each device, depending on the maker’s implementation of the technology, can store multiple credit and reward cards. These cards are highly-encrypted and can be deleted remotely in case of a lost or stolen phone. When tapping the reader, users must enter a pin code to activate their radio and complete the transaction or transfer of data. Google has been a pioneer in the NFC arena. They recently upgrade their “Wallet” software to work with all major credit card types and have also introduced a fresh approach to credit card security. Google has teamed up with MasterCard for their processing. Each time you add a card to the “Google Wallet”, MasterCard generates a new “alias” card number for you and your credit card details are stored on a secure Google and/or MasterCard server. When making a purchase, this alias card number is sent to the merchant and processed like normal. Then, when funds are being settled at the credit card/bank level, the alias number is used to look up your real card number and your actual card is charged.
Apple has not commented on how or even if, they will use a similar approach. In addition to being able to charge for a purchase, small businesses can place NFC “smart tags” in their business that will allow consumers to engage and interact in their business. Have a product that is best sold once people can see how it works? Retailers can add NFC tags that link to video of the product. A simple tap on the tag by the consumer loads the video. Place a tag at your front door, and customers can tap as they enter to share the location with the friends on popular social media sites such as Facebook and FourSquare. The tags could even link consumers to reward or coupon sites for products that your business carries. At the airport, similar to the barcodes used by some airlines, you may soon be able to tap as you enter the plane to verify your tickets.
The capabilities of NFC technology are only limited by your imagination. Not only will understanding these technologies help increase sales, but they can be utilized by everyone today. NFC will start to become a much needed piece of marketing for small and large businesses alike. So, get ready to “tap to buy” your next purchase.