NFC – tastes great but how long to bake?

Jun 6

NFC – tastes great but how long to bake?

Back in February the (roughly simultaneous) announcements from Google and Samsung Galaxy S support for NFC created a lot of excitement. Not least me!
Then the rumours of Apple’s iPhone5 including NFC swung from positive to negative and so did my mood!
Winding forward to May and Google announces Google Wallet along with Visa reconfirming its commitment to NFC with the Visa Digital Wallet.

Over the next 24 months we should see a steady increase in handsets carrying this technology and we already know that Apple has a bunch of patents around shopping with NFC. I fully expect even a potential market for dedicated hardware wallets as well. We are also seeing NFC being added to micro-SD memory cards that are common in many handsets (other than apple) – this allows NFC capabilities to not be restricted to next-generation handsets. Its plausible that these could also be installed in iPhone jackets/cases allowing NFC commerce to proceed in spite of Apple’s hegemony.

There are some levels where we will see NFC take hold:

  • Transactional – I’ll give more detail in a later post but the links to Google Wallet and Visa a good starting points. I think everyone understands via Mastercard Paypass and Visa Paywave the transactional benefits of NFC. In a later post I will cover the other unique benefits when NFC is on the handset.
  • Footfall and Gaming – By physically requiring the user to be close to the NFC scanner/tag – it opens a lot of new possibilities for games and proximity indicators. Similar to scavenger hunts consumers may swipe a location to “unlock” some capability or offer. I think we will see more real-world “gamification” – expect to see things from Zynga and SCVNGR. The most obvious proximity activity is checkins – see my last point.
  • Loyalty, Security and Access – iPhone and Android are perfect platforms for replacing wads or loyalty cards, NFC allows immediate confirmation of ME. Perhaps our cars, houses and identity confirmation will all be linked
  • Social – For many cases NFC will just be a hi-fi handshake for example Foursquare checkins with NFC have been in trial. On the surface this appears purely social but you can guarantee that Foursquare will be making offers/rewards for NFC checkins.

cd photo
I call this “hi-fi” because until now location-based checkin (using GPS/AGPS/Triangulation) is a complete hoax in terms of fidelity. I sit at home and can checkin to several restaurants and one hotel from my loungeroom. If venues are to make offers based on footfall or presence, then it needs to be linked with another proof-point (usually a cash register transaction). So guess, what? – why not just swipe at counter rather than go through a separate checkin ritual?!!!

Even Starbuck’s found they had folks gaming their QR codes for coffee (I won’t share the secret details here).

So how long to bake? Its hard to say but I guess that even in Australia by Christmas Google Wallet might be swipeable at on Paypass at your favourite barista! What is not so clear is how Foursquare can get access to the hardware – getting new hardware into retailers is a mission for the well-funded or the heroic.

Somehow I suspect that Groupon or LivingSocial might also surprise us – but thats a complete guess.

Quick Comment on security: I’ve been involved with internet security for ¬†long time, so, I’m aware of some concern about malware on the phone/tablet being able to access the wallet. Its too early to tell what will happen here but people are still banking on their home windows PC which is far riskier! NFC payments appear to be limited to lower per transaction and daily limits, so that would indicate the consumer risk is limited or zero (credit card company assumes the risk). However, if Google Wallet stretches the utility to higher value transactions it may shift risk to the consumer. I’d be inclined to link credit accounts rather than debit accounts until we see how things evolve.


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