Commentary

NFC & Heading Beyond the $487 Billion in Payments

There’s mobile commerce technology and then there are consumer habits and behaviors.

For the longest time, proponents of Near Field Communication (NFC) technology have been trying to bridge that gap.

Many were optimistic when Apple finally adopted NFC in its latest iPhone, tapping into the technology for Apple Pay mobile payments.

The obvious challenge, of course, is that for NFC in phones to work for payments at checkout, the technology at checkout has to be able to accept NFC, kind of chicken-and-egg 101.

The good news for NFC is that most EMV terminals, which will be used for all the new credit cards coming with chips embedded this year, can accept NFC transactions once activated.

A new report sheds some light on what the NFC market will look like over the next several years.

NFC terminal penetration this year will reach 1 million, 2 million next year and 8 million by 2020, according to the report Mobile Proximity Payments: A Disruption in the Force by Aite Group.

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The study is based on interviews with 50 opinion leaders, CEOs and business managers.

Mobile proximity payments will grow slowly from a very small base, according to Aite, but will accelerate within five years.

By dollar volume, that growth is substantial. From $8 billion in payment transactions expected this year, Aite sees growth to $487 billion within five years.

While the growth of payment by NFC chugs along, I have to wonder if it will be payments that become the primary driver of NFC adoption or whether it will be something else.

Last night, I attended a meeting hosted by the NFC Forum where payments by NFC were barely mentioned in passing or as more of a given.

One of the speakers, Nathan Neil from Purple Deck Media, highlighted one of the challenges around NFC payments. “Retailers are not sure which platform to go with or what hardware to purchase.”

Most of the speakers at the NFC Forum highlighted NFC uses outside of payments.

One of the major uses seen was in content delivery. Some examples given:

  • Washing machine breaks. Tap tag on machine and self-monitoring technology displays code of what’s wrong. Call repair, give them the code and they come to repair with the correct part the first time around.
  • Television set. Tap TV in first year of ownership and warranty info is displayed. Tap in year 2, and find code of what’s wrong with TV. Tap in year 3, receive latest in new TVs on the market or related products.
  • Furniture. Tap on tag inside new chair at home. Receive option to purchase additional, identical chair and have it shipped.

In one of the multiple demonstrations at the event, David Shalaby, president of TapTrack in Toronto, instantly created an NFC tag for me, programmed it to a website, tapped a phone to it, got to the site instantly and watched the tracking system identify the tap.

The key in the case of TapTrack, Purple Deck and others at the event is that NFC can link to dynamic content, all of which can be changed on the fly and at scale.

The main point at the NFC Forum was that NFC tags should be on just about everything.

Oh, and they also can be used for mobile payments.

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