The global electronic payments industry is turning to new technologies as it looks to expand its footprint, starting with NFC.
“In 2016, magnetic swipe payments in retail outlets will be completely replaced by NFC-enabled POS terminals as a form of regulation mandated by the South Korean government,” – Kerf Han, Deputy Director of the Mobile Payment Business Unit, Korea Telecom during the Joint Visionary Keynote Session on Day 2 of the Cards and Payments Asia 2014 event.
While not every country shares the same united approach in leapfrogging onto the NFC bandwagon, let’s take a look at the potential role of NFC in retail and payments from differing perspectives in this discussion:
“At EZ-Link, we see NFC as a very good opportunity for us to serve consumers within the mobile ecosystem,” said Siew Kiat Leo,VP of Information Technology at EZ-Link. “So far, the EZ-link NFC mobile app has been well received by tech-savvy consumers that have made full use of the app’s self-service functions such as balance checking and top-up services.”
“We have done several compatibility tests and one of the key issues that we’ve realized is that the electronic wiring for certain mobile phones differ greatly from one another despite sharing the same model.
“As such, we are still consistently striving for ways to enhance what is presently needed today which is to focus efforts in executing a more solid and stable user interface for the consumers and to slowly ease the transition to ticketing at the right timing.”
However, Daniel Lee, Director of Digital Projects for APMEA, McDonald’s Corporation had a different approach to NFC; stating: “As a retailer in the Quick Service Restaurant industry, our needs for NFC and other contactlesss technology are varied. We love payment and we have 20 million consumers daily but what we’re more concerned with is actually the consumer data and understanding the preferences and behaviour patterns of our consumers.”
“The transition that McDonald’s is currently going through is this; How can we track an individual customer transaction to a unique customer ID? As of now, NFC lacks the right element to do so in this context. And so, we’ve experimented with numerous alternative technologies such as Bluetooth Low Energy (BLE) and iBeacons which are really good in exploring and understanding the concept of presence and proximity in stores.”
Finally, Tian Ung Ping, Associate Vice President of Personal Solutions StarHub Ltd commented on consumer behaviour as a driving factor, saying: “Today, consumer behaviours are largely driven by what they have in their phones and knowing what are the variety of services that they would enjoy because it’s just so convenient for information checking and making payments a painless experience, all within the click of a button.”
In Japan, for example, McDonald’s signed an agreement with DoCoMo in 2007 where DoCoMo subscribers were able to purchase fast food with their mobile phones in a ¥300 million joint venture. Under this system, the existing subscriber that makes a transaction will be able to view their McDonald’s receipt showing up against their cell phone bill.
Using this case study, this indicates that mobile network operators have the power to influence payments without the actual need to welcome innovative technology, not until the timing calls for it at the very least.
The time for NFC to be simply seen as an agent of introducing a revolutionary change to to the world of payments has ended but that doesn’t necessarily limit the extension of its capabilities to the payments industry.
The truth is, NFC technology remains hindered by the harsh realities of adoption and cost. The full potential of the technology remains unlocked, not until the majority of smartphones offer it as a standard feature.
[Image: NFC Interactor]