NFC – The killer app isn’t the mobile wallet

Posted by Ross Coundon on October 17, 2012

For a number of years now I’ve heard that next year will be year whenNFC takes off and the simple fact of the matter is that it hasn’t. Yet.

Don’t get me wrong, I think it will take off in time but the more I think about it, the less I think that the catalyst required to accelerate widespread adoption is the application that is most widely talked about – the mobile wallet.

The mobile wallet is the concept by which your mobile phone is used to make payments for goods at retailers. When goods are purchased, up to a set maximum value, the customer simply places their phone near to anNFC enabled POS (Point of Sale) and the payment is made wirelessly.

For this use case to work many things have to come together. For example, where does the money come from? Is it charged to the customer’s mobile phone bill or do bank details need to be pre-registered with a mobile app provider?

Of course, the retailer must have installed an NFC enabled POS device in their shop and have this integrated with a receipts system in order to receive the wireless transfer of funds. Receipts may need to be printed or emailed to the customer. If it’s the latter the customer’s email address must be passed as data in the NFC transfer along with some privacy choices around the use of that email address.

From a user experience perspective in order to make the payment the customer is likely to have to unlock their phone, launch their NFC payment app, log into that app, then scan the device to make payment. Prior to this they must install the application (I’m making the assumption that it’s a single NFC app for all transactions but it’s possible retailers may want customer to use their own apps for marketing purposes), configure the app and register bank details and set login information.

As you can see what is, on the face of it, a simple use-case becomes quite complicated both from an implementation perspective, but more importantly in terms of user experience. As with all technologies, if the user experience isn’t better than the existing way of doing things – pay by cash, pay by card – then it simply won’t be adopted. It is therefore my belief that if NFC does take off in the consumer world it will most likely be for transactions that happen less frequently. For example, for flight boarding cards and event tickets.

Outside of the consumer world I can see far more applications for the technology. Since NFC (RFID) allows two-way communication, in time it’s likely that machines will transfer information to mobile devices about their current operating state. Consider – assets in the field that can supply information about their operating state when requested by a mobile device – Smart Energy Meters may incorporate this in future (although not currently in the spec). Or instructions passed to an asset from a device in order to apply a fix without the need to create a physical connection.

Alternatively, automatically recording the receipt of goods that are each tagged with an RFID chip as they pass through an NFC reader enabled doorway. These use cases, whilst not without their implementation challenges, I feel are the most likely drivers of the technology since they can drive operational efficiency improvements for businesses.

It’s now a question of when will all this happen. Perhaps next year?