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Alternative payment methods are pretty much the hottest topic around, and last week EE previewed its new NFC smartphone wallet. Retailers, however, are pretty adamant NFC wallets are not worth their time.
At the same time, marketers are still plugging away with new advertising campaigns using NFC technology to deliver content. Is this anything other than a fad?
In this post I look at the uses of NFC, assess some recent campaigns, and ponder what the future holds. (Major hat tip to NFC World, where I found a bunch of the campaign info).
Tomorrow’s World: rubbing phones together
When the iPhone 5 was released without NFC capability, last year, it was reported as noteworthy. This could’ve been Apple-launch hysteria, making every feature, or lack thereof, seem big enough to chatter about.
But maybe this was a big deal? Maybe Apple was wrong not to include NFC? Or does Apple define the market? Was this Apple indicating NFC wasn’t worth bothering with, and thereby making it so?
Have I already asked too many rhetorical questions and used too many italics?
A lot of the fuss around NFC was due to the concept of peer-to-peer touching (excuse the choice of phrase). Touching NFC handsets (here’s a list) to share information or to play games together etc, was sort of a Tomorrow’s World concept that briefly excited the market.
Now this has largely been forgotten, after the sudden realisation that no meeting is ever fleeting enough to demand the snatched rubbing together of our phones (and the tech investment therein). Cloud services and Bluetooth seem to do the trick for much of our peer-to-peer sharing.
Payment: NFC or digital wallets?
The industry consensus is that digital wallets, or Ewallets, are a big idea. Crucially, without NFC. The transfer happens in the cloud, between a consumer’s app and the merchant’s PoS app. Square gives the best explanation of how digital wallets work, and how much time and hassle they can save customers.
There are tons of reasons a user would get involved. No worrying about cash or cards, incentives offered, time saved. And, there are a number of options for digital wallets, including PayPal and Lemon Wallet.
Droplet, a UK-founded digital wallet, is of particular interest as a payment solution that doesn’t charge the user or the merchant any fees. The user is incentivised by the ability to earn vouchers, and the merchants are displayed on a map of the local area, to increase awareness.
Then there are a whole host of other digital wallets designed to work for online transactions, such as V.me from VISA, effectively removing your bank details from the transaction, increasing ease of checkout.
Google Wallet: value for merchants?
And then there are smartphone payment systems involving NFC, like Google Wallet, and EE’s recently launched smartphone app with MasterCard. The key difference with these two is that using them in-store requires NFC, touching your phone to a reader, rather than paying through the cloud.
Online, Google Wallet works like V.me, and also allows payment to be sent by email. Check out the video because it’s really rather nifty.
And here’s the problem with smartphone NFC (tapping to pay retailers in-store) the retailers don’t see how it adds value for them.
Tesco’s Lyndon Lee, Enterprise Consultant Architect, told NFC World:
At Tesco, we focus entirely on the consumer relationship. We are developing a digital wallet, focusing on marketing and loyalty aspects, but payment may not enter the wallet. We have a payment system in place already and we don't want to disrupt it if it doesn't add any value.
Contactless cards are already there and they already have value. Mobile NFC payments have no value to us; it has lack of consumer experience and it is too complicated so I don't see a future. It is a very stagnant market.
Unsurprisingly, as their product is not NFC enabled, Square echoes these sentiments. COO, Keith Rabois, says “I’ve never met a single merchant in the U.S. who says I want this NFC thing”.
I don’t think we should underestimate Google’s ability to push technology like this into the mainstream, but the noises from the market are clear. Contactless credit and debit cards, yes, smartphones, no.
Examples of NFC in marketing
British Airways. Solving airport hell with NFC?
The recent announcement that British Airways staff members are trialling re-usable luggage tags was reported in the mainstream news, mainly because we’re all aware of the absolute purgatory of the airport.
Anything that could get rid of queuing for luggage check would be worth as much as oversized duty free Toblerone.
The tags have e-ink in them that display your unique barcode for flight check-in. They don’t require a power source and when you next need to travel, you update or rewrite the tag’s barcode with your NFC-enabled phone and its corresponding app. I wonder if British Airways have supplied all staff with an NFC enabled Samsung or similar?
Therein lies the first drawback with NFC: not all phones are enabled. And so when the app and luggage tag are eventually launched, the tag will work via Bluetooth, too. So, no need for NFC technology then?
Content delivery: Gabrielle Aplin, South West Trains
Seamlessly ‘grabbing’ samples of music and literature at a gig, or when travelling, sounds like a great idea, and some are trying to do this with NFC.
The touchpoints are placed next to posters promoting Gabrielle Aplin’s debut album and users can listen to sample tracks, sign up for a fan newsletter or enter a competition. Links to buy the album online are also provided.
I haven’t yet seen any feedback on the success of this campaign, but it might not pay to hold your breath if the next case study is indicative.
South West Trains has trialled this type of NFC use, too. On-train media company KBH has introduced a new advertising service called Tap4Offers on 360 South West Trains carriages and plans to extend the service across the UK.
Each touchpoint uses both NFC tags and QR codes (as well as SMS) to provide users with offers, deals and vouchers tailored to the interests of rail passengers.
"Since launch we have had over 10,000 users of the service," KBH On-Train Media told NFC World. "Of these 10,000 users, 33% of them have interacted with the service via the NFC tags."
So that’s still only around 3,500 uses of the content via NFC smartphones, from around the same number of tags, equating to a single smartphone touch per tag.
And this is why - the improper implementation of technology for a marketing campaign is a massive annoyance for users. It makes us distrust the technology and would be more baffling if it wasn’t quickly dismissed as a fad.
Check out this hilarious blog post detailing the complete failure of the initial trial.
Product info: Adidas
Adidas is adding a "lace jewel" with an embedded NFC chip to its Boost running shoes, sending product info and reviews to NFC smartphones at a tap.
The system is now live in stores in New York and California. Store assistants are also being equipped with NFC phones which they can use to register a customer's purchase.
In these instances, it’s imperative stores provide good free WiFi, to enable customers to take advantage.
Clear Channel: bus stops
Probably the most visible use of NFC, for Londoners. Clear Channel has NFC points on bus stops that allow NFC smartphone users (and those with QR code readers) to access websites, and to enter competitions.
Another blog post with some fruity language explains how this was initially yet another use that wasn’t working properly at the tags unveiling, leading to a confusing experience for the consumer. However, the roll-out was some months ago, and many campaigns have come and go on the stops since then.
Again, the customer needs a phone signal, but that’s not a problem in London.
Space saver: South Downs
One place signal might be a problem? The beautiful South Downs of England.
NFC tags and QR codes have been added to 40 wooden way signs along the South Downs Way, a 100-mile walking route through the South Downs National Park.
Here’s a rather cute BBC report:
Visitors can use QR codes or NFC to access map references, YouTube videos, photos, local history, audio commentary and info on local wildlife.
I think this is an inspired use case, providing there is good phone signal at these wooden way signs. This forum suggests perhaps not.
Ads. The captive taxicab market
Blue Bite is using the mTag platform for advertising in 5,000 US cabs. Passengers see video or static messages on screen and tap an NFC tag or scan a QR code on the panel to access promos, maps and coupons.
The mTag platform will be available in cabs across New York, Boston, Chicago, San Francisco, Philadelphia and Anaheim by September 2013, with further expansion planned.
This is an almost captive market, and it would be great to see what the uptake is in the back of these cabs.
And parking meters?
To end, a rare example of NFC smartphone payment out there in the wild that could be one of those adoptions that helps Google Wallet and EE. If 500,000 Mackay parking meters begin to accept NFC smartphone wallets worldwide, that’ll be a good encouragement for adoption.
- Unless Google pulls a hell of a lot of users on board, NFC smartphone payment doesn’t look set to take off.
- The early adopters of smartphone wallets will use them a lot online, as well as on the high street, and so NFC is only one aspect of the payment debate.
- For the marketers, there are the perennial difficulties with NFC, as with QR. Internet connection, user confusion, campaign confusion, and therefore no adoption. And of the two, QR codes are cheaper.
- Some use cases are more compelling than others, with NFC tags a handy space saving device. But, Google is getting better and better at local marketing through search and maps, and serving relevant info and offers so perhaps the smartphone is becoming powerful enough in this regard without the need to put tags everywhere?
- Of course, there are tons of uses for RFiD tags, connecting objects to the internet (the so-called Internet of Things). And some every day uses are very much up and running, for instance, enabling recognition at car tolls.
On the whole, we’re going to see contactless credit cards boom, mobile wallets boom, local and targeted marketing boom, but I think NFC will ultimately disappear.
If you have constructive criticism, clarifications or ideas of your own, please fire away in the comments.
Edit: Check out the counter piece on NFC - Tap on the map: maybe I was wrong about NFC