Research by YouGov has found that 91% of British consumers have not heard of NFC technology, while 70% have yet to hear of the ‘mobile wallet’.
Though Juniper Research predicts that $50bn in worldwide sales revenue will be generated by NFC mobile payments by 2014, it’s clear that there is some way to go before British shoppers turn their backs on cash in favour of their mobile.
Mobile NFC technology gives consumers another payment option for those times when they suddenly realise they have forgotten to get cash out and they are already at the cash register with their shopping.
It represents the ultimate in consumer convenience. However, partly for security reasons, the finance industry has agreed to a relatively small transaction limit of £15 (although there’s no limit on the number of transactions).
So paying by your mobile may be okay for a small coffee run, or to buy your lunch on the go, but it won’t be much use for that jacket that’s calling your name from the shop window.
At the moment the UK market has just one scheme: Quick Tap. Others are on the way, but at the moment there is just one NFC enabled handset on the market. This handset has to be used in conjunction with the correct mobile service provider and bank in order for the user to benefit from the NFC technology.
Until there are many more compatible handsets available, that can be used with other mobile providers and different banks, the growth of the NFC userbase will be limited at best. (There are much more attractive handsets on the market, and people may be reluctant to switch mobile providers or take out a new credit card just to participate).
There’s also the issue of retailer take-up. Yes, over 50,000 of the nearly 290,000 retail stores in the UK have installed NFC readers, but that does not mean that all terminals are in use, or that all employees are fully trained in how they are used or any potential problems that can occur.
Retailers are faced with a wide range of new payment options at the moment, everything from building mobile internet sites to accepting iPhone barcode scanners in store, and they need to decide which technology is right for their shoppers and worth investing in. There must be a good reason for investing in the technology beyond it being an extra payment method. If it collects data on customer spending habits and allows the retailer to target offer to the individual shopper, all the better.
Of course, the consumer has to want to use contactless payments enough to buy the specially enabled phone. The mobile NFC industry has to fight against deep set consumer habits and reassure the public that the payment system is secure and trustworthy.
According to modelling by Datamonitor only 8% of UK consumers have a medium to high likelihood of adopting mobile NFC payments. Then there are other forms of payments to consider, such as contactless debit cards. VISA says the number of contactless cards in the UK will increase from 13 to 20m by 2012.
NFC mobile payment technology has clear benefits for consumers and retailers alike, but consumers will need to be convinced to use the technology. The retailers, mobile operators and banks that become involved may seek to entice shoppers to spend by offering exclusive deals and discounts, which will work for some.
What really needs to happen is a concerted effort to educate and inform consumers and participating retailers about the new payment method.
Once the potential security issues are addressed and the mobile NFC service can be used from any handset with any combination of mobile and credit card provider, the system will undoubtedly have the capability to be the success that it is forecast to be.