Is NFC about to take off?

November 11, 2014 : TECHFacebooktwittergoogle_plusredditlinkedinmail

Is NFC about to take off

Near field communication (NFC) has been around for a while now, and when it first found its way into smartphones a few years ago there was a bit of buzz around mobile payments. Basically, it was predicted that thousands of us would very soon be using our handsets to pay for our shopping instead of pulling out our battered old wallets.

But that hasn't happened, or at least not yet. Sure, there are some people using the technology at the moment, but on the whole, although a large number of the latest smartphones are NFC-enabled, most of us have no idea how the technology works or how to use it.

A survey by location-based shopping platform Retale showed that 56 per cent of shoppers do not know NFC is a contactless payment system that can be used to make payments via mobile phones, while 38 per cent are familiar with the technology but do not use it. Only six per cent of those questioned said they use NFC regularly to make mobile payments.

But there are a few developments in the pipeline, or at least rumoured to be, that could provide the catalyst needed for NFC to take off on a larger scale. So maybe, albeit a few years later than expected, our phones really are set to become not only our mp3 players, our cameras, our games consoles and our personal organisers, but our wallets too.

The end of the Oyster card

NFC technology is now widely integrated into credit and debit cards, and although its use it not yet widespread, contactless payment on plastic has taken off much more quickly than it has via mobile handsets. That's why Transport for London (TfL) made the move to allow contactless card payments on its buses at the end of 2012.

Now, according to the Financial Times, trials of the technology are set to begin on the Tube network, meaning passengers will be able to swipe their debit or credit cards instead of their Oyster cards on the readers at the ticket barriers when they travel on the Underground.

But it doesn't stop there. There are also plans to allow payments via smartphones using payment apps such as EE's Cash on Tap or Vodafone's mobile wallet service, although it must be stressed that it has not been confirmed which mobile operators TfL will be working with.

Shashi Verma, the group's director of customer experience, said: "The upgrade to our readers to accept contactless payment cards also makes them capable of accepting suitable payment applications on mobile phones. We are testing to see how the devices perform on the system and welcome any innovations which improve the services and choices we are able to offer customers."

So, if mobile phones begin replacing Oyster cards for the hundreds of thousands of passengers who use the Tube every day, could mobile payments soon take off in shops, restaurants and on other public transport networks around the country?

iPhone 6 rumours

So far, despite its rivals routinely offering NFC technology in their latest smartphones, Apple has resisted the temptation, and none of the iPhones released since the gadget's first appearance have been NFC-enabled.

However, if rumours about the next device are to be believed, things could be about to change. There is speculation that the iPhone 6 will be released towards the end of the summer or the beginning of autumn, and that this time the handset will include NFC.

Of course rumours are always rife when it comes to new iPhones, as Apple is notoriously secretive about its products. But this particular nugget of information has apparently come from KGI Securities analyst Ming-Chi Kuo, who has been proven right when predicting the features of past iPhones before they were released.

If it's true, could this be the push that consumers need to start embracing mobile payments? Sure, there are numerous other smartphones out there and many people prefer them to Apple's devices, but let's face it, the iPhone is the original smartphone and is not about to lose its place at the top any time soon.

What's more, Apple is never one to play catch up, so it's unlikely that it will simply offer NFC and be done with it. It's probably going to build on the technology in some way so that it sets itself apart from its competitors. It'll be the competitors playing catch-up, not Apple.

It's not just about consumers

Regardless of whether these two developments push consumers into a new way of thinking about mobile payments, the truth is using a smartphone to pay for goods and services is never going to become the norm unless merchants get on board as well.

TfL seems to want to head in that direction, but then it's been using NFC technology for a while with its Oyster cards. What about the supermarket chains, the clothing retailers, the coffee shops and the corner stores? Unless it is both easy and inexpensive to offer mobile payment as an option for shoppers, and unless there are tangible benefits for merchants, then adoption is going to be slow.

At the end of the day it's a chicken and egg situation. Consumers need to embrace mobile payments before merchants will jump on board, and merchants need to provide more opportunities to use NFC technology if consumers are to become familiar with it and confident using it. One thing's for sure, it's an area to keep an eye on.

This entry was posted in TECH and tagged on by sarahstooks
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