NFC: More than digital wallets?

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Nikolas Badminton, Director of Digital Strategy, Tribal DDB Vancouver
Nikolas Badminton, Director of Digital Strategy, Tribal DDB Vancouver
NFC technology has arrived. NFC, or near field communication, allows for simplified transactions, data exchange and wireless connections between two mobile devices in close proximity to each other, usually by no more than 10 centimeters or so.

It's being lauded as the great enabler of mobile payments, but there are some important considerations for both the consumer and companies looking into this technology as part of the future of their payment processing strategy.

There is a great deal of discussion going on right now on the subject of NFC, mobile wallets and the potential applications for sales, service and marketing.

Security and permission concerns. Security is a prime concern for the consumer and clearly needs to be resolved and communicated to ensure uptake.

The very nature of NFC necessitates close proximity between the mobile device and the reader, which some say means there is likely to be less risk of a security breach because there is the potential for two levels of security that will protect the consumer: the passcode to get in and then a pin code when paying. Therefore, NFC has the potential to be twice as secure as using conventional credit cards or Interac. In addition to that, the problem of cloning cards is removed and some companies are looking at integrating biometrics.

Communicating this and gaining confidence is a main enabler for consumer adoption, so check out these useful security references:

Consumer adoption. Both mobile providers and device manufacturers see consumer adoption as an important part of their product strategy. AT&T, Verizon Wireless and T-Mobile USA are all involved in ISIS, a national mobile commerce network that aims to transform how people shop, pay and save. Device manufacturers are also getting ready. Google launched the "Google Wallet," Nokia stated that all new smartphones launched in 2011 will have NFC and Samsung is planning a large-scale rollout at the London 2012 Olympics.

In-Stat, an NFC chip manufacturer, predicts 1.2 billion NFC chips will be shipped by 2015, which translates into 30% global penetration, supporting a user base of more than 375 million people. This means we are on the way there. However, getting consumers to uptake a new way of paying for goods still needs a change in perception.

Introducing NFC with a big splash and then expecting instant adoption is unlikely. We are already on the way to seeing how it can be used and gateway solutions will introduce the idea of paying using the phone to help drive positive perceptions towards using this method when NFC is more widely available in both the mobile base and stores.

Use for sales, service and marketing. We know that mobile wallet technology will help consumers pay for goods and services easily and that sales, service and marketing functions can use it as a mechanism for driving better in-store consumer relationships and advocacy.

Line-ups, payments and pithy small talk with cashiers will eventually be replaced with in-store staff acting as guides who will be akin more to marketing and service representatives than sales people.

Mobile payments will be preceded by easy access to product information, recommendations for related products, coupons, messages and other offers when the consumer is in-store, enabled by both scanning the mobile device over NFC-enabled information tags and geofencing. This leads to an immersive retail environment where brands can engage and inspire consumers based on their interests, preferences and in-store actions. The logical result? Increased revenues and loyalty. When you can link consumer preferences and in-store behavior, the net effect will be greater.

Brand and retailer collaboration and planning will be key, as will the development of mobile applications that use NFC-reading capabilities.

Some brands, like Starbucks and Swisscom are already in on the game, and other brands are also starting to create more immersive environments to engage consumers using mobile. Even the recent "X-Men" movie was advertised in the U.K. using NFC – the first campaign of its kind in Europe.

Time to get moving. NFC is coming, and with that mobile wallets will soon become the norm – but only looking to mobile technology and NFC as ways to achieve that is shortsighted. We need to start planning for consumer engagement through devices to drive people towards payment, advocacy and loyalty.

Start thinking about how this technology can augment your current sales, service and marketing programs and, once adoption is on the way and consumer confidence is good, start planning some simple pilot activities. Welcome to the new world of engagement.

Nikolas Badminton is Tribal DDB Canada's director of digital strategy.

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