Some analysts had written off NFC as a significant technology for payments space but the technology made a comeback this year and is gaining traction day-by-day. Factors like EMV liability shift and cross-industry collaboration are leading to broad merchant collaboration in NFC terminals for payments. With new mobile wallet services like Apple Pay gaining traction in the market, new innovation will be enabled at the point of sale driven by NFC. Many industry observers and participants believe that the shift to EMV-enabled payment terminals combined with adoption of NFC payments by big brands like Apple will be driving force behind the next wave of payment innovation.
With NFC, new media technology is converging with new payment solutions. This shift brings a whole new category to the forefront that’s all about engaging the customer at the merchant location and seamlessly bridging the online and offline worlds. This “new” media is at the point of sale with every electronic transaction that a consumer makes, thus enabling the convergence of offline and online marketing and promotions. NFC also leverages “presence” which involves connecting location-based, “online” social media services and capabilities to the “offline” store, the lane, and the checkout.
Here are some major trends witnessed around NFC this year:
Booster Dose to NFC Payments thanks to Apple Pay
Apple finally launched its payments system dubbed as Apple Pay using Touch ID, tokenization and most importantly, uses NFC for point-of-sale communication. Apple Pay already supports 30+ banks, 50+ merchants and is bringing the adrenaline rush to NFC based mobile payments. Examples of Apple Pay transaction numbers at Whole Foods, McDonalds already show the traction that NFC is finally getting into the payments market. Moreover, thanks to Apple Pay’s popularity, other NFC based mobile payment systems such as Google Wallet have witnessed a rise in their user base. Let’s Talk Payments released a report titled “NFC Projections taking into account Apple Pay and Liability Shift (NFC Smartphone, Terminals and Payments forecast, 2014-19)”. As per the new report, NFC payments volume is expected to cross 683 billion by 2019.
Proximity marketing via NFC
NFC smartphone users can simply tap NFC tags and get access to a large variety of content. Numerous companies have shown the impact that NFC has in proximity marketing:
- Astral, an out-of-home advertising company, makes use of NFC in posters and digital signboards.
- Blue Bite offers mTAG solutions which leverages NFC to provide marketing solutions across shopping malls, airports, college campuses, bus stops, kiosks, etc.
- Bridget provides connectivity and management of passive as well as embedded NFC enabled tags.
- Clear Channel Outdoors uses its out-of-home mobile interactive advertising platform dubbed as ‘Connect’ to bring access to interactive content from advertisers using NFC.
- Proxama’s ‘TapPoint for Marketing’ services enables retailers, brands and agencies to deploy mobile proximity marketing campaigns using NFC and other mobile technologies.
- Thinaire provides a core solution called Thinaire Mobile Connect which uses NFC to engage customers on mobile devices.
There are many other companies which provide such similar solutions.
POS Players Betting Big on NFC
Point-of-sale systems are getting an upgrade across the merchant space thanks to the efforts of a number of new as well as established players. Both hardware and software based solutions are being developed to support the drive of NFC payments. Some of those POS players include:
- Shopkeep offers a dedicated NFC card reader. The card reader supports two-factor authentication needed for contactless payments. The company additionally provides POS software as well.
- Poynt offers an all-in-one Smart Terminal that not only supports NFC but also EMV, Bluetooth and QR.
- Clover POS system is able to accept NFC contactless transactions using a First Data Corp. PIN pad that has a built-in contactless reader.
- TouchBistro uses the highly secure Merchant Warehouse Genius Customer Engagement Platform to process payments using NFC and other technologies.
Other players working towards developing NFC POS solutions include Merchant Link, ID TECH, Revel Systems, Bindo, iConnect, etc.
Gemalto’s Intense Support for NFC
Gemalto has been backing the adoption of NFC through its wide array of solutions, deploying them through partnerships across different geographic markets. Some prominent examples include:
- NTT Docomo had opted for Gemalto’s NFC services such as Allynis Trusted Service Management (TSM) service and its UpTeq NFC UICC embedding for both SIM and contactless applications
- Gemalto aided in deploying NFC payment services across 27 banks in Taiwan through partnership with Taiwan Mobile Payment Co. (TWMP)
- Gemalto enabled the commercial rollout of Valyou, Norway’s first mobile NFC payment service developed jointly by Telenor, DNB and SpareBank 1
- China mobile partnered with Gemalto to launch UpTeq NFC Multi-tenant SIM to protect customer data used for contactless applications
NFC Payments is the way to go in Australia
Australians are favouring NFC contactless payments day-by-day ditching traditional payment methods. Even merchants are seeing a high demand and are rolling out specialized terminals to cope up with the trend. More than 58 million Visa PayWave payments were made in July alone this year. As per a research by RFi, 70% of adult population now owns a NFC based credit or debit card. MasterCard has 320,000 tap-and-go-enabled cards on the market. According to a report by Australian bank Westpac, contactless payments via mobile will reach A$3 billion in Australia by 2015. In Australia, mobile-based contactless payments have accounted for 60% of all debit-card transactions in the past 12 months. The growth can be attributed to the proliferation of smartphones that come with features, such as NFC, that make it possible to perform contactless payments.
NFC Payments Gains Popularity in UK
According to a report by Knowledgefaber, there are 1,326,333 POS terminals. mPOS and contactless POS markets are growing at rates of 14.3% and 26.7% respectively in UK. The country is witnessing rising adoption of NFC based contactless payments across various merchants. Zapp, a leading NFC mobile payments service, had partnered with leading UK banks which provide accounts to more than 18 million customers. The company has also made a series of deals with retailers and payment providers. Zapp is making attempts to target a customer base of around 35 million through these deals. Transport for London has readily accepted NFC payments for public transit related payments. This includes use of NFC contactless cards like that of Oyster. Vodafone, a major operator in UK, developed a mobile wallet service in collaboration with Visa. The mobile wallet service uses a special SIM card embedded with NFC.