The critical question facing retailers right now is how to gauge the timing for finding the sweet spot in terms of making an investment in NFC technology: early entrants will pay more for the requisite hardware, with the hope of creating a legitimate point of difference in the consumer’s mind and positioning their store as a friendlier and smarter place to shop; late entries will enjoy the cost efficiencies of cheaper hardware, but will also miss out on a rare opportunity to present their clientele with something genuinely new and different in the retail space.
We believe there will be a critical mass of NFC-enabled consumers in the next 24 months. As a result, now is the time to start understanding and budgeting for this hardware upgrade, with an eye on being NFC-compatible by the 2015 Holiday season. Wait much longer than that, and you might start to feel like that store with a “Cash only” sign on their register.
From the consumer perspective, a different set of opportunities emerge. One result of this unprecedented aggregation of processing, transmission, access and system fees into a single pot is going to be a massive sales and marketing effort that, like most massive sales and marketing efforts, will oversimplify the options and may encourage consumers to make uninformed choices.
But remember that NFC is nothing more than the handshake in the transaction; it doesn’t actually do any of the processing work. So as we explore NFC systems for our partners, we see one critical challenge as being finding ways to maintain a truly flexible payment system, one that allows each individual consumer to make purchase decisions in whatever way they’re already comfortable. The average American carries four different credit cards, and uses them in four different ways. Any system that seeks wide acceptance must allow the customer to maintain control over their spending patterns.
For example, thinking as both a mobile professional and a consumer, what will work for you:
- Do you want to pay by simply tapping the device or inserting the extra security of texting payment verification?
- Where is the money coming from: do you want payments tacked onto your phone bill or some type of “mobile account” that is shielded from your checking account or just withdrawn directly from your bank account, like a debit card?
- What is it you’ll be using: do you want a mobile version of your existing cards, or one new mobile supercard designed just for this purpose?
- How important is the ability to meld commerce with coupons and discounts? Do you need a system that, in addition to processing a payment, automatically tracks and applies earned discounts? Or should the act of paying remain separate?
To the extent we all get ahead of these questions now, our clients and their customers will benefit down the road.