NFC in retail: Now simply wave your phone to pay bills!
The NFC transaction market is forecasted to experience astounding growth in the next 5 years, according to a recent survey conducted by ReportsnReport.com.
The aspiring need of any smartphone addict of paying through their handheld device has now been fulfilled with the disruptive technology called ‘Near Field Communication’ or NFC. This fusion is now transforming the world of retail and creating hyper-competition in the payments space.
NFC today has reduced in to a chip inside the smartphone that can read and interact with other NFC-enabled devices and also with the electronic tags that are used in retail stores. The customers can now simply wave their phone in front of the register to pay for goods and services.
Opening up new channel for retailers
With the development of NFC into the retail industry, shopping is equivalent to interacting with machines to purchase goods. It enables the brands and retailers to send information to their customers about the products they want to buy.
Unlike credit cards, phones can do two-way communication; an NFC phone would open up a channel for the retailer to talk back and send its customers time or place sensitive coupons and promotions. Another development that will be observed is the change of things for location-based services like Foursquare. NFC can now play a realistic role in check-ins – making it a more reliable metric. It even allows the customers to check in to a specific area of the store, a new phenomenon called ‘micro’ location based services.
Serving customers better
One of the major hurdles experienced by the retailers in order to serve their customers better is the waiting lines at their checkouts. Almost 95 per cent of the retailers are facing this issue and around 92 per cent of retailers have problems meeting their customers’ service expectations. Another obstacle encountered by the customers in a retail store is lack of support by store personnel. They most often are unable to find the store representative when they need help or the representatives do not have enough product knowledge to be able to assist them. The retailers are losing customers because of these persisting issues.
The deployment of NFC enabled payment services will help retailers to tackle the matter of waiting lines at their checkouts by accelerating the payment process. The loyalty applications and rebate coupons could aid in fast-tracking the situation.
The NFC technology enabled devices could also be used by the customers to gather information on products, diminishing the experience of not being attended by store personnel. This is an interesting solution for the retailer as the customers would be using the mobile devices to understand the product. However, all these facilities cannot be availed without significant investments in infrastructure, such as compatible payment terminals.
Creating new business opportunities
This technology not only has the potential to enhance consumer convenience through m-ticketing to m-currency, but to also create new business opportunities for Mobile Network Operators and Service Providers in their respective markets. It can also deploy operational guidelines to many sectors, e.g. banks, retailers and transports. To realise the benefits of NFC technology to the retail market, a new regulatory environment will need to be developed to satisfy both consumer and business considerations.
Keeping in mind the benefits, the NFC transaction market is forecasted to experience astounding growth in the next 5 years, according to a recent survey conducted by ReportsnReport.com. The NFC ecosystem will see its growth in various segments such as finance, IT, telecom and device manufacturing.
Good market opportunity
NFC technology is also experiencing a lot of support from the government as well which seems to be aggressively promoting it. Apart from this, a lot of network operators and manufacturers across the APAC and African regions are also encouraging the technology.
The NFC technology is gaining popularity as a result of its ease of use, security and versatility. Further, the proliferation of NFC-enabled smartphones is also adding to the NFC transaction market growth during the forecast period. It predicts that the Global NFC Handset Market will grow at 55.8 per cent CAGR between 2014 and 2019.
The study also depicts that currently there is a significant and rapid growth across all verticals in the NFC market. Growing at an estimated CAGR of 8.83 per cent from 2014 to 2022, the total NFC market is expected to reach $16.25 billion by 2022.
(The writer of this article is Soma Sundaram, CEO and Founder of iKaaz Softwares. Sundaram is primarily specialized in software products and has around 20 years of software industry experience. He has successfully launched innovative mobile payments product in the emerging market. The views expressed here are personal.)