NFC – Not (Just) For Commerce

When The iPhone 5 went on sale to critical acclaim, there was one thing missing that many retail and payments experts had thought would be included – NFC (Near Field Communication) functionality.

When the launch was announced in early September, the exclusion of NFC was somewhat surprising. It was thought that, with Apple unveiling its Passbook service in June (which pulls together loyalty cards, tickets and coupons), embedding NFC would be the next natural step to complete its mobile wallet offering.

Customer interaction
As a whole, NFC only scratches the surface in terms of the services the technology can offer to retailers. All too often, consumers, and even retailers, associate NFC purely with payments. For the true value of NFC to be recognised, businesses need to understand that beyond payment, the customer interaction opportunities it creates are a huge factor in the sales process.

NFC technology enables the use of the mobile wallet, which takes the functionality of the Passbook a step further, bringing together loyalty cards, tickets and coupons, but also credit/debit cards and bank accounts. This fuller service allows shoppers pay for purchases both online and in bricks and mortar stores, using their phone.

With NFC already backed by large carriers and card companies in the US and the UK, it was thought to be highly likely that Apple would align with these organisations, so that Apple devices were ready for a service like the mobile wallet to be widely adopted.

The absence of NFC technology and the ability for a mobile wallet to function on  Apple’s iPhone 5 hints that Apple views regular retailer interactions via mobile channels as being a long way off. However, recent research from MasterCard proves that this is a dangerous assumption to make. The Mastercard study forecasts that by next year, 44 per cent of retailers will offer contactless payment technologies in store, and 35 per cent will invest in new mobile and eCommerce technology. Thus retailers need not worry.

Enabling the customer journey
It could be said that tapping a phone is as useful as tapping a card, and as such, there’s no real additional benefit to the customer. This reason alone would be a justifiable reason for Apple not to implement NFC technology. However, a consumer is able to tap a phone for payment and simultaneously provide loyalty details and/or redeem a money-off voucher, while using it to get additional in-store services – this makes it is a bigger incentive for customers and retailers alike.

Furthermore, the mobile wallet with NFC enables a customer to go on a journey, and enables the collection of valuable data to create customer interaction opportunities for retailers, marketers and advertisers. These interactions can include in-store customer loyalty programmes, vouchers, or location-based services for customers.

For example, with an NFC-enabled mobile phone, a customer can tap a poster or product label to view promotional and product information as well as offers and complementary items for cross selling. 

So, while Apple may not be enabling NFC technology on its phones, it doesn’t mean the technology has become obsolete – for retailers there is much more to mobile NFC than just a payments tool.

Jon Worley is director of customer interactions at The Logic Group