Even with impressive forecasts for the growth of the mobile transactions market in the coming years, a straightforward system for buying through mobile devices has been a major obstacle. However, with the increasing acceptance of a technology known as NFC as the standard for handling mobile payments, mobile commerce appears to have reached a turning point this year.
NFC, or Near Field Communication, is a technology that enables short-range wireless communication between two NFC sensors that are close to one another. These sensors can be integrated into various devices, such as smartphones and point-of-sale terminals, allowing data (like credit card numbers) to be exchanged between them. This means that the information on your phone (such as credit card details) can be accessed without needing to physically touch the card. G+ has created an informative mobile payment infographic that explains the process, which is worth checking out.
Adopting the NFC standard has allowed handset manufacturers to safely invest in building NFC technology right into their devices. Just as critically, it has allowed retailers to invest in checkout terminals that can process NFC payments. Google’s Eric Schmidt recently estimated that one-third of retail terminals will be NFC-friendly within twelve months.
So while there are a host of “like-NFC” technologies being developed, solutions that seek to provide the same consumer benefit without the requisite NFC hardware, these have largely been driven by short-term needs. As a result, most analysts believe that in the near future, NFC will be seen as the universal standard: Yankee Group estimates the number of NFC-enabled phones worldwide will grow from 7 million this year to 203 million in 2015, and the Juniper Group is even more optimistic, putting the number at 300 million by 2014.
A pretty powerful, albeit not exactly cooperative, set of companies want to influence the ways your phone will replace most of what’s in your wallet (including your credit cards, debit cards, ID and loyalty cards). Some, like Google and Paypal, see the opportunity to create a massive and ongoing revenue stream. Others, including the banks and credit card providers, just want to hold onto what they already have.
Because of the money involved, most conversations about NFC technology have focused on its use as a payment tool. But NFC technologies are not simply a means to buy and sell things more efficiently. Imagine everything you carry with you and you start to see how the idea of the mobile wallet impacts loyalty programs, couponing, POS and virtually every other aspect of the retail sales process.