Recently Lyndon Lee (Enterprise Consultant Architect at Tesco) made some strong comments on the future of NFC, or more likely the absence of it. Although in parts I must agree with him, I have to say it might not all be that grim. For starters, when reading between the lines you’ll find exactly the things you should focus on when developing your NFC solution.
“NFC was revolutionary 10 years ago but I think it just might have passed its sell-by date”, the retail giant’s Lyndon Lee told attendees at a mobile payments conference in London this week. “We are developing a digital wallet, focusing on marketing and loyalty aspects, but payment may not enter the wallet.”
When developing and NFC solution, don’t just think payments, think about marketing and loyalty as well. This was also one of the key take-away points of the Startupbootcamp NFC Event “Retailers and Brands” in Amsterdam on the 26th of April.
“We have a payment system in place already and we don’t want to disrupt it, if it doesn’t add any value,” Tesco claim.
NFC mobile payments are too complicated, there are too many parties involved and the concept offers too little value, Lyndon Lee, Enterprise Consultant Architect at Tesco, one of the world’s largest retail groups, told attendees at the Mobile Payments and Value Added Services 2013 conference in London this week.
“There is limited value and an increasing number of players which is making it difficult,” Lee, who leads projects on mobile payments, fraud management and identity and access management, explained.
With many players active in NFC (phone manufacturers, payment terminal providers, POS terminal providers) this requires you to either find a niche or develop a solution that can be applied across multiple systems. Also keep in mind that in some cases contactless might be an easier option.
“Is mobile NFC at the right place, at the right time? I don’t see any real movement or activity. NFC usability is not really revolutionary and, for the general public, is it really that cool? I think the next generation won’t think it’s cool enough for them and they won’t use it.
“But this is my opinion. NFC was revolutionary 10 years ago but I think it just might have passed its sell-by date. Usability is a big question and we need to crack this.”
Maybe NFC hasn’t proven itself beyond access passes and public transport cards. Maybe it isn’t cool enough to survive a new generation. But a warned person counts for two. When developing an NFC application, make it cool and think about keeping it cool for a few years when the technology has caught up and is more main stream. On a different note, also consider things you don’t know yet. You might see a new type of technology entering the market that you should re-platform to. There is no guarantee that NFC will last forever.
“At Tesco, we focus entirely on the consumer relationship. We are developing a digital wallet, focusing on marketing and loyalty aspects, but payment may not enter the wallet. We have a payment system in place already and we don’t want to disrupt it if it doesn’t add any value.”
“If it doesn’t give us any value to adopt it, why should we do it?”
In an interview with NFC World following his presentation, Lee said: “Mobile NFC is unappealing. Contactless cards, I have no doubt about. They work now and they have no difficulties, but mobile NFC is very challenging and not easy.”
“As it stands, there are no official plans for NFC,” he said. “Existing players ask the question, do we really want all the complication of mobile NFC? It has too little value to be shared and I find it hard to believe that it will really take off.
“Contactless cards are already there and they already have value. Mobile NFC payments have no value to us; it has lack of consumer experience and it is too complicated so I don’t see a future. It is a very stagnant market.”
Think about the value that your NFC services bring. Think beyond speed, but think spend. Spend can come through loyal customers that buy more, better marketing and more (effective) payment methods. If your NFC solution increases turnover by a few percent, I am confident people are willing to listen to your story, even Lyndon Lee.
Make sure you are able to show the value in a business (test) case. Especially with a technology as much debated as NFC, the theoretic revenue increase has far less value than a proven increase.
To conclude, make sure your NFC solution:
Not just focuses on payments alone, but keep in mind loyalty and marketing
Find a niche or develop a solution that can be used across different systems/platforms/mobile phones
Make NFC cool, for now and for the next generation
Keep an eye on new technologies and re-platform when NFC runs out of fashion
Focus on how you are going to increase spend and have proof to back it up. Use the Lean Startup methodology to validate your assumptions.
Sytze Koolen is Director Global Alliances for GlobalCollect and a mentor in NFC&Contactless.