What Are Retailers' Top NFC Mobile Payment Questions?
At Software Advice, we hear from a lot of retailers that are curious and sometimes confused about mobile payments. That’s to be understood--the market is extremely fragmented and while evangelists have built up the technology, little has happened in terms of adoption.
In addition to the lack of mobile payments-capable handsets, another barrier to adoption is that there isn’t a need for consumers to be excited about mobile payments. Most retailers don’t accept it, anyways. Retailers can be a leader in changing consumers’ adoption by better understanding the technology--and learning if they can, in fact, already process the payments today. To help educate retailers, here are our answers to some of the top questions we hear.
What are NFC mobile payments? These payments are facilitated through the interaction of mobile devices and terminals that can process near field communication (NFC). The users' accounts are managed via a virtual wallet application, such as Google Wallet or ISIS.
What do consumers need? To process mobile payments, consumers need a smartphone that has an NFC chip. A list of phones with this technology can be found here. With capable phones, consumers just need to wave their phones in front of NFC-enabled terminals.
What do retailers need? Retailers will need to complete the basic requirements to process credit card transactions, including merchant accounts, payment gateways, cash registers and/or computers with point of sale software installed. To read the signal from NFC-enabled phones, retailers must also have either a standalone NFC receiver or a credit card machine that is ISO 14443-capable. The standalone receiver option is much cheaper than the more high-end credit card machines.
Who are the major NFC projects retailers should keep tabs on? In the US, retailers should keep an eye on the happenings of Google Wallet and ISIS. ISIS will be deploying in test markets very soon, and Google Wallet has set up test runs in select cities around the US already. In the UK, Orange and Barclaycard have been leading the way. Another player to keep an eye on is PayPal, who has not only been testing NFC payments in Sweden, but have been testing a roll-out of self-serve payment options at Home Depots around the US.
How much will NFC payments cost? NFC payments with virtual wallets will cost the same to merchants as Mastercard PayPass and Visa payWave cost today (as they use the same technology). Merchants should keep their ears to the ground to see if the credit card companies lower transaction rates to spur NFC adoption, much like they did in 2010 for Italy (source).
How secure are NFC mobile payments? Security will be a major factor in this technology’s adoption. Just today, news began to spread like wildfire that Google Wallet can be easily hacked. The application developers and the hardware manufacturers will have make it a top priority to ensure payments are truly secure if they hope for mass adoption.
What should retailers do TODAY? NFC payments aren’t going to take off today--the ecosystem for its success doesn’t exist yet. But retailers can take the innitiative and be proactive by educating themselves and staying on top of of the trends. Now more than ever, retailers should have a plan in place for today and for the future. That involves staying in touch with their local community and seeing if NFC payments are being deployed elsewhere (e.g., in Taxi cabs in Boston, or in UK McDonald’s).
For answers to other questions, you can check out my retail site or my more in-depth FAQ article here.