DK, a ex contributor for Tech65.org, predicted that Near Field Communication (NFC) in mobile phones will see slow pick up in 2011 scratches only the surface of the whole NFC as a payment medium story.
DK also failed to see the big picture of what Google intend to do with NFC in its Android phones. I will touch on that point later.
Wrote DK,
But despite having phones with NFC in the market, services like payments using NFC will not pick up in Singapore. It’s just like using EZ-Link to make purchase. Almost everyone have an EZ-Link card. But how often do you see someone using EZ-Link card to make purchase? Someone need to find a killer feature for NFC in Singapore. Payment just won’t make the cut.
EZ-Link’s Achilles Heel is that the card is the only payment medium for taking public transport in Singapore. You can pay cash, but the cost of using cash on public transport is more expensive than if you were to use the EZ-Link card, plus you have to pay full fare when you change public transport, instead of the discounted distance based fares.
When the cash value in the EZ-Link drops below SGD3.00, the commuter would have to do a minimum top up of SGD10. Given this situation, most commuter would rather reserve the stored value to use it on public transport opposed to buying a MacDonald Meal for SGD6.00.
NFC as a payment medium also poses another problem which is more on the operator’s side. It would be naive to say that the telco wouldn’t want a cut of the transaction value. The operator of the NFC payment solution would also want a cut of the transaction. If the NFC payment medium is linked to the bank, the bank would also want a cut of the transaction cost.
Plus the operator will charge the retailer a rental fee of its equipment.
This increases the retailer’s operating cost. The worst part is that the retailer may not be allowed to pass this cost to the consumer, as in the case of NETs. If using the NFC as a payment medium eats into the profit margin of the retailer, there is no reason for the retailer to offer NFC as a form of payment.
As such, NFC faces a lack of push by the consumer to use it as a payment medium and the lack of pull by the retailers to provide consumers a choice to use NFC as a payment medium.
So what is Google big picture reason for putting NFC in their future Android phones? The answer – location marketing.
The signs are there in Portland. Google is marketing RFID stickers to retailers which this RFID sticker is suppose to provide information of the retailer to the mobile phone in a form of a URL or even discount coupons.
Wrote PC World,
Google's NFC-enabled Android phones won't only be about commerce: The systems will also allow you to "check in" with sensors around a city to instantly load information onto your device.
During his demo, Schmidt tapped a phone to a specially marked Google Places placard. It immediately caused location information to pop up on his Android handset. The same principle could be used to exchange information with retailers or other smartphone users.
This is I why predicted that location marketing will be a hot social media topic in 2011. While location based marketing look to bring consumers in the vicinity of the retailer, location marketing is all about get the consumer at the retailer to market to their friends online so that theirs friends will go to that particular shop.
Viral marketing at work.
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