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What does Apple snubbing NFC mean to the retail world?

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17th Dec 2012
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Jon Worley examines whether customer interactions can be enhanced through NFC technology and the mobile wallet when some mobile handsets are still not NFC ready.

When it went on sale, many were surprised that the iPhone 5 did not include NFC (near field communication) technology. With Apple’s Passbook, which has some of the functionality of a mobile wallet (pulling together loyalty cards, tickets and coupons) being announced ahead of the iPhone 5 launch, it was thought by many in the industry that Apple would embed NFC in its new device to complete its mobile wallet offering.

How NFC enables the mobile wallet

There is a perception amongst consumers and even some retailers that NFC is to do with payments only. However, payment is just one aspect of customer value that NFC technology can enable. NFC opens up a suite of customer interaction opportunities, which can play a huge part in the sales process.

NFC technology brings the mobile wallet to life, enabling us to store and interact with loyalty cards, tickets, coupons, credit/debit cards and bank accounts. This complete capability allows shoppers to pay for purchases both online and in high street stores.

It is surprising Apple has not included NFC within the iPhone 5, as NFC is already backed by large carriers and card companies in the US and the UK. It was therefore thought highly likely that Apple would align with these organisations so the fully enabled mobile wallet could be widely adopted on its devices.

The absence of NFC technology on Apple’s iPhone 5 hints that Apple does not see mobile interactions between customers and retailers as something likely to become the norm before it launches its next iPhone device. However, recent research from MasterCard predicts that by next year, 44% of retailers will offer contactless payment technologies in-store and 35% will invest in new mobile and e-commerce technology.

NFC enabling the customer journey

It can be argued that using a phone is no more useful than using a card to pay and therefore enabling NFC technology on a phone has no real benefit to the customer. This argument alone would be a justifiable reason for Apple not to implement NFC, if we are just interested in facilitating payments. However, with a mobile wallet enabled by NFC technology, a customer is able to tap their phone to pay for an item, while the wallet simultaneously provides loyalty details and/or money-off coupons, which can be redeemed in store at the checkout.

The data provided by NFC technology also allows retailers to offer customers additional benefits and in-store services, such as clothes fittings or consultations. This type of additional benefits make the use of NFC enabled mobile wallets in-store a large incentive for customers and retailers alike.

While Apple may not be enabling NFC technology on its phones at this time, it doesn’t mean that the technology has no future. Retailers need to realise the full potential of NFC technology and offer it to their customers as more than just a tool for payments.

Jon Worley is director of customer interactions at The Logic Group

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By Jeremy Cox
17th Dec 2012 12:02

-Hi Jon an interesting gap in Apple's arsenal perhaps?

I can see the more adventurous retailers using NFC to do all sorts of clever things to the mutual benefit of themselves and their customers. As a counter to the practice of showrooming, where potential customers enter the shop, take pic's with their smartphones and then shop on line for a cheaper deal, NFC has much to recommend it.

I can imagine the clever retailer offering customers a shopping list app, so that as they can get round the store in the shortest time possible (I'd love that as an inveterate shopping hater), and get relevant offers, perhaps associated with their shopping list, or by adding complementary items in the shop - highlighted as they pass nearby.  

It seems odd that Apple would miss a trick - unless maybe they have something up their corporate sleeves perhaps?

 

- Jeremy [***]  Principal Analyst CEM Ovum

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