NFC nearing commercial deployment, experts say

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By: Wise Marketer Staff |

Posted on January 18, 2010

The rise of NFC (near field communication) technologies is forecast to affect retail marketing and customer loyalty strategies in the near term, according to a report published by Near Field Communications World (NFCW).

The report, entitled 'NFC: The Road to Commercial Deployment', concludes that the use of 'smart posters' (whereby consumers can hold their NFC-enabled mobile phone near an advertising poster to receive digital promotions or multimedia content) to deliver special offers could be an important new addition to today's recession-hit retail marketing toolbox.

The smart poster idea is not a new one but, with more and more NFC-enabled mobile phone handsets now being launched into the market, it is becoming more viable as a technique for reaching significant numbers of potential customers. The technique's attraction for retailers is increased by the idea that these offers can be at least partly funded by CPG brands.

According to the report, early trials of loyalty and promotional services based on contactless stickers attached to the back of mobile phones have delivered coupon redemption rates as high as 50%, compared to just 1% to 2% for paper coupons.

"Retailers who switch to the new terminals will be able to take advantage of the advanced mobile loyalty and promotional programmes that NFC could deliver without having to install any extra hardware," noted report author Sarah Clark.

Another factor in the rise of the technology is that NFC mobile phones are broadly compatible with POS terminals that accept contactless bank cards. The report suggests that, from 2011, NFC could potentially begin replacing traditional wallets and purses in markets where the technology is gaining wide acceptance (such as the US and the UK).

Clark predicts that NFC technology will begin to be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys, and even cash: "But what hasn't yet been decided is who will win the battle to provide consumers with their new hi-tech mobile wallets. And, of course, NFC is a secure technology, so consumers will be able to instantly lock all the mobile wallet services on their phone if it is lost or stolen, and then get them automatically transferred to a new phone as soon as it arrives. And, because an NFC tag doesn't require an internal power source, consumers will even be able to use their phone to make payments when their battery is dead."

The UK, France, United Arab Emirates, Singapore, Taiwan and Korea are likely to be the first countries to get the new mobile wallets, the report predicts. The US, Canada, Spain, Germany, Italy, Norway, the Czech Republic, Romania and Australia are also expected to be early adopters. Businesses ranging from retail and travel to fast food, consumer goods, tourism and entertainment are all expected to be affected by the arrival of NFC services, as well as government and educational service providers at some level.

"Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field," Clark concluded. "Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market."

The report, which can be ordered online from NFCW's publisher, SJB Research, explains the key factors that are expected to decide which companies will become the mobile wallet market leaders and details what the first NFC services will need to offer in order to succeed - click here for details and online ordering.

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