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Home arrow Market Research Findings arrow General Finance arrow NFC: Technically Viable, but is it Desirable? asks IMS Research
NFC: Technically Viable, but is it Desirable? asks IMS Research PDF Print E-mail
Written by IMS Research   
07 Nov 2007

08 November 2007 
 
NFC has tremendous potential for contactless ticketing, payments and passive door entry. The key benefits for consumers are reported to be faster transactions, no more carrying loose change, even a wallet can be discarded and everything in the future can be performed on one’s mobile phone.

Thanks to significant NFC pilots, technically this is all feasible. A lot of time and money has been spent on NFC by a variety of stakeholders and from its latest market study, NFC: the Road to Mass Market, IMS Research is of the opinion that it’s a question of when, as opposed to if. However there is a sticking point in this ‘NFC master plan’, that quite frankly, is far harder to solve than any technical problem; namely the infamous consumers.

Where to begin with the complexity that is the consumer mindset? Culture, age, lifestyle, perceived value and psychological attachment are just a few factors that will affect the consumer adoption of NFC.

To illustrate this point according to a survey performed by Visa in January 2007; 61% of Americans aged 25-34 would want to use their cell phones to make payments.

This sounds positive. However, American culture is a far cry from the culture of most European countries, Asian countries and pretty much the rest of the world. The whole American culture revolves around convenience; therefore it could make sense to install NFC points of sales in say for example McDonalds or on the New York Subway. But would a more ‘laid-back’ culture, say, Greece for example, embrace NFC in the same way?

Secondly, even in America this view could change vastly, after all those surveyed are of the era of MTV and Dot.Com, would the age bracket 45-59 share the same opinion? Many consumers have only just grasped chip and pin; and if asked a similar percentage probable would say that cash would be their preferred way to pay for goods.

IMS Research believes that there are real values to be had from using NFC, especially in ticketing where time and convenience are imperative. The metropolitan transit system such as the London Underground for example would be a good place to have such a system. The implementation of NFC in certain culture will be easier than others; NFC payments theoretically may work better in the Japanese industrial structure of Keiretsu, where corporations often have interests across telecoms and finance. Furthermore, regionally the value for NFC will vary. However the real question is how will the various markets get consumers to adopt NFC as a payment method?

There are other applications that could see NFC enter the market and improve the user experience. Most of these revolve around the idea of The Mobile Wallet although this is not exclusively so. IMS Research Director John Devlin said, “Transport for London is currently trialling ‘touchpoints’ that, when in close proximity to an NFC-enabled mobile phone, transmit local maps, directions and real-time travel advice to the handset. This is not the only type of application coming through; value added services such as mobile coupons, identification/ authentication and peer-to-peer connections can also be implemented in this way.”

Devlin added, “what we envisage will be a multitude of applications all designed to benefit the user, improve their experience of transit, banking and payments solutions. However, it is definitely not a case of one size fits all and consumer adoption will vary widely, affected largely by cultural differences in consumer behaviour but also by the demands and competitive influences of local businesses. Of course, this all depends on the various stakeholders agreeing a suitable business model, and relevant revenue streams, for each particular case.”

 

Last Updated ( 14 Jul 2008 )
 
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