General knowledge about near fields communications (NFC), a technology used to power mobile payments, is not exactly mainstream – most consumers using mobile devices haven’t even heard of NFC even if a few of them do use their mobile phones to make purchases.
NFC technology makes it simple for consumers to use their mobile devices to perform simple credit transactions or to pass information between two gadgets. The technology is currently enabled on some mobile devices, but not all. Certainly, mobile payments adoption has not yet reached a level where it could be called mainstream.
Not yet anyway.
In May, Generator Research reported that mobile payments are expected to reach $633.4 billion by 2014, up from $68.7 billion in 2009. Further, it’s anticipated that mobile payment users will grow 600 percent, to 490 million in 2014 from 81.3 million last year.
It appears Apple plans to fuel that adoption. The company recently hired NFC technology expert Benjamin Vigier as its new project manager for mobile commerce, and in recent months has also filed for several NFC technology-related patents.
As GIGAom.com reports,
By allowing Vigier to implement some or all of Apple’s NFC patents, Apple could be the company that enables millions of consumers to pay for goods by waving their mobile device near a payment terminal.
TechCrunch has also reported on Apple’s hire of Vigier suggesting it is “perhaps the strongest public signal yet of Apple’s intent to use NFC to build on its micropayments franchise and disrupt traditional point of sale using a mobile commerce model.” TechCrunch also states its sources have indicated Apple is already integrating NFC technology into iPhone prototypes.
Other mobile phone providers are implementing NFC technology as well, including Nokia on its 2011 smartphones and NXP on its Android-based reference platform.
But just because you enable it, doesn’t mean consumers or businesses are ready to adopt it. For there to be mainstream adoption of mobile payments via NFC-enabled mobile devices, merchants at brick-and-mortar stores will need to purchase terminals that accept NFC signals. It’s kind of a chicken before the egg thing, and I anticipate there will be trials of these terminals with select brands to iron out the kinks.
Think of the cross channel marketing opportunities for participating brands. Special incentives and discounts – sent via mobile devices of course - for consumers to go to these stores and make a purchase with their NFC-enabled mobile wallet.
Apple’s clearly thought of the marketing opportunities. The company’s recent 'iPay, iBuy and iCoupons' patents indicate a comprehensive mobile payments, mobile commerce and mobile marketing business plan based around a next-generation iPhone with NFC technology built in.
Addressing security concerns – real and perceived – is of course another hurdle to mobile payment adoption. Consumers need to trust the technology if they are to consider using their phones as a mobile wallet. Apple already has a reputation for introducing and reinventing mobile technologies in ways that fuel widespread adoption. The company has a way of making these features fun, cool and easy to use.
Many Apple customers already consider their iPhone as indispensible. The ability to use the iPhone as a mobile wallet to make purchases and exchange data “on the go” could make it even more so.