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Your fighting chance for NFC success

June 26, 2013 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

A newly released report from research and consulting firm Celent focuses on lessons and observations regarding recent launches in the emerging mobile-payments arena. According to the report, there are signs that industry players are increasing investments in Near Field Communication, which flies in the face of many reports that NFC is flagging.

The report notes that NFC infrastructure is expanding, including from nine of the top 10 handset manufacturers supporting NFC (with the notable exception of Apple), and more than 100 NFC phone and tablet models released as of the end of 2012. Many more, the report says, are also planned in 2013.

Most importantly from the financial institution's (FIs) perspective, NFC offers an opportunity to maintain leadership in mobile payments.

Why? Because playing in the NFC space may be one way FIs can ensure bank-issued credentials continue to be used for core payment transactions.

However, a number of current NFC projects are driven by mobile-network operators, which view payments as a source of new revenue. There is a risk that FIs may end up in the back seat once NFC payment solutions catch on.

Beyond ensuring new mobile payment services are secure and well-promoted to customers, the report recommends that FIs wanting to launch NFC solutions should approach negotiations with telecommunication companies and other parties carefully and first agree on a business model.

Mobile operators and other new players in the payments ecosystem should give up on trying to "get a cut" of the payment transaction fees.

At the same time, FIs should expect to pay for provisioning their payment credentials on mobile phones while trying to keep those costs consistent with the cost of card issuing.

Among the threats to NFC noted in the report are cloud-based wallets and such technologies as QR codes. But delays and other issues holding back NFC could provide an opening for these technologies.

The report advises FIs that are willing and able to invest should follow these steps to speed up their NFC deployment, giving them a fighting chance against some of the larger and newer players:

• launch, pay attention to feedback and refine;
• agree on a business model regarding rights and responsibilities;
• educate customers;
• optimize customer enrollment;
• build awareness;
• train cashiers;
• establish trigger points that would prompt your fi into action; and
• develop contingency plans.

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