Is NFC the bridge to the future?
It is certainly bridging the gap between the physical and virtual worlds, and it is absolutely poised to play a pivotal role in the way we use our phones, especially when it comes to mobile payments.
Even if you’ve never owned an NFC-equipped device (like a Samsung Galaxy S5 or a Nokia Lumia), chances are you’ve still probably used NFC. The technology is embedded in things like commuter cards, print advertisements and smart cards. And now that the technology is placed in more Android and Windows phones, and Apple’s iPhone 6, iPhone 6 Plus and Apple Watch, NFC is more relevant than ever.
NFC, or near-field communication, is a fairly straightforward technology that allows two devices placed within a few centimeters of each other to share small bits of data. In order for this to work, both devices must be equipped with an NFC chip.
One-way vs. two-way
There are two ways that this can play out. The first is two-way communication. This happens when two devices work together so they can both read and write to each other. For instance, using NFC, you can touch two Android devices together to share information like contacts, links or photos.
The second is one-way communication. In this case, a powered device (like a phone, credit card reader, or commuter card terminal) reads and writes to an NFC chip. Then, when the user taps his or her commuter card on the terminal, the NFC-powered terminal deducts money from the balance written to the card.
One-way communication to a mobile device is what advertisers are interested in working with first, of course. Retail is the obvious application: A coffee chain serving a coupon offer directly to a customer’s phone, for instance. (NFC should be confused with beacons, however, which have farther physical reach.)
Less power, Bluetooth-friendly
Consumers tend to have a love-hate relationship with Bluetooth. They like for its ‘magical’ powers, but don’t like the inconvenience of pairing devices. It’s hard enough pairing Bluetooth in a car to call mom.
Bluetooth is also a huge drain on your battery. That’s the beauty of NFC – it uses significantly less power than Bluetooth. This is important when you consider that someday, phones could supplant wallets, meaning battery life will be one of the primary considerations when purchasing a mobile device.
NFC is a team player, too, in that it works directly with Bluetooth. For example, rather than trying to endure the process of pairing your phone with Bluetooth speakers, you can just tap your device to a speaker and allow NFC to exchange the pairing data.
So it really isn’t too big of an exaggeration to say that someday we will all be making purchases with our phones, using NFC technology. In that sense, NFC is the bridge to the future.
Will credit cards become obsolete?
Maybe. But maybe not. Credit cards could still remain the golden standard to which everything must be compared to – the ease, the reward points, the lustrous sheen — what’s not to like? Still, as we’ve seen recently, credit cards are swimming in their share of problems. From credit card breaches (remember the Target nightmare?) to credit card fraud (according to your statement you just dropped a grand at a Parisian nightclub), now may be an especially good time to find a solution that protects our wallets from theft and fraud.
Millennials, Gen Z are digging mobile payments
According to GfK’s FutureBuy survey, Millennials (Generation Y) and the generation after (Generation Z) are more apt to see mobile payment systems as more efficient and effective than other types of transactions, even if they are admittedly concerned about security and privacy.
About a third of Generations Y and Z say if they have the opportunity, mobile is their preferred method of payment. As for the others, mobile payment may not be their number one pick right now, but they certainly do not seemed closed to the idea.
“Right now, people are standing by. There’s a willingness to embrace mobile payment, but they’re standing back because they sense the issues,” Tom Neri, executive vice president of GfK’s Financial Services team in North America, tells Marketing Daily.
One factor that may help give this crowd a boost of confidence in mobile payments — Apple. Apple’s introduction of ApplePay could just be the key player that the industry needs to really take hold.
“No one’s really made the case yet, and Apple’s probably in the best position to do so,” Neri points out.
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