nfc

Apple’s Passbook: Early evidence is that it’s a hit with users

/ Mark Brill / 1 Comment

Whilst many commentators were discussing the features of the iPhone 5, one announcement that received less notice was the introduction of Passbook in iOS6. Many industry figures had been holding out for NFC to be introduced in Apple’s new handset, so Passbook barely counted as a consolation prize. However, this feature may turn out to be a significant channel for brands and consumers.

The system has had a soft launch from Apple – not a bad idea after the maps fiasco. Some of the first for Passbook apps for McDonalds (France), Eventbrite and Airbnb were recently released in iTunes and early signs appear to show high adoption levels. Online ticketing business, Eventbrite, said that over 20,000 tickets had been sold through Passbook in the first week. The French supermarket, Auchan, has just announced that 10,000 people registered for a Passbook loyalty card within a few days of its release.

Apple’s reasoning behind Passbook is that it creates a frictionless experience by delivering barcodes within apps and negates the need to install millions of readers for NFC chips. It would seem that the advantage for consumers is familiarity combined with additional features such as location services (useful for Airbnb) or event reminders (useful for Eventbrite).

Lexus Use NFC in Wired Ad

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Always ones to be pushing the tech boundaries, the US version of Wired Magazine has included an ad from Lexus with NFC embedded in it. With around 3 million NFC handsets in the US, they are hoping that some of their 500k readership will be willing to ‘touch in’ to the advert. The activation takes users to a link with videos which introduce the Lexus app suite which includes Bing, OpenTable, iHeartRadio, Pandora, MovieTickets.com and Yelp. For Wired, it’s as much about being experimental as it is about gaining a response. But who knows, maybe all magazine ads will be like this one day.

Creating the Future of NFC

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Unsurprisingly, one of the big themes at WMC last week was NFC or contactless. Sure, there were payment devices, but there were lots of other whizzy applications showing how NFC in phones is much more than a mobile wallet. Here are just a few:

NFC Vending Machine – touch in to buy your drink

NFC flowers – touch in to find out what the flower is and how best to look after it

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NFC Car – OK, this was a car mock-up, but showed how contactless could be used to unlock a car and as an ignition key. This is very useful for car hire or car sharing where the NFC could be restricted to a set time period.

Of course, there’s so much more that could be done with the technology. To try to find out, Isobar London Create are running a hack day on 24/25th March, in London and partnership with O2. Any would-be developer can turn up, demonstrate their skills in an NFC environment and be in with a chance to win a number of mobile devices and other goodies. And anyone who comes up with a great application could be eligable for Kickstart funding from Bluevia. There’ll be lots of NFC tech and expert support to help developers through the Hackathon. There’s more information at http://www.isobar.com/createlondon

BlackBerry NFC to allows sharing between phone

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BlackBerry has announced that its new OS7 will include the facility to share files, contacts, docs and more between handsets, which are NFC enabled. RIM has been adding NFC chips to it’s higher end Curve and Bold models since the spring this year. They are not the only company to show an interest in Contactless technologies in mobile. Orange, in conjunction with Barclay card launched a Samsung NFC phone in 2011. Google has also firmly shown their commitment to NFC with their wallet.

However, BlackBerry is the first to promote the file sharing aspect of the technology. Outside of the business market, their key demographic are younger users (it’s all about BBM), and the presence of P2P-based file sharing will set well with that audience. It was this demographic that made use of Bluetooth for file sharing in the days when Nokia were still making phones. BlackBerry Tag looks set to replace that for their users. VFC has been slow to roll out, but could BlackBerry tag do for contactless what BBM did for IM on mobile?

Although not primarily aimed at mobile marketing, this initiative could help open things up for that market. The company will include a developer API to allow third party integration with the ‘tap to share’ function. Look out for a ‘tap’ to do download poster in the near future.

NFC? 91% of People Don’t Know What it Is

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What does this tell us about contactless payments? Not much, according to the study!

A new study by YouGov has found that just 23% of consumers want to make payments with their phone, instead of cash and 20% said they preferred chip and pin. 91% of those asked didn’t know what NFC (Near Field Communications) and 70% had no idea what a mobile wallet was. So, whilst many people in the mobile industry are excited about NFC (or contactless, or mobile wallets or TapTap if you’re Orange or whatever we’re calling it this week …) it would seem that consumer adoption will be a major barrier. Contactless technologies are widely in use: door entry is cards; travel cards, such as London’s Oyster; and it is in many credit/debit cards. In spite of that, 61% of those who have the technology already never use it.

That’s a somewhat disappointing set of figures given the vast spend on rolling out these technologies, not to mention the considerable sums that Barclays have thrown at their TV advertising and iPhone games. Clearly, there is a lot of work to be done to get consumers to both understand and be reassured by contactless. People whizzing down giant roller coasters clearly isn’t doing the trick. Perhaps something more direct, such as shop assistants suggesting that customers use contactless (it’s faster) or even rewards or money off for doing so. It’s in the banks, shops and operators interests to shift to mobile-based NFC, so why not make it worth the consumer’s while?

More on the YouGov study here

Google Wallet: what’s right and what’s wrong with it

/ Mark Brill / 1 Comment

Last week, Google launched their contactless payment system, Google Wallet. They are initially trialling it in two US cities, New York and San Francisco. Besides a simple touch to pay wallet, it will also include the facility to hold and redeem vouchers on the phone. There has been a mixed reaction to Google’s Wallet though. Here is a run-down of the good and bad points about their NFC offering:

What’s right with it

  1. Google has the traction to make NFC payments happen. Whilst there are many companies in the mCommerce space, it takes a Google (well, Google) to get it into the mainstream. Given the number of providers getting into the sector, Google will help consolidate the market.
  2. Low cost of transaction. From a merchant perspective this could be the killer app. Google are not interested in making money from this but rather, using it to develop their search marketing base. They are therefore only charging the standard card-holder present fee. Compare that to the transaction costs of Premium SMS (35% or more), and Google Wallet become a bit of a no brainer. What’s more, for launch they are giving away the terminals and $100 worth of free transactions.
  3. Vouchering and discounts. Wallet ties in very neatly to Google Offers. In fact there are some that believe that Offers isn’t about beating Groupon, but rather connecting it to NFC. The idea is that Google Wallet users will receive offers that can be redeemed by touching in to a contactless terminal. As one commentator put it, it will ‘close the loop’ in the offers/payment system for merchants, and reduces the effort of having to print out or show vouchers for customers (http://searchenginewatch.com/article/2075862/Google-Offers-and-Payments-Its-all-about-Search).
  4. It goes well beyond payments and vouchers. Google wallet isn’t just a payment card, or an offers network. It will also be a ticketing mechanism, travel card and could even replace your house keys and let you into your home. Worried about losing your phone (and ergo your wallet and your house keys)? Google point out that people take more care of their phone than their keys or wallet. We know where our phone is most of the time, but do we know where the other items are? And the advantage of it being held electronically is that you can both quicky ‘cancel’ your keys and get a replacement. Much cheaper than a locksmith.

What’s wrong with it

  1. Getting sued by PayPal. OK, tech companies are always getting litigious with each other (just look at Apple and Samsung), but the legal threat from such a major payment competitor will make roll-out more complicated (http://www.webpronews.com/paypal-sues-google-2011-05).
  2. Lack of terminals. Obviously for NFC to work, there needs to be enough terminals in retail outlets. Google are intending to use Mastercard’s  PayPass as the reader. There are already 120,000 of the devices in the US – that sounds good, but in terms of retail coverage that’s a pretty tiny percentage of outlets. Some commentators believe that terminals will need to become ubiquitous to achieve mass adoption.
  3. Fragmentation. The market is already becoming divided. First off there is the operating vs operating system wars. RIM have already launched an NFC handset in the states, Orange and Barclaycard in the UK. And everyone knows that Apple is developing their offering in that space. Outside NFC, Square is making great gains and recently launched their CardCase which allows users to easily make payments through their phones. It is far from a given that Google will own the contactless space .
  4. Issues with Privacy. As one commentator said, it will be the end of anonymous shopping. That isn’t simply about being able to hide embarrassing purchases. It will be about freedom from being followed round by advertising. Google’s revenue model is all about advertising, so the primary reason for getting into NFC is to use the data to further ad revenue, particularly behavioural targeting. Google will know everything about your purchasing habits both on and off line.
  5. Concerns over security. It’s the question almost everyone asks when first told about NFC. What about security? Google have certainly addressed the issue by keeping the credentials separate to the OS along with a robust encryption.
    That’s still doesn’t detract from user concerns. Most people wonder if it’s possible to snatch a payment just by walking past someone. The answer is of course ‘no’. Both the proximity (4cm) and the encryption makes that hard (Google would say impossible). However there are some industry experts who also think that many hackers will try to compromise the system (http://www.eweek.com/c/a/Security/Google-Wallet-Security-Solid-Until-its-Hacked-566798/). After all, Android was hacked just a few months ago.
  6. Developer unfriendly. Fair enough, it’s a mobile wallet so you can’t exactly open up the data to everyone and their dog. However, that also means that Google is looking to succeed without the support of a developer community (http://www.i-programmer.info/news/81-web-general/2519-google-wallet-developer-unfriendly.html). That will make the whole thing much harder to realise. Surely there must be some kind of API that allows developers to interact with the wallet but raise security problems?

Linking the Wallet to their search and offers is a shrewd move by Google. Search is what they know. In the end, the success of Google Wallet comes down to one thing – consumer adoption. If the public believe that it makes life easier, is genuinely secure and that they won’t get endless offers they don’t want, then it may well be a success.

Contactless Payments Launches in the UK (finally)

/ Mark Brill / 2 Comments

Orange and Barclaycard have been promising contactless payments in phones for over a year. They finally launched the UK’s first NFC phone last week. It will first be available on a Samsung Tocco Lite on both pay as you go and monthly and the payment facility (called Quick Tap) can be set up by Barclaycard or Barclays Debit Card customers. NFC works much like an Oyster Card (for those of you who’ve travelled in London), whereby you top-up your account with up to £100, and can make single transactions up to £15. In essence it’s like cash, but without the pocket full of coins.  The contactless payments can be used at 50,000 stores, including Pret a Manger, EAT, Little Chef, Wembley Arena, Subway, Wilkinson and McDonalds.

Consumers often raise the issue of security with NFC. Could someone just brush past and deduct a payment? No, because the data is encrypted and can only be read at terminals. In fact, the NFC chips have been available on Barclaycards for some time, and there are no examples of that security being compromised. What if someone looses their phone, could someone just spend the money? Not really. If you lost it will all £100, once you tell Barclays the payment facility is cancelled and the money refunded. If you went out with £100 cash and lost it, you’ve lost £100. That doesn’t happen with contactless.

In spite of that, there are understandable consumer concerns about security, which is why users can add a pin number, making the contactless facility more like a traditional chip and pin. Will contactless catch on? Certainly Orange and Barclaycard have massive confidence in the scheme, and will be rolling out other handsets shortly (lets hope one of them is a decent smartphone). The potential of contactless as both a payment and marketing channel is there, however there is one big but. Consumer adoption. In spite of large investments in mobile NFC by banks, operators and handset manufacturers, there is little evidence that consumers are demanding contactless payments. Pushing technology to consumers does not a promise of success. The world of mobile is littered with failed technology (mobile TV, video calling, any Nokia phone in the last three years …). What is disappointing with the Orange/Barclaycard offer is that neither the handset nor many of the brands involved are exactly cutting edge (contactless in a Little Chef???). True, you have to start somewhere, but this isn’t going to reach the kind of social opinion formers who will evangelise about the technology. Maybe it will all happen with a contactless iPhone 5!

Who owns the mCommerce platform, operators or handset makers? Let the battle commence.

/ Mark Brill / 1 Comment

With all the talk of mCommerce and contactless (NFC in particular), a war between the operators and handset manufacturers was always on the cards. It looks like it’s beginning to kick off. The Wall Street Journal reported on Friday that RIM (BlackBerry) was ‘locking horns’ with operators over who controlled the NFC customer data. The issue is about where ‘credentials’ (the encrypted personal payment information) will be stored. Will it be on the SIM card (operator) or the phone memory (handset manufacturer). This is much more than a row over a technical function, as the customer will be tied either to their network or handset depending on how this data is stored. Whilst RIM talked about their close relationship with operators at the Mobile World Congress, one senior figure at Bell Canada recently stated “we expect some closed operating-system vendors will probably try to build into the handset. RIM and Apple fall into that category”.

The problem from an operator perspective is that whilst revenues are being squeezed, customers are demanding much more for their money, in particular they want more data. How do the operators make more money in already saturated markets? The answer is through providing mCommerce. In order to do that they will need to invest in expensive security infrastructures, making it even more critical to keep their customers with SIM-based credentials. On the other hand, we have increasingly seen handset manufacturers and handset operating systems define the mobile market and mobile content. The two that have done most to drivfe this change are Apple’s iPhone (and appstore) and Google’s Android.

My money is on the handset/operating systems winning out. Apart from their obvious success in defining the mobile content channel, they seem to have the revenue model right. Operators tend to charge consumers or merchants/content producers high transaction charges – look at app stores before Apple (£1000 + to get your game listed) and the low payouts on premium SMS. On the other hand, Apple and Google are past masters at the freemium model – get something for free and pay if you like it. And there’s no question about which model consumers prefer.

 

Dean Bubley’s blog gives more insight into the NFC revenue model

BlackBerry will include NFC

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The latest proof that NFC (Near Field Communications) or contactless payments will be big in mobile comes from BlackBerry. First, leaks from Google showed how they had big plans for contactless payments and advertising. Then there was the evidence pointing to Apple’s inclusion of NFC in the iPhone 5. Now, RIM, the Canadian company who manufacture the BlackBerry have once again confirmed their commitment to contactless. UK MD Stephen Bates, said that NFC would be in “all of our new devices moving forward”. Pretty conclusive.

With a commitment from the handset manufacturers, card payment companies and mobile operators it looks like there’s little to stop NFC. Well, little apart from consumer adoption.

iPhone 5 to have NFC (Contactless Payments)

/ Mark Brill / 3 Comments

All the signs are there that the next iPhone will include contactless:

  1. Richard Doherty, director of consulting firm Envisioneering Group who work on NFC hardware, told Bloomberg that the next iPhones/iPads will have NFC.
  2. AppleInsider has discovered that Apple this week put out a call for an engineer with NFC experience.
  3. Apple filed a number of NFC related patents in 2010.

Aside from all these signs, NFC makes a lot of sense for Apple. At the moment their itunes store pays massive transaction charges for purchases bought on credit cards. Though highly profitable, it would be much cheaper for Apple to see more NFC payments which would debit a bank account and reducing their transaction costs. Google have already added NFC to their Nexus S, but the addition of a contactless iPhone will make the technology almost inevitable.

The infrastructure of contactless is appearing in many countries – aside from Japan and Korea who have had contactless phones for years, the US now has 750,000 contactless payment terminals. In the UK similar NFC devices are being rolled out in numerous shops and restaurants where there are 42,500 contactless payment points. Barclaycard and Everything Everywhere (Orange and T-Mobile) re-announced their plans to deliver a contactless handset from April 2011. With the payment technology added to phones there technological barriers to contactless will be removed. Of course, there is still one big ‘if’ with the whole – will users want to adopt it? It looks like the handset manufacturers (and banks and operators) are assuming they will. However, mobile is littered with technologies that users weren’t interested in (in spite of Face Time, how many people actually make a video call?). When it comes to NFC payments the big question from users will be security. How easy will it be for someone to get hold of my money?