StorefrontBacktalk

When Replacing NFC, Tech Is Really Not The Issue

Written by Evan Schuman
August 7th, 2013
Seems that the thing to say today, when discussing a retail mobile interaction method (be it for payment or loyalty or couponing)is to say it's an alternative to NFC (Near Field Communication). What a horrible thing to say about a technology (in the U.S., at least). But the characterization—or is it an insult?—misses the point about NFC.

More precisely, it misses why NFC has fared so extremely poorly in the U.S., especially for payment. The comparison of technologies—be it Light Field Communication (LFC) or using the touch-screen of a phone such as is being done by TouchBase—to NFC usually implies that if NFC phones were more plentiful or if the POS interface was simpler or if the phone connection was faster, then NFC would have flourished. The reality, though, is that while those tech issues are true and were obstacles, tech problems weren't anywhere close to NFC's biggest headache. It has always been the business issues—and none of today's much-touted approaches seem to have a solution for that.

At one level, the problem for NFC has been that no retailer had a reason to push it. There's a huge difference, for example, between a Macy's and a Walgreens initially accepting Google Wallet and such retailers really pushing it, with customer financial incentives, E-mails to shoppers, prominent signage, extensive associate training (with associate monetary incentives for how many shoppers they convince to use it), including references in broadcast commercials, magazine ads, billboards and anything else a chain can do when it really wants to push something.

No, what just about every chain did was enable it—and pretty much the effort ended there.

It's easy to blame retailers, but when all of this was happening, what was going on with the rest of the payment and mobile community? Where were the card brands, who are always thrilled to say how much they want mobile to succeed? What about the processors, the banks, the POS manufacturers, the handset manufacturers, mobile OS companies? Everyone was proud of their talking points that sang how much they loved mobile, but everybody quickly concluded that any financial investment to fund incentives was going to have to come from retailers.

If one of those tech companies wanted to really make a difference, they could approach one of the largest chains and argue that they could use the technology for free—and here's a big check to cover marketing, training, shopper incentives and collateral costs. Chains are looking to mobile as a way to get away from—or at least shortly minimize—interchange fees.

That's why these approaches are much more effective with tiny merchants, where standard POS operations are daunting.

There are many very impressive technologies out there for payment and related retail functions, but once we hear from some that choose to stress the business case and not the tech case, that's when we'll we have a contender for a true NFC replacement.