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What is the stall with NFC?

NFC has a lot of potential for taking the mobile commerce space to a deeper level. However, a lot of advancements have to be made before the technology is fully implemented.

“Like so many elements of mobile marketing, the NFC promise has not been met by reality – NFC will become a powerful mobile tool, but only when the majority of smartphone handsets are equipped to be readers of NFC tags,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.

“A simple tap is far simpler than the process involved with scanning a QR code,” he said. “The potential is there, certainly.”

Mobile advancements?
According to a recent study by Garner, while mobile payments are growing at a fast rate and will surpass $171.5 billion in transaction values this year, NFC transactions are expected to remain relatively low through 2015.

NFC adoption for mobile payments is expected to remain low because the technology requires a change in user behavior.

Additionally, NFC requires banks, mobile carriers, card networks and merchants to collaborate, something that takes time to develop.

Although NFC has potential, not a lot of marketers are taking advantage of it.

Smartphone penetration is growing at a rapid speed.

Consumers are increasingly using their mobile devices to make purchases and giving them an option to tap their phone to pay for goods and services will be critical.

According to Mr. Kerr, few marketers have made advancements in the past year.

“Nokia is the global NFC veteran and yet they have dropped the ball in the U.S. market,” Mr. Kerr said. “In the vacuum, Samsung is stealing the show.

“Their Galaxy II series is very popular and at one point was outselling iPhones,” he said. “The Galaxy II and III both have NFC.

“Samsung just announced innovative consumer NFC kits that can be customized.”

Open to change
Although NFC is still rather new, recent reports from Forrester and Juniper Research show that marketers and consumers are open to it.

However, the technology needs to be there and consumers need to be educated on how it works.

“Payments are being touted as the hot NFC iteration, via ‘tap-to-pay’ linked to mobile wallets, but I think this is only the beginning,” Mr. Kerr said. “Smart retailers and agencies should be investigating how NFC can help their marketing efforts, today.

“It might take a while for consumers to feel its rumble, but the NFC train has left the station,” Mr. Kerr said. “When it arrives, the impact will be significant.

“Watch for Apple to make a big NFC play with the iPhone5. Watch for Samsung to use NFC to extend their lead on the Android side.”

Consumers will use NFC if it is easy.

Unfortunately, at this point, it is not, nor is it broad-based, which makes it hard for marketers to take seriously.

“NFC hasn’t stalled so much as it just hasn’t managed to get any strong, broad-based support,” said Drew Sievers, CEO of mFoundry, San Francisco.

“You need devices, terminals, and an easy way to set-up credentials on a phone – sadly, these don’t exist yet,” he said. “I haven’t seen any significant, broad-based advances in the NFC-based payments approach in the past year.

“There will be more deployments in 2013, but unless it’s simple and easy for consumers as well as banks, it’s unlikely to take the market by storm.”

Slower integration
According to Marci Troutman, CEO of SiteMinis, Atlanta, NFC has not stalled. The technology is, however, slower to ingrate than some had forecasted.

“Mobile phone hardware must have NFC technology built-in,” Ms. Troutman said. “Although this is not a heavy expense and many phone manufacturers are indicating adoption on a broader scale, but a large factor is whether Apple will do so and how soon. Keep in mind that there will still be a long period of phase in phase out globally.

“Retailers [should] start incorporating their own reading hardware into their POS,” she said. “This adoption is a bit more costly and will probably be a more difficult implementation time line.

“Although there will be incentives to do so from financial institutes, it is still a big gulp operationally for a retailer to take in the near term.”

The executive also believes that consumers will be more receptive to NFC technology, but the hardware needs to be equipped and used more as a payment gateway, which will lead consumer adoption.

“Mobile payment systems will grow and help push the NFC technology,” Ms. Troutman said. “However, there will be higher adaption rates in the Pacific Rim area of the world simply because more is being done to push usage.

“The U.S. will take more time and we probably won’t see strong adoption until the iPhone implements the technology,” she said. “Some think that iPhone will implement in the sixth generation of the phone.”

Final Take
Rimma Kats is associate editor on Mobile Marketer, New York