ORLANDO, FL – As near field communication continues to gain momentum, merchants and marketers should realize that it enables more than just contactless payments—it can be used to inspire consumer loyalty, according to a panel at CTIA Wireless 2011.

Moderator Randy Vanderhoof, executive director of Smart Card Alliance, Princeton Junction, NJ, said that NFC is fundamentally changing the way we view payments, and that the various ecosystem players must find common ground from a technological standpoint, but more importantly, from a business perspective. While there are key infrastructure pieces that still need to align, tremendous progress has been made, especially with more handset manufacturers embracing this technology, including first-mover Nokia.

“Payments is the big driver that is leading to disruptions in the industry, and the question is what will happen between the payment providers and the carriers?” said Damien Balsan, director of business development for devices at Nokia, Espoo, Finland. “This year is going to be a big year, as many manufacturers have announced NFC-enabled phones, and the carriers’ Isis venture in the U.S. will be operating without Visa and MasterCard.

“For us, we think this is really the first year for NFC to enter the market in a meaningful way, although it is still so complex that to really see the impact—it is still going to take some time,” he said. “Payment is going to be the killer app, but there are lots of things you can do with NFC—for us it is all about ease of use.

“If it takes five clicks, you’re not going to do it on your phone, and with NFC we will see a one-click or two-click paradigm—that is the most interesting opportunity in order to make payment successful, virtual cards on phones for loyalty, ticketing and transit.”

The panel also included Mohammad Khan, founder and president of Vivotech, San Francisco; Jean-Louis Carrara, vice president of business development at Gemalto, Paris; and Amitaabh Malhotra, cofounder and chief operating officer at DeviceFidelity, Richardson, TX.

Nokia bets on NFC
Nokia claims that it is shipping about 500 million phones per year. It has an install base of 100 million Symbian-based smartphones worldwide, which it expects to grow to 150 million in a year. In addition, it will begin manufacturing smartphones based on Microsoft’s Windows Phone 7 operating system.

Mr. Balsan said that Nokia has been working with NFC over the last 10 years, and it has run 80 NFC pilots over the past five years. It has also produced five NFC devices, some with embedded secure elements, others with NFC-enabled SIM cards.

“We support anything that will get NFC to take off,” Mr. Balsan said. “Simple applications that let you connect to other devices are going to get people accustomed to a simple gesture, touching something with their phone.

“An incentive could be free content for touching a smart poster or touching an RFID tag, or they can have credit cards and loyalty cards on their phone,” he said. “NFC applications could be used to exchange business cards with a tap, add someone on Facebook or follow someone on Twitter.

“There are some very simple applications that will make you understand the power of NFC’s one-click or two-click experience, which provides tremendous value for the merchant and for you.”

Mr. Balsan said that NFC merchants and marketers can take lessons from the freemium economy of certain Web sites and applications.

Just as brands and publishers can incentivize consumers with free content such virtual goods is in the digital world, that same model will move to the physical world.

“People who want a free game or app would be able to go to a store, check in using their phone and get the game because they bought a coffee or came between the hours of 3 and 5, all of this because the merchants knows who you are, and because everything happens in the cloud,” Mr. Balsan said.

The NFC panel at CTIA Wireless 2011

Final Take
Nokia NFC payment