Near field communications (NFC) technology has brought a new wave of techniques to the retail industry, enabling...
bricks and mortar stores to attract and interact with customers in innovative ways.
Analysts see these tools as a money maker as well, with a study conducted exclusively for Computer Weekly by Juniper Research showing contactless mobile payment revenues set to soar to $180bn by 2017, with western Europe and the US catching up with the current adoption levels in east Asia.
But what do retailers in the UK think of NFC and mobile technologies in their businesses and are they willing to invest?
Stagecoach announced this week it was starting a new trial in Cambridgeshire with Everything Everywhere to enable NFC mobile ticketing on its bus network. If the NFC mobile ticketing pilot study proves successful, Stagecoach intends to roll out the technology across all of its bus and train services by the end of 2013.
A spokesman from Stagecoach told Computer Weekly it was taking a lot of inspiration from traditional retailers getting involved in NFC.
“New technology is opening up opportunities for us and we are learning from other sectors, especially the traditional retail sector,” he said.
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“Smartphones are a key extension of people’s lives, we manage our lives all round them, not just calling but buying on Amazon, social networks and so on. NFC taps into that lifestyle.”
The spokesman admitted it wasn’t cheap to roll out NFC technology, but by partnering with the mobile operator, costs could be kept down.
“The reason we are trial ling is to understand what the impact will be, from the back office and operations through to the cost point of view.”
Stagecoach has already started a trial in Liverpool to allow passengers to use contactless credit cards to pay for their bus journeys around the city.
“Mobile NFC payments could well end up the main way, but you need to have a variety of options, as some will be more popular than others,” he added.
“It is all about making transport easier for the public… giving more of a chance to get them out of cars and onto more green transport.”
But this position couldn’t be further from the opinions of transport leaders in London.
Earlier this week, Transport for London (TfL) dismissed NFC mobile payments, claiming the technology was too slow for London customers to use on the tube network.
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Shashi Verma, director of customer experience at TfL, said: "We have carried out tests on NFC in both 2008 and 2010, unfortunately during both of these tests we found that the technology was not fast enough to complete the transaction in under 500 milliseconds which we would require." Oyster cards complete in under 300ms.
The executive was keen to point out that this concern was specifically around mobile payments, not contactless card technology produced from the likes of Barclaycard, adhering to the EMV (Europay, MasterCard and Visa) standard.
“We are keen to see any progress the industry can make in this area."
In the shop environment, one consideration has to be the large cost in deploying terminals and infrastructure to handle NFC transactions.
For a small retailer like Novatech, a computer components retailer with just four stores around the UK, it seems harder to justify.
Tim LeRoy, head of marketing at Novatech, told Computer Weekly the sales his company made were not suitable for current NFC trends.
“Places like Costa or McDonalds have average transactions of a few pounds and with the limit of up to £15, that works for them,” he said.
“You have to add a naught for us as we sell components. We would be looking at the security of hundreds of pounds worth of transactions each time.”
This hasn’t stopped the business looking at mobile technology to ramp up sales.
“We are just about to launch a mobile website, aimed more at our B2B customers. In our shops we use posters with QR codes so consumers can find out more about a product or service,” said LeRoy.
However, even for a company which sells technology, he admitted Novatech has been a little behind the times.
“We have only just started using social networking,” confessed the marketing executive.
“We are feeling our way with what people like, rather than choosing a technology and forcing it onto them.”
LeRoy concluded that it would be foolish not to embrace mobile technology. Depending on NFC's wider adoption, it could still be on the horizon.
“We have grown very quickly from 5% of our visitors coming to the site on a mobile to 11% and that is growing,” he said.
“So, with mobile, it is less of a feeling that you have to, but more a feeling that it would be silly not to.”
So, what about larger retailers? The former retail operations director at Harvey Nichols, Martin Schofield, believed stores big and small needed to embrace mobile technology to bring shoppers back to the high street.
“It has always been a battle for bricks and mortar retailers to look for technology and be ahead of the game when it comes to online retailers, but nowadays it is just not a choice to ignore it,” he told Computer Weekly.
Like with Novatech, the costs at Harvey Nichols are above the average cup of coffee or Big Mac, so the company has yet to go down that route. However, Schofield said the mobile phone method remains attractive to consumers.
“Mobile technology will mean different things to different retailers,” he said. “At Harvey Nichols, for example, it was not about contactless payments and kiosks for self service, but it was about offering better customer service and offering assistance on the shop floor through mobile devices.”
“As people join the cycle and more phones become enabled, there will be more pressure on retailers to get involved.”
But the main thing putting retailers of all sizes off right now is the price tag.
“Getting on board with NFC in the first place is costly,” said Schofield. “If you had to roll out new infrastructure anyway, such as PIN pads, you would include the new NFC models, but you are unlikely to do it proactively.”
“To justify the mass change which, in essence, does something you are already doing is a hard business case to make.”
“It is a significant cost to roll it out, compared with the small percentage of customers prepared and willing to use it. It will be useful for quick, impulse purchases but for high value retailers, it won’t be significant.”
That seems to reflect the attitude of many retailers. The technology is fresh and exciting, but until customers are asking for it and every mobile phone has it enabled, it is such a small portion of payments that businesses cannot justify investing a lot of money at a difficult time for something so few people are using.
The study from Juniper is about the long game, but even research director and author of the report, Windsor Holden, reminded companies to keep their feet on the ground with the figures he came up with.
“Global retail is worth $16tn and eCommerce is just 5% of that,” Holden said.
“Cash isn’t going anywhere soon and neither are credit cards, but there will be high and rapid growth in NFC mobile payments.”
It is clear from the retail perspective it will be some time before NFC mobile payments are the norm in their stores and it will take leadership from the mobile manufacturers and acceptance from consumers to make it happen.