Near Field Communications (NFC), which is maturing into mobile payment technology across the globe, is set to bring in $180m each year by 2012.
This was the finding of an exclusive study conducted by Juniper Research for Computer Weekly, which shows the use of smartphones in retail is set to boom across Europe and the US in the next five years.
Windsor Holden, research director at the firm, said that mobile technology is pivotal for bricks and mortar retail businesses, enabling them to bring in customers and keep them with new techniques on offer.
“From a retail perspective, the customer could arrive at the store thanks to a previous interaction with an NFC-enabled poster,” he said. “There is then an intrinsic link between that customer and their interest, which the retailer can link to coupons and payments.”
“Essentially, the phone can work as a central hub and can leverage existing assets to link the retailer to the digital world.”
NFC technology has been around for 10 years though, so why is now the turning point for retailers to take advantage of it? Holden said a huge nod should be sent in Apple’s direction.
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“In the pre-iPhone days, mobile phones were pretty much for calls and texts,” he said.
“What has now happened is phones have evolved, driven by Apple’s handset and its very intuitive user interface, making it easy to access content that both you look for and it pushed to you.”
With these capabilities spreading across numerous handsets and applications becoming the most powerful element of communicating on a device, Holden claimed the smartphone was “the Holy Grail” for retailers looking to access their customer base.
The West is way behind the East with such technologies, however, with the majority of the $23bn NFC market in 2011 coming from Japan and Korea. But, Holden believed the opportunity was there for the Europe, especially the UK, to make its mark.
“Clearly we are not a world leader yet, but do we have the potential to be? Yes,” he said
By 2017, both Western Europe and the US are expected to overtake the Far East in market share of the $180bn, with 35% and 30% respectively, compared the current dominator’s 26%.
There are still issues to tackle, however, with convincing not only consumers to adopt the technology but also banks and mobile operators to get involved.
But enthusiasm from trusted credit card vendors is pushing away some of the fears.
“When making transactions over any device, security is a critical issue,” said Holden. “However, with Visa and Mastercard becoming very active with service solutions, it alleviates some concerns as they are trusted financial institutions with standards to adhere to.”
With the prospect of $180bn in the next five years, NFC is looking like a technology trend to get excited about. But Holden concluded with a bit of realism to keep our feet on the ground.
“Global retail is worth $16tn and eCommerce is still just 5% of that,” he added. “Cash isn’t going anywhere soon and neither are credit cards, but there will be high and rapid growth in this area.”