NFC Mobile Payments: Answers to Retailers’ Top 5 Questions
While this may seem like a lot, the industry still has a long way to go and there are a number of roadblocks ahead, according to Sandy Shen, Gartner Research Director. “The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards,” says Shen.
Retailers can play a large role in changing user behavior. While manufacturers can produce the phones to process mobile payments and merchant service providers can set up the networks, a lack of retailer support will lead to little (if any) mobile payment adoption.
The first step for retailers is to educate themselves about the technology. Over at Software Advice, we commonly hear from retailers that have a lot of questions about what near field communication (NFC) and mobile payments mean to them. Here are the top five questions we hear from retailers and our answers.
(1) What are NFC mobile payments?— Mobile payments are transactions that take place at the interaction of radio-frequency equipped mobile devices and payment terminals. This connection, called near field communication (NFC) is already popular in MasterCard PayPass and Visa payWave transactions.
(2) What do retailers need to accept mobile payments?— First, retailers have all the same requirements as they do to accept credit card payments–merchant account and gateway for payments, POS software and hardware). Specifically, retailers need a credit card machine that is capable of conducting ISO 14443 communication. These specifications are integrated in some new, high-end credit card machines. Alternatively, retailers can use a standalone NFC receiver, which is usually the cheaper option of the two.
(3) Who are the major players that retailers should be aware of?— Within the US, there are two main players to be aware of. Sprint has long been supporting the Google Wallet, and yesterday AT&T and Verizon announced they would be supporting the Wallet on the Galaxy Nexus phone, as well. Additionally, Verizon, AT&T and T-Mobile USA have backed ISIS. Both will offer similar services–ISIS is set to launch sometime earlier 2012, while Google Wallet is available in select piloting cities now. A third party currently testing NFC payments in Europe is e-commerce processor PayPal. PayPal has already begun to pilot its payment service in US Home Depots, encouraging consumers to pay with their PayPal accounts rather than cash, debit or credit. It has begun to dabble in NFC, even though company execs have said they believe mobile payments will take-off via other technologies first.
(4) Does point of sale technology selection have to change? — Credit card terminals may need to be upgraded, but most of the innovation in this area will take place in mobile device manufacturing and application develop. Retailers just need to ensure they have the means to accept the payments and stay on top of the important trends. Which leads us to…
(5) What should a retailer do to prepare for the mobile payments movement?— Because mobile payments may be years off, there’s not a set of solutions or technologies that retailers need to go out and buy immediately today. Instead, retailers need to be proactive, and have some sort of a plan in face. Retailers that are leaders in this movement will receive increased traffic from early-adopting consumers eager to test out mobile payments. In the meantime, retailers should stay actively on-top of NFC news and finding out if mobile payments are being tested in the local community. For example, McDonald’s is set to make a marketing push for mobile payments in the UK (more here).
