Tap, Tap: Is the NFC Tipping Point Finally Here?

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There’s been a lot of hype recently about Near Field Communication (NFC), a wireless process that allows a device to collect data from another device or “NFC tag” at short range. NFC works similarly to Bluetooth, except instead of having to program two devices to work together, a connection can be established with a simple tap. NFC technology is finally being integrated into most wireless phones, and has become possibly the best way to enable payments, exchange contacts, utilize transit systems, collect and exchange information and so much more, all with just the tap of your phone. According to the NFC Forum which is dedicated to advancing the use of Near Field Communication, this technology (in a nutshell), “makes life easier and more convenient for consumers.”

Why use NFC?
NFC technology has broadened the payment options for consumers everywhere. If the convenience isn’t enough, there are also many additional benefits that come with using NFC. A good example is the easy access to offers and rewards. Google Wallet, for example, allows its users to store payment cards, offers and more on their phones and online. Users are also granted access to exclusive “Google offers” which can lead to great savings and are easily redeemed in store with a simple tap of the phone.

Some NFC applications like Square make things even easier for users, allowing them to go to participating retailers and use NFC technology to pay using a “tab” system. Before entering, users can open up a “tab” on their phone for a participating store. Once at the register all they have to do is give their name, and the close proximity allows the merchant to find an individual’s personal “tab” and automatically receive payment when selected. How much easier can it get? As an added bonus, Square users can also store paperless receipts within the app, helping to easily keep track of funds and even help the environment by saving some trees.

Is NFC safe?
Two big worries people have about NFC technology are safety and privacy. However, there shouldn’t be too much cause for concern. The short range (about 1.5 inches) makes NFC a good choice for secure transactions. Most NFC applications also have systems in place to analyze user transactions as they happen. Any unusual activity is detected and investigated immediately. Additionally, many retailers are now using equipment like Verifone, a leader in secure electronic payment technology that allows both the retailer and consumer to make transactions safely. Also don’t forget, if your phone is ever lost or stolen you can always cancel your credit card right away, the same as you would with a lost wallet. When you think of it, NFC really isn’t much different from physically using a payment card – aside from the additional perks!

What are the location-based marketing implications?
This new technology creates a connection between consumer and retailer like never before. It also creates a world of possibilities for location based marketing. It makes the shopping experience a little more personable, for example, by allowing people to pay with a name instead of a card. Some NFC apps also allow users to view menus, have access to special deals, and even browse social networks associated with a retailer instantly. The use of NFC also benefits retailers by allowing them to analyze consumer patterns more easily, connect with them, and learn what keeps them coming back.

One further point to note, is that while much of the attention given NFC has centered on its use for payments, there are lots of other great location-based marketing applications as well.  Person-person interaction (ie. Bump), deals, loyalty programs, checkins, and even tapping your phone to open your hotel room, are just some of the possibilities.  As this technology continues to grow certainly so will the potential for location based marketing opportunities.  So, how will you be making your next purchase?

Asif R. Khan is a veteran tech start-up, business development and marketing entrepreneur currently serving the community as founder and president of the Location Based Marketing Association (The LBMA).  Weekly podcaster at This Week In Location Based Marketing every Monday.  Can be found at @AsifRKhan @TheLBMA on Twitter.