Mobile money on the go

Shoppers have already started to turn to their smartphones to check out prices before buying, to look up product availability or a review, or to collect vouchers and discount offers. Increasingly they are using their mobiles as a way to pay for goods. Mobile payments using so-called Near Field Communications (NFC) are one of a myriad of m-commerce activities becoming increasingly popular with consumers. M-commerce currently makes up only a very small proportion of online spending (around five per cent) and total retail (no more than 0.5 per cent), but the everyday use of mobiles by consumers as part of the shopping process means it is set to boom. Many smartphones currently on the market already contain embedded NFC chips that can send encrypted data at a short distance (‘near field’) to a reader located, for instance, next to a retail cash register. It means shoppers who have their credit card information stored in their NFC smartphones can pay for purchases simply by tapping their mobiles onto a reader unit in the retail store. It is much easier than the cumbersome credit card, PIN keying and/or signature routines. The NFC applications are being launched in multiple sectors including sales, marketing, promotions, payment, transport, tourism, retail, events, and social networking. With the now available technologies, it is now feasible that a worker heading to the office through one of Dubai metro stations could pass through the ticket barrier simply by touching an NFC mobile phone to the reader/writer to be granted access. Once at work, she could pay for a lunch-time meal in the staff restaurant using a mobile wallet stored in her phone that beams money to a specially configured point-of-sale register. In the evening she might receive on her NFC-enabled smartphone an electronic ticket as she drives to an athletics event. That secure NFC token has an embedded access control, which is read at the turnstiles of the stadium, allowing her to pass straight through. She could also  receive a discount voucher from a sporting goods chain after she used a location aware app to ‘check in’ at a particular retail unit at the sports venue. Start of the mobile money business value chain The biggest story in the payments world in the 1990s and 2000s was undoubtedly the growth of online payments, and the emergence of new players such as PayPal. Experts expect that the whole process of NFC-enabled m-commerce, involving storing payment details on a compatible smartphone device in a so-called mobile wallet, is set to become the next big thing. Evidence for this is already building overseas. For instance, since launching in May 2011, the Quick Tap NFC mobile phone payment service in the UK has attracted more than 50,000 stores to sign up as merchants. Launched by Mobile Operator Orange. In partnership with Barclaycard, Quick Tap allows mobile users to make purchases of up to $25, simply by tapping their NFC-enabled smartphone over designated terminals. The NFC adoption model identifies three target consumer groupings for NFC based on current behaviour. The appeal of NFC is based on three key elements, namely an existing history or interest in mobile banking, an existing use of or interest in contactless payments, and a tendency to make frequent card transactions at the POS. The Internet heavyweights and big name mobile phone makers are getting behind NFC too. Google has announced the Google Wallet, which launched last year in the USA with the likes of Subway, American Eagle and Macy’s. Google Wallet is intended to serve as an open platform for payments, couponing and other services, and is reportedly open to banks and other players becoming involved in the future. With its strong focus on location based couponing services, the Google Wallet may hold one of the strongest models in creating incentives for both consumers and merchants in using mobile NFC payments. Discounts and vouchers are an increasingly significant part of mobile shopping, boosted by services such as foursquare, which allows mobile users to ‘check in’ at a retailer and receive credits that turn into payment discounts. Google Wallet and Orange’s Quick Tap, both use MasterCard PayPass Credit card application, and both access a customer’s bank checking or current account. Support for Visa’s PayWave, other payment scheme operators and banks will be availed with future development. Other alternatives like the Starbucks Card or, in India, Airtel’s Money application both access payment accounts associated with specific retail outlets. Nokia was amongst the first to launch an NFC handset. The latest Google Nexus S handset includes NFC. Research in Motion, manufacturers of the BlackBerry range of mobile devices is also committed to NFC, having already launched  the Blackberry 9900 and the Bold 9930. Samsung, HTC, Motorola and other handset manufacturers have either launched NFC enabled handsets or committed to launching such handsets soon. Apple is also known to be working on NFC, but it is unlikely to launch until the iPhone 5 appears late in 2012 Industry analysts are forecasting that by 2014, 50 per  cent of smartphones will ship with NFC technology, essentially allowing a mobile device to function as a credit card. If that estimation is correct, we can expect NFC to influence not only how people pay for retail goods with their mobile devices, but also how they tap into the metro, enter ticketed events, and identify and authenticate themselves. For retailers, it promises real opportunities for business growth. In the world of online shopping, it is a proven fact that the fewer mouse clicks that are required to make a purchase, the higher conversion rates will be. NFC technology offers retailers the opportunity to make the payment process more convenient for consumers and improve conversion rates, both in-store and online – as computers can also be configured to receive NFC payments, saving the consumer from having to repetitively key in their payment details. The convenience benefits on offer to consumers and the efficiency gains and consumer data generated for retailers, suggests it is just a matter of time before the technology becomes commonplace. Retail grocery and supermarket chains in particular stand to gain, because they have scale and volume of shoppers that makes it worthwhile. Market-watchers predict that this is the sector that will be among the first to implement the systems in-store on a widespread basis.