27th November 2014
Recently, I spoke alongside our CEO, Neil Garner, and other industry leaders from companies like VISA, Wells Fargo and Trustonic at an event Proxama co-hosted with BayPay Forum, Mobile Payments: What can NFC, HCE, TEE and SE do for your business? Near field communication (NFC) may have had a stuttering and uncertain start in the U.S., but everyone at the event collectively agreed – those days are gone.
However, there is still much to be done, despite Apple giving NFC usage in the U.S. its unofficial stamp of approval with the recent announcement of Apple Pay. On the cusp of something big and industry-changing, players within the payments ecosystem – vendors, brands, financial institutions, mobile operators and more – must work together to ensure the transition to mobile payments is as smooth as possible for consumers.
At a fundamental level, widespread adoption of contactless payment technologies throughout the U.S. requires a shift in behavior for both businesses and consumers. Businesses must figure out how to make the digital world integrate seamlessly with the physical. Bluetooth Low Energy (BLE) beacons happen to be one way to do that. They offer countless new opportunities for customer engagement and loyalty, but brands must be strategic in how they incorporate beacons in their mobile commerce strategies. The alternative could be catastrophic.
How quickly would you, for instance, be turned off by an app that promises location-based coupon redemption but effectively spams you with so many push notifications every time they step foot into a mall you can’t even read your texts? Instead, brands’ beacon usage must be highly-relevant and focused. If done successfully, beacons can be truly effective in engaging with customers in new ways, such as automating check-in when a consumer enters a specific store or unlocking new deals.
That truth about customer experience goes hand-in-hand with another reality of our proximity commerce future: contactless payment technologies themselves, whether we’re talking about NFC or beacons, mean virtually nothing to consumers. As Damien Balsan, EVP at LOOP accurately put it at the event, “the key isn’t so much the payment platform, it’s the consumer experience. If you can deliver that, you gain adoption.”
Where this is most starkly observed is the customer experience surrounding probably the most highly-buzzed about topic in the mobile payments space – security. While the protection of user information is undoubtedly important, hence forthcoming landmarks like the October 2015 Europay, MasterCard and Visa (EMV) mandate, it must be invisible. It’s unlikely that consumers will be able to overlook clunky extra steps to ensure their mobile payment transaction is secure. Instead, they will resort to something they know well and that is, for the most part, a trusted interaction – handing their credit card over to a cashier.
So, what’s next? We are currently faced with a chicken and egg scenario. Retailers want to see consumer adoption go up before they undergo large projects to replace hardware and software payment systems. On the flip side, consumers may not really see the value of contactless payments until their favorite brands start offering it. Yet, this has not stopped many brands and regions like Europe from forging full-speed ahead, embracing the contactless payment wave and setting the tone for others to follow suit. If nothing else, the launch of Apple Pay, and Android’s inclusion of Host Card Emulation (HCE) in KitKat OS, have sent a message to not only brands, but also financial institutions – jump onboard the NFC bandwagon or get bowled over by the competition.
Interested in hearing more of what we talked about at Mobile Payments: What can NFC, HCE, TEE and SE do for your business? I invite you to watch the video here or connect with me on LinkedIn to start a conversation!
Pascal Caillon, General Manager for North America, Proxama