Virtual Versions of Your Existing Plastic Cards On Your Phone

Near Field Communication (NFC) Enables the exchange of data between devices over about a 10-cm range. It is very useful for contactless payment and other contactless communication. NFC is a short-range communication technology that is used by mobile phones. NFC is compatible with contactless smart card RF technology. NFC-enabled devices can communicate with current contactless smart cards and readers. This ability is often leveraged for payment and interaction with NFC-tag-equipped posters. NFC data throughput is slower than Bluetooth’s, and NFC has a shorter range, but it connects more quickly and is compatible with current contactless payment infrastructures to create a better consumer experience overall.

NFC is a rich technology that, once widely deployed, has great potential for mobile retail, but it is not without challenges. NFC requires special hardware both in the mobile phone and at the retailer’s POS.

Although it appears that NFC-enabled phones will soon be widely available, it will be years before the majority of consumers have them. In addition, not all retailers have the required contactless readers as a part of their POS infrastructure, and the business case for installing new POS hardware can be challenging.

A consumer with a NFC-enabled mobile phone can redeem coupons at a Mall and pay for a meal at a restaurant. The consumer’s NFC-enabled and location-enabled phone provides the user with multiple services. The location services automatically recognize that users as they enter the Mall and rewards them with Mall loyalty points for returning. On the home screen the consumer has information linking the value of gift cards stored on his phone to stores within the Mall. The user also sees a list of all the retailers, who are advertising a current sale and additional discounts for making a purchase within the next 30 minutes. Special offers customized to his Facebook, Groupon or Google Plus profile are pushed to the mobile device. While walking through the Mall if the customer finds something of interest displayed on a “smart poster” offering a discount on that product the user can scan the “tag” code on the poster with the phone’s camera to retrieve the coupon.

Once in the store the customer can compare competing products on the shelf by scanning bar code or quick response codes with the cell phone. The device reads the links provided with the products and displays product information and customer reviews on the retailer’s Web site.

NFC-enabled mobile phone can also provide the following additional financial services:

• Users can choose a credit, debit, or alternate payment method with which to pay for goods and services.
• Users can link to a mobile banking site, to check the balance on a card before making a purchase.
• view purchase history.
• Receive messages indicating that the balance on a card is low or indicating that a credit card payment is due.

Depending on the transaction amount, the NFC-enabled phone can prompt the user to authorize payment. Authorization methods might range from no confirmation, in the case of smaller amounts, to special authentication mechanisms, such as biometrics, for large amounts. Or the user can use a password to start the payment application.

If the business has chosen to add NFC to its contactless reader, customers can also receive a receipt transmitted directly to the phone.

The receipt can be stored in the phone and accessed for expense tracking. Loyalty points or a coupon for a future discount can be added in the same way.

Digital displays that advertise products and promotions can facilitate in-place interaction with customers. (For example, scanning a food item might show recipes using that item.) This interaction can be accomplished using NFC tags or quick response (QR) codes that allow the phone to “read context.” (QR codes are two-dimensional bar codes that can contain a lot of information, including URLs.) A unique number, simple data, or a Web site link is communicated to the mobile phone, through which information specific to the display can be accessed.

Retailers can also use smart posters and other media with embedded tags that can be tapped for detailed offers to let consumers with NFC-enabled phones decide which offers are of interest.

List capabilities can often be integrated with extended product information capabilities. For example, recipes might be suggested for items included on a shopping list, along with the ability to add any missing ingredients to the shopping list. NFC tags can also be embedded in goods or in permanent shopping lists so that consumers can tap a product or product description and create their own lists for storage on an NFC-enabled phone.

Typical examples of current mobile-based loyalty programs range from SMS-based text or mobile applications with bar codes or numeric codes to RF chips attached to cell phones. NFC-enabled phones and terminals allow consumers and retailers to interact directly when updating loyalty points, tracking, and redeeming rewards. Depending on the technology used (NFC, fingerprint), readers attached to the POS can be expensive.

Store location is a basic function that is typically displayed immediately by a mobile application. The function is most often made available using a browser-based application or a downloaded native application. Locations can also be shown as a map on a smart poster, which can be read by tapping the poster with an NFC-enabled phone and storing the received information about the nearest store locations, hours, and specials. When security is not an issue, the technology commonly employed is SMS. That is, the consumer sends a text message that contains the consumer’s zip code and receives the address of the nearest store.