Why NFC may be the second-best contactless payment solution

Early adopters of next-generation contactless payment technology will reap many benefits. But NFC may not be the best solution for all.

Nothing among today’s consumers is more ubiquitous than the mobile phone. 85 percent of Americans own cell phones, according to Pew Internet; for adults 18 to 29, cell phone ownership is 95 percent.

It’s no wonder that anticipation for the proliferation of Near Field Communication (NFC) technology is high. When a retailer or other organization enables cashless payments via mobile phone, they essentially place credentials conveniently at hand for 85 to 95 percent of their target consumers, with the potential to promote purchase frequency and customer loyalty. Per MasterCard, contactless cardholders made purchases with 26 percent greater frequency than regular cardholders. Further, the overall usage for contactless account holders increased by 24 percent.

MasterCard also reports that acceptance of contactless payments is expanding at a phenomenal pace. 265,000 merchant locations worldwide are accepting contactless transactions as of September 2010, up nearly 75 percent from 2009. However, while merchant acceptance is spreading rapidly, the penetration of mobile devices with NFC capabilities has been slow.

To enable more rapid penetration of contactless payments, HID Global has introduced the Contactless Payment and Identification Stickers. Placed on a mobile phone, the sticker delivers a user experience comparable to that of NFC programs, making it an excellent test case for those considering NFC.

In addition, there are a number of benefits these stickers provide, which NFC-enabled mobile devices cannot offer, including:

• Immediate availability. They can add timely impact to the introduction or expansion of your contactless payment program.
• Customized promotional messaging. Each sticker may be custom printed with your logo and promotional message, a visible reminder of the participant’s relationship with you.
• Adaptability. While I anticipate mobile phones to be a preferred vehicle for contactless credentials, many consumers may prefer to carry credentials elsewhere, such as on an MP3 player, in a wallet, or some place we haven’t even thought of yet. The sticker gives consumers the choice to place credentials where most convenient for them.

With the Contactless Payment and Identification Sticker, HID provides organizations a way to ramp up their contactless payment program now, while providing a long-term solution which is more effective and customer-friendly.