M-commerce is set to be one of the most exciting opportunities to hit retailers this decade. In the realm of the checkout, where convenience and loyalty are crucial, payment by phone could prove the ultimate queue-buster while getting you even closer to your customers.
With PCI compliance pushing many of the UK’s grocery multiples to upgrade their POS estates, VeriFone believes that the timing is perfect for NFC enablement. By planning ahead, you can ensure that your infrastructure investment can easily accommodate mobile payments once NFC-enabled mobile phones hit the high street in the next few years.
Here are VeriFone’s Top Ten Tips for making sure you’re prepared for the mobile revolution when it hits:
1.Accept it’s not about ‘if’ but ‘when’
There are already 11 million smartphone users in the UK (comScore). Forecasts predict that one-in-five of these will be NFC-enabled by 2014 (Juniper Research). This represents a substantial base of potential customers for retailers. Many mobile users will want to exploit the convenience of paying for goods and services via their phones and will be prepared to switch loyalties for the experience. If your POS is enabled when the market is activated you can gain significant competitive edge.
2.Don’t confuse NFC with contactless
Yes, NFC uses the same radio transmission frequency (13.56 MHz) as contactless and both allow fast payment by waving a card (contactless) or phone (NFC) at an enabled device. But NFC has no transaction limit, while contactless cards (or contactless card emulation via NFC) can only be used for purchases of up to £15 – this has limited its viability within high-volume, high-value shopping environments. NFC also enables two-way communications between the POS and the device, making it more than just a payments platform.
3.Be prepared to exploit NFC outside the POS
Whereas payment cards are passive objects that only respond to a reader, NFC can be interactive. NFC chips embedded in mobile phones allow the phone to operate as either a card or a reader. So, NFC–enabled phones can not only make payments but can also read tags embedded in other devices, such as an NFC posters, in shopping aisles, on trolleys or in at self-service check outs and kiosks. This means the more adventurous and integrated you are prepared to be with the platform – the more added revenue you can generate.
4.Don’t get hung up on mobile security
Because mobile devices will use NFC technology in the form of an embedded chip, it will be as secure as the plastic cards we use today in the UK.
5.Do think outside payments
NFC delivers two-way, real-time communication between the merchant and the consumer. With NFC, you can turn your point-of-sale into a much more valuable point of interaction that provides customers with intelligent and ultra-secure checkout capabilities.
6.Do look at integrated loyalty solutions
For the grocery retailer, there‘s the prospect of combining ‘bricks & mortar’ checkout with online promotions and electronic coupons. For the consumer, there is the allure of electronic wallets stored conveniently on a mobile phone, and the opportunity to take advantage of easily cashing in rewards and discounts electronically and to leverage social media-oriented applications.
7.Use your creativity and collective muscle
M-commerce will open up new opportunities for loyalty, promotion and brand-building opportunities. This requires a new level of creative input and the heavy involvement of marketing and communications functions. Make sure all relevant functions across your organisation are engaged, informed and up to speed with m-commerce and what it means to them and their activities.
8.Be prepared to invest in m-marketing
You may need to consider additional investment or reallocating marketing budgets into new promotional activities that can leverage m-commerce as a communication and fulfilment platform to drive new competitive advantage and revenue streams. For example:
• Programmes that allow consumers to use virtual e-gift cards, participate in loyalty programs and earn rewards at the POS
• Materials and apps designed to exploit two-way communication between the handset and POS device or NFC stickers in-store to transmit coupons, loyalty rewards, payment and promotional messages
• Provision of links for social media fan favourites and group discount offers
• Gathering customer data efficiently through various payment devices for improved consumer analytics
• Enabling alternative payments methods to create mobile POS in and out of the store
9.Seek to leverage current investments
Any investment in POS infrastructure today – for PCI compliance, self-service or contactless – should include a roadmap for NFC enablement. Without doing so, you risk being left behind. You may also eventually be forced, by stakeholders and customers, to commit to future upgrades which would incur a higher cost than a planned, phased roll-out that takes into account existing POS evolution roadmaps.
10.Start dialogue with proven payments partners – now!
For m-commerce to fulfil its potential, many payment devices currently in the field need to either be upgraded or replaced. It isn‘t simply an issue of adding an NFC reader, it requires deep software richness at the POS to interact with the mobile and encompasses new applications and deployments without disrupting operation of existing systems.
You must be wary of new supplier/integrator entrants who may be attracted to the size and volume of this market, but who may lack the necessary knowledge, financial stability or longevity to see their projects through successfully. By opening up discussions with experienced payments vendors such as VeriFone, you will be better placed to understand the impact and implications on existing operations once NFC goes live.
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