Where Next For NFC In The UK?

Few people would disagree that the recent launch of Apple Pay was one of the most discussed arrivals into payments market last year. Within the first 72 hours of the launch, in October 2014, it had witnessed a million payment card subscriptions and Apple has since claimed two thirds of contactless spend in US.As Apple Pay relies heavily on the near-field communication (NFC) technology, its incredible success could be key to fuelling fresh interest in NFC-enabled payments in the US and, more importantly, across the Atlantic.

In the UK, NFC has been competing for customer attention alongside other ‘alternative payment’ options. At the same time, we have seen the staggering popularity of contactless. However, unlike other competitors, one of the key benefits of NFC is that it uses much of the standard acceptance infrastructure that is already being deployed for contactless across the UK and customers have readily adopted tapping. This, coupled with Apple’s ability to attract a large and loyal base of high-value customers, means that adoption of NFC is likely to grow once Apple Pay arrives in the UK.

But while Apple Pay will heighten the awareness of and confidence in NFC there is much more to this technology. NFC is now supported by all major handset providers and thus could open door to several mobile wallet solutions. Both Google and Samsung have announced plans for their own payment solutions. All of this helps to cement mobile payments as a serious contender in this fragmented marketplace, allowing customers to pay in a way that’s most convenient for them and helping merchants offer a consistent payments service that is the bedrock of a great connected commerce.

At the same time, current contactless certification mandates the need to support ‘high value payments’. So while recent news of the increase in contactless spend limit to £30, will no doubt keep customers happy for a while, mobile wallet options could help to move the market forward. Considering that recent technologies such as Host Card Emulation, supported by Google, make it easier for app providers to use NFC with smartphone, we will start to see more NFC-enabled payment apps come to market in the near future.

But payments alone are not the only benefit of NFC, in fact, its wider adoption would allow customers and merchants to start to use smartphones for much more than just transactions. NFC solves the problem of redemption of value added services, such as coupons or discounts, where smartphones have to interact with an acceptance device to redeem an offer (the only alternatives being to key-in or scan a code), which makes it easier for merchants to offer loyalty rewards to their customers. It also complements location-based services such as beacons, which can locate the customer and help deliver a targeted promotion that can be then redeemed at the point of sale.

I have no doubt that NFC has the potential of capturing the imagination of consumers and bringing merchants a step closer to connected commerce and Apple Pay’s arrival in the UK could help put the spotlight on this so far, largely unexploited technology.

Raja Ray is director of products and solutions at Verifone.

All clued up on mobile payments? Try our quiz!