Fishburn Hedges

30.11.2011

The era of consumers making quick and safe payments using contactless cards and mobile phones is finally upon us thanks to the rapid development of technologies such as Near Field Communication (NFC). On November 30, Fishburn Hedges and AMV brought together key players in the mobile payments field to answer questions about the future of mobile payments, the risks and opportunities for various sectors and consumers, and current sentiment in this industry.

The panel consisted of:

Colin Swain, Head of digital business development, UK and Ireland, Mastercard

Claire Maslen, Senior market development manager, O2 Money, Telefonica UK Limited

Mark Fabes, IT director, McDonald’s UK

Chair: Nathan Guerra, Director of innovation, AMV BBDO

 

What is NFC, and how is it relevant to mobile payments?

Nathan Guerra explained that NFC was a technology that could be used as a reader, a writer or as a credit card. The communication occurs over a distance between 1cm and 4cm and has the potential to allow very quick and safe payment. NFC phones are available, but not widely – only four people in a room of 50 at the event had an NFC-enabled phone.

Claire Masden highlighted the importance of recognising that NFC technology was not just about your phone acting as a card. It is far more exciting and complex than that, and can be used for a range of different features and two-way interaction.

Colin Swain said that a key demographic for mobile payments in the eyes of those developing this technology was the tech savvy, 20–30 age group. Interestingly, teenagers are not key to uptake, as they usually do not have bank accounts and their preferred method of payment is cash.  But by using relevant and interesting content, it is hoped that a wider demographic will be enticed into adopting the technology.

How secure is NFC?

Claire Masden highlighted that there was a big difference between perceived security and the actual security of NFC payments. She explained that mobile payments would be safer than cash, as any lost money could be reimbursed in a similar way to a credit card. Claire also argued that, unlike at present when if your wallet is stolen you have to make a number of phone calls to cancel its contents, with a mobile wallet it would take just one phone call for operators to cancel your sim.

Will mobile payment take off?

Nathan Guerra said that an estimated $1 trillion of mobile payments, including payment through NFC technology, would be made in 2015. Some commentators even believe we will all have thrown away our wallets by 2016!

However, as Colin Swain explained, NFC technology is not new. He and Claire have worked on NFC since 2007, and the technology existed long before that. In his view, for mobile payments to take off the infrastructure has to be in place and there has to be an incentive for customers, which is not the case now.

Standardisation and the customer relationship

Mark Fabes explained that McDonald’s had had contactless/NFC payment terminals in all 1,200 of its UK restaurants since May 2011, and six months on, the restaurant chain had just processed its  1 millionth contactless transaction.  The technology reduces payment time from seven seconds to one second, with authorisation in just 0.6 seconds.

The question of who owns the end relationship with a customer in a world of mobile wallets was something about which many in the room wanted clarity. Claire Masden said that informal research suggested consumers felt that if the wallet was hosted on their phone, it should be the phone company that was responsible.

Consumer benefits

In terms of what the consumer can get from NFC, Claire Masden argued that from the customer’s point of view, payments were just a utility. They expect to be able to make a payment and are not interested in how the technology works.

Colin Swain backed this argument, saying that if the customer remembers a certain contactless payment, it was definitely a bad thing! He said that “replacing the wallet” sounded like a good strap line for NFC mobile payments, but was ill suited for that purpose. Customers are not interested in replacing their wallets.

Nathan Guerra cited research that at present 78% of Americans do not want their phone to be their credit card. Consumers are, however, interested in the benefits that can be gained from using their NFC-enabled mobile as a multi-purpose communication tool.

Claire Masden saw the area of offers being very much a case of consumers opting-in or opting-out of brand content. The whole panel agreed that offering interesting content was vital, and that this would be a determining factor when mobile operators chose which brands to partner with.

Colin Swain explained that other benefits for customers in using this technology lay in the way they could help people to track what they are spending and therefore better manage their money. This could prevent people slipping into overdraft territory, and would be quite a revolutionary shift from the card provider’s perspective.

For Swain, the big benefit of mobile payment technology for companies is being able to pair up money and media – developing targeted advertising campaigns to people’s mobiles and then being able to close the transaction loop by enabling payment through the device.