The following is a guest post by Mobile Guru.
It was not long ago, perhaps 15 years, when people were concerned when they handed someone their credit card to complete a transaction. People could steal your credit card number and then rack up all kinds of charges before your monthly statement came, then along came the internet with online transactions. This opened up an entirely different type of potential identity theft as sites ask you to enter your name and credit card number in to their site for a transaction. For most people after doing it enough times using your credit card for online transactions has become second nature, just like handing someone your credit card years ago. We are entering a brave new world of transactions and for those who want to sit this ride out, I ask is the following: “Do you today use the internet and do online transactions?” If the answer is yes, then you are headed towards this next great frontier, whether you are ready to or not. If the answer is no, then keep enjoying the 90’s and keep partying like it is 1999.
One mobile payment technology that will become a household name in 2011 is Near Field Communication or NFC technology — a short-range wireless technology, not dissimilar to Bluetooth, that can be used to make electronic payments quickly and without hassle. It is being designed into the next generation smart phone by Google with its Android 2.3 (Gingerbread), Apple with the iPhone 5, RIMin the new BlackBerry, Nokia and household names. Visa and MasterCard to name a few. Obviously if all the major players are getting behind a technology it is only going to be a matter of time when it is available to the masses. In the scheme of things, who isn’t looking to make life simpler and if I can get through a checkout line quicker, that is a huge value to me as a shopper. My top two complaints about shopping: can’t find items and time spent waiting in checkout lines. Both of these will probably be solved in the very near future with mobile applications and Near Field Communication.
Performance comparison of major players in this field.
NFC technology will quickly start showing up in stores in conjunction with other mobile applications. Using your smart phone to scan items, redeem coupons and then paying as you exit without interacting with a checkout person is in the near future. This should also motivate people more to reuse shopping bags as they shop. Here is the scenario I see for the future grocery shopper. Your list is in your smart phone. As you enter the store the geolocation provides coupon opportunities for the items on your list. As you scan items the coupons are automatically applied to the items. You place the items in your reusable shopping bag. When you are done shopping you walk by a checkout stand and sync up your smart-phone and pay. Keep in mind the list is a virtual list that any family member can add to at any time during the week. There will also be non-list item offers that can be made available based on previous purchases or targeting based on a profile that has either been built up on the user or was self input.
Paying at store checkouts will be one example of the technology but I expect the technology to spread too many other payment and information based uses. One application will be a much more simplified way to pay for tickets at events such as movie theaters. Bump and go will become a very common way to buy your tickets. Another application will be the interactions with RFID tags. Any item that has an RFID tag could also provide information such as how many are in stock, when they were purchased, sizes, colors, reviews etc…. Walking up and buying a pop from a machine will become point and click. This sure beats trying to find change or worse, not being able to get the machine to take your dollar bill.
So this all brings us back to what does it take for people to adopt a new technology such as NFC or an equivalent payment system? Obviously there has to be a need which I think there is, but the top thing it much have is trust. If people can be made to believe that the risks are nonexistent in using your mobile device to directly make payments then they will. Just like with credit cards and online purchases over time, people have learned to trust the services to provide them a secure payment method. With the NFC technology being limited in distance, the biggest risk is in losing your phone. Of course losing your wallet also provides the same type of risk and these days which of the two spend more time in your hand?
One interesting situation still exists. What if someone borrows your phone to make a call? Today you may think nothing about it if someone said their phone battery died and could they make a quick call to someone. But tomorrow I think you had better know who you are handing your phone to and ask yourself a simple question. Would I hand my credit card to a complete stranger if they asked because in essence that is what you are doing?
I’m a long time investor with investment experience in high tech, biotechs and precious metals. I blog on topics that are of interest to me and my goal is to generate intelligent discussion. I don’t consider myself an expert in any one area, but know a little about a lot of things. I believe as soon as we stop learning, we stop living. You can connect with me at SeekingAlpha.
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