NFC Not The Answer for Retailers, Says PayPal

It might be one of those “well he would say that, wouldn’t he?” statements, but David Marcus, president of PayPal, told the audience at DLD that not only was Near Field Communication (NFC) not the technology that would kick-start the mobile payments industry and enrich the customer experience, but it was actually harmful to it.
According to Mr. Marcus, not only are there existing, and simple, technologies that will already replace many of the functions NFC is anticipated to solve, NFC will actually make the retail experience worse.

“Retailers say NFC stands for Not For Commerce,” he said. “It actually prohibits those retail experiences that have de-centralized point of sale checkouts. If you look at the experience you have in an Apple store, they launch an app and scan a barcode. It’s a really good experience.

“When you have consumers with smartphones, why do you need to go to a place to checkout?”

Mr. Marcus is not a disinterested observer in this debate. Paypal is investing heavily in bridging the gap between the virtual and real world, and sees itself as the payment mechanism to make that happen.

NFC is a contactless technology that allows devices to swap information over short distances. It is one of those technologies that has, for a long time, been on the edge of being mainstream. There was wide speculation that the iPhone 5 would feature it, which would have gone a long way to bringing it over the horizon, but no. Many Nokia phones are equipped with it, and Android supports manufacturers who wish to use it.

Mr. Marcus, who took over as president of the company in March last year, said retailers need to embrace the opportunities smartphone users give them.

“The new norm for retail commerce is really multi channel — you buy online, on mobile in store. The question is facilitating payments across all channels and bringing these all together in one device. If you look at a typical retailer today they don’t even know when a customer is in their store.”

Retailers are becoming increasingly worried about customers using stores as showcases but making their purchases online. “[Customers] walk into an electronic store, scan the bar code look at the price and buy it online. If it happened to be a large bulky TV even better you don’t have to schlep it back.”

But rather than make life hard for these customers, says Mr. Marcus, retailers should use the opportunity they provide. If retailers know a customer whois likely to use their smartphone to compare prices on line “that given retailer can offer a specific price so you continue to buy in store, but they don’t have to lower their prices across the board for everyone.”

And it doesn’t have to be just price discounts, customers could be offered incentives such as loyalty points.

“I am often asked in five years what is the percent of retail will be on mobile versus iPad versus in store? My answer is I won’t be able to tell. Where you initiate or complete a transaction is going to be completely different. Mobile will be involved in most purchases you make whether it is in store or online.”

Author: Ben Rooney


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