January 10th, 2018
Businesses that Use Near Field Communications and the Outcomes of Such Use
Various businesses have used NFC technology with success. One application of such technology has been in the transportation sector. Transportation sector has been able to achieve more efficiency by shifting from paper ticketing to electronic ticketing (Maviance, 2012). Use of NFC in electronic ticketing enhances efficiency since customers can check in using their mobile phones and receive coupons, electronic tickets and receipts by passing their phones through a company enabled reader that transmits their payment information to the company records (Maviance, 2012). Such a process also enhances transparency by providing real time data on the amount of money collected by each collector (Maviance, 2012).
Second, NFC technology has given merchants better advertisement services. NFC-enabled smartphones enable merchants to track their customers’ information when customers checked out, and provide targeted advertising through location-based advertising, coupons and programs that provides additional offers on in-stores item (Kim, 2011). Furthermore, NFC tag that contains data can be customized to give merchants more freedom in creating advertisements that are more accessible and visible (Samsung.com).
Disruptive Opportunities Offered By NFC
Disruptive opportunities offered by NFC concern its enabling of mobile payment systems. The mobile payment market has given service providers cost savings from quick and simple payment processing. The mobile payment market has however become highly competitive, as evident from the Porter’s five-force analysis (Porter, 1974) (see Appendix A). Compared to the traditional payment, the mobile payment includes various stakeholders and changes the role of each of them in the ecosystem (see Appendix B). New players includes Mobile Network Operators (MNOs), financial institution (banks, Credit Card Company), payment networks, intermediaries, merchants and customers. There are added value chain in each section (see Appendix C), but the common benefits for such businesses are (i) increased customer loyalty, (ii) enhanced customer acquisition, (ii) brand expansion, (iv) efficiency in operations, (v) cross channel revenue (Tandulwadikar, 2012).
Mobile payment services provide customers a quick and simple payment process hence attracting new customers. According to GV Mobile, more than 50% of carriers for mobile payment transaction are from new customers (RCRWireslessNews, 2012). The mobile payment not only improves service sections but also changes operation and marketing in the value chain. In operation sides, for example, the merchant is usually charged a commission 1-3% of the value of each transaction paid for by credit card (Andrew, 2010). However, the mobile payment saves credit card fee and lowers the operation cost such as of product delivery and aggregation by improving order processing (see Appendix C).
NFC has thus changed payment from card-based to phone-based process and replaced card issuers with MNOs and mobile phone manufacturers as leading payment providers. Phone-based payment delivers tremendous customer value in the form of convenience while protecting consumers’ privacy and security. Mobile payments also present opportunities to banks by attracting the unbanked population in far-to-reach by easing access to funds and minimizing costs compared to use of ATMs. Such opportunities are especially relevant to developing countries where there is a large unbanked population. In MMT Africa conference (2011) it was for instance observed that “the total value of mobile money transfers in Africa will exceed US $200 billion in 2015, almost 8% of Africa’s nominal GDP, due to user’s growing trust in the system and easy accessibility.” Such prospects make NFC a technology to advance future payment options in such regions.
Go to part four here.