How to sell the NFC mobile payments value proposition to skeptical merchants
If you needed to make the case now for a merchant investing in contactless POS terminals, with the promise of NFC enabled mobile payments at some future date, how would you go about convincing them that this is...
A. Going to happen
B. Not just about the current contactless value proposition of speed / convenience
C. Revenue Generating
Answers (7)
Well,
First the contactless POS will be the same for cards and mobile payment.. that makes it simple to manage and cheaper.
Then, be paid with an NFC mobile phone allows the merchand to dematerialize loyalty programs :
instead of managing cards and send emails / paper animation mails to its participant customers, merchands can deliver adds and loyalty program points directly to the mobile on the POS... that's a powerfull opportunity to develop sales.
Additionaly,most transportation networks in bigger cities conduct large scale experiments on NFC-enabled phones, where the interest for the consumer is obvious...
and bank have started quite a few experiments as well : usually, such experiments turn into real life after only 2 to 3 years for 15 to 30% of customers... that's tomorrow.
Last but not least, in France, customer adoptation is very impressive : people simply love it and do not want to return lended phones after the experiment : the describe the service as "obvious" to use, fast and convenient. Honestly, I haven't seen such enthousiasm in experiments very often.
Barbara B
Mobile Product and UX Strategy Consultant
Best Answers in: Wireless (10), Software Development (5), Web Development (5), Interface Design (2), Graphic Design (1), Mobile Marketing (1), Product Design (1), Blogging (1)
1. Reduce purchase friction.
2. Will work with cards with smart chips (typical in Europe; they have to pull out a special machine for magnetic stripe cards)
3. Faster transaction (possibly)
4. Opportunity for interesting services, such as what I call "the Starbucks scenario":
Customer walks into a Starbucks, waves her phone past a (second) NFC station near the door. The phone launches a Starbucks site or application, and she indicates that she wants her normal venti half-caff vanilla latte (or maybe today just the grande mocha, also on the list), gets a presentation of possible pastries, and pays. She's not yet stood in line, not used the cashier's time. She may be at a Starbucks she's never visited before. But her coffee is being made nearly immediately.
This is happening. The contactless technology for POS is the same as contactless credit cards. So, many merchant by supporting contactless credit cards, already are ready for NFC. While few, phones with NFC support are coming out.
It is about the convenience, and leveraging the new ways of payments.
But we are still 2-3 or maybe even 5 years away from mass adoption in the US for NFC phones. But much less for contactless credit cards.
Nick,
Tough sell. "What's this going to do to increase my sales now?", the merchant asks very directly.
Answer that question clearly and unambiguously and you've got a winner.
Otherwise, "maybe I'll consider it when I get around to upgrading my POS in a few years."
Scott
Nigel D
Wireless and Mobile Business Analyst
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Hi,
Today you have no real chance of convincing a skpetical merchant today but there is no doubt that commercial proposition which are interesting can be developed. Take Barbara's "StarBucks" scenario and expand on it. How about the phones uses location based capabilities when someone decides to have coffee and it lets the user know there is a Starbucks just round the corner and since this person has opted into the "starbucks" application up comes the menu to order as the user is walking the last few meters. They the know the customer is there and can start to perhaps suggest dougnuts or whatever.
Probably some years off right now, but the bigger issues is when will critical mass of POS terminal NFC technologies on customers hands be reached? I remember when the Knip chip chipcard for cashless payments was introduced in Holland. You charge "cash" onto the card at any ATM .......... but there was almost nowhere to spend it! So adoption of the system was terribly slow.
The good thing is that by making something folks do regularly, easier and hopefully more secure, the social intertia related to changing people's habits is reduced. So adoption is likely to happen more quickly than if we were suggesting changing the whole payment model.
Nick,
It's a chicken and egg scenario whereby to first convince a merchant about NFC, it's really about starting off with supporting existing contactless cards and all that you mentioned from A-C. This will in the future, support NFC mobile payments utilizing the same infrastructure which is sort of the same case when you purchase a 802.11N router knowing that it supports your 802.11 B/G network cards.
NFC enabled mobile payments have an advantage in that the user is able to utilize the same phone and load multiple applications such as transit, loyalty, access card information,etc. all on 1 phone, space permitting, with a user interface that the user is able to use as an additional channel through their mobile to read, interact with information around them.
To give an analogy, not too long ago, nobody had a bluetooth handset but now, well at least the area i am in at the moment, the majority of the handsets support bluetooth.
If you have to convince them that NFC is going to happen, then you're probably barking up the wrong tree and already at a huge disadvantage. The move towards a cashless society is not coming... It is upon us. See web resource #1.
However, let's say we are going into this hypothetical situation knowing that the 'skeptical merchant" believes in contactless and NFC. Then you would first need to find out how they interact with customers today as it pertains to payment. Then determine if the technology would help them gather more data (Barb's Starbucks Model) about their customers and ultimately generate more ARPU from their customer. Those two pieces of info are critcial to your ultimate success in demonstrating the value prop.
Last but certainly not least (and the key to the whole pitch) is how the merchant leverages existing expenditures (contactless POS) and sets him/herself up for future managability and scalability once NFC is adopted en masse. What most folks forget is that 'cost of exit' can be equal to or greater than the 'cost of entry'. What is the customer currently using to accept payments, have they realized their ROI and how much is the new system going to set them back before they can see an impact on revenue? See resource #2 for an idea of what's coming down the pike.
Hope this helps.