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During the early part of this year, when Borders Group filed for bankruptcy and closed most of their stores, I felt really bad. It seemed like an era was coming to an end. The movie “You’ve Got Mail” depicts the impact to the ‘mom and pop’ corner book stores due to the emergence of big retail chains. Now we are looking at how even the big retail chains can feel the heat due to a technological change which completely alters the business model, like what Amazon has achieved.

I hope the Barnes and Noble bookstore chain survives with its digital offerings. During the mid-90s, when I had a lot of free time, I used to visit B&N at Stevens Creek Boulevard, San Jose, every evening and read lots of useful books, for free, by just sitting in their in-house coffee house sipping wonderful coffee.

In this digital era, we are seeing a lot of new players emerging, and old players, who are not able to adapt to the changes, are struggling. For e.g. the mobile phone is a threat to a lot of existing players manufacturing alarm clocks (is anybody still using them?), music players, cameras, etc.

Now that mobile phone handsets are enabled with NFC (Near Field Communications) technology, will it change the way we do credit/debit card transactions? Will it change the way we redeem loyalty points? Will it change the way we travel and clear the multiple gates at airports?

I would love to see those changes. It will certainly reduce my wallet size. With the number of cards that I am carrying – credit/debit cards and loyalty cards – my wallet is giving a “Costanza wallet” effect. Apart from that, it makes life easier. Let us look at the following cycle for an air traveler:

  • Checks in at the airport and gets the baggage tag in the mobile and gets the reward points loaded
  • Gets the boarding pass bar code equivalent loaded in the mobile
  • Clears security gate by waving the mobile
  • Pays for onboard snacks/duty free products by waving the mobile
  • On landing, takes a rental car – the car key is loaded on the mobile
  • Opens the car with the mobile
  • Checks into the hotel waving the mobile and redeems the reward points
  • Gets the hotel key loaded on the mobile and opens the hotel room
Is Mobile NFC going to revolutionize payment, loyalty and travel industries?

Basically the applications are endless. Smart phones are getting enabled with NFC technology, be it from Apple, Samsung or Motorola. The smart phone market size is also on the rise. With Google wallet around the corner and with Google having bought Motorola’s mobility division, the NFC enabled smart phones with Android platform will certainly have a good push.

Now it all depends on market adoption. The cost lies in changing so many points of sale with readers compatible with NFC technology. Also, the number of smart phones enabled with NFC technology and the end users doing sufficient transactions on mobiles should increase. It might take a couple of years for all of the above to happen.

NFC is a two way communicating technology between the NFC phone and the NFC reader. For example, after receiving the card information, the reader can ask for the PIN that goes along with it. As usual, with any new technology, there are concerns on the security aspects. For example, what happens if the cell phone is lost? The same problem is present on a plastic credit/debit card. At least, in the NFC enabled smart phones, you need to provide a PIN to access the card details.

It is good to see that Google is trying to create a market through vertical integration of mobile phone manufacturing and distribution, through its Motorola acquisition, and providing a Google wallet product with Google prepaid cards as well. We need a market creator here.

Mobile phones are moving towards a convergence of digital consumption in providing not only mobile telephone facility but also providing entertainment in terms of games, music, videos, utilities like alarm clock, emails, internet surfing, sms, etc. Now it is going to change the way we make payments as well, replacing the plastic cards. Also it might be good to see easier acquisition and redemption of loyalty points and the way the hotel/car industries operate.

The next development in future could be – you make payments through mobiles and the transactions are automatically taken to a personal/corporate accounting software for expense claim accounting, etc.

The wide spread adoption maybe just a couple of years away but it might be worth the wait.

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