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NFC technology, or Near Field Communication is not a new technology but the application of it is becoming more widespread in the finance, advertising and marketing industry, thanks mostly due to out of home devices like smart phones and tablets. This article is an introduction to the technology, how it works and how it can be used as part of a complete digital marketing strategy.

Global NFC m-payment transactions will be almost US$50 billion worldwide by 2014. 20 countries are expected to launch NFC services in the next 18 months. (Juniper Research - June 2011)

  • What is NFC
  • Smartphone technology
  • Difference between NFC and QR Codes 
  • How can NFC be implemented into a Digital Strategy?
  • Mobile Wallets

What is NFC

Basically it is a set of short range wireless protocols that enables devices to share and communicate information often inciting an action. It has been in use for a long time now, enabling keyless entry and oyster cards for travel. Now it's application in marketing and advertising has promoted NFC technology to the trend watchlist.

Information sharing can be one or two way, phones can use NFC to share data between each other, send photos, videos, data to each other. NFC payment points can allow a person to make payments by swiping a card or phone within a certain distance in front of a POS enabled system. Promotional uses include stickers that allow the user to tap their enabled phone and obtain information, which can range from just opening an informative website to redeeming a voucher, entering a competition or uploading information.

Smartphone technology

In order for NFC to really take hold in the marketing world, it has to overcome two barriers, firstly there need to be devices ready to activate, like smart phones and secondly applications and ideas need to be applied to real life campaigns that engage the user to utilise that technology.

Luckily this year it looks like things are finally getting underway on both fronts, by the end of the year it is anticipated that most new smartphones will have NFC technology built in and secondly big brands are already putting money and time into the development of applications. For example airlines like Qantas and Virgin want to introduce NFC enabled boarding passes and Commbank and Westpac are creating NFC ready applications for their mobile savvy clients.

Difference between NFC and QR Codes

QR Codes are scanned images, barcodes to be more specific, that carry information that can be read by enabled mobile technology, using the camera. They read whatever information is carried on that barcode, usually a link to a web or Facebook page, and take the user there. In order to read a QR code you need to first download a QR reader app. The fact that there is an extra step, may deter some less mobile savvy users from adopting this trend. 

NFC isn't a scanned code, it is a wireless signal that is transmitted. This means that information / actions are communicated to a device to perform a certain function. Unlike the QR code, it doesn't just upload information (usually a web address) but rather tells the receiver to perform a function like unlock a car, make a payment, share a video, enter a competition, redeem a voucher. The application of this technology is huge, much larger than just web viewing.

Both QR Codes and NFC have their place and because not all smartphones are NFC enabled, it is prudent for a lot of marketers to not discount the humble QR code just yet. NFC is growing and by 2014 it is expected to be considered a more mainstream technology among smartphone general users, not just early adopters.

How can NFC be implemented in a Digital Strategy?

The applications of NFC can be used in a range of ways, including mobile wallets, as Visa and Mastercard are developing, or banking software like Commbank and ANZ are developing. The idea behind it, is about simplifying an action. For example use NFC to recharge your mobile phone at the bus stop, then use same mobile phone to get the estimated time of next bus arrival on your phone. Order a coffee at a cafe by holding phone over menu item, typing size / quantity then pay for same coffee using mobile wallet. 

Here are some real life applications that can be used to enhance a brand, customer loyalty or their social brand position:

*Paperless Bookings: Create a paperless system that allows people to check in, order without having to print out documents. This might be useful for the travel industry including hotels, who offer online booking but still require people to print a printed copy of their booking. Using NFC a person can book in using their smart phone. Great for business people who don't want to carry reams of paperwork for every booking on their trip. There are even apps that store all your travel arrangements so you can keep all your flight, transfer, accommodation or even venue passes in one place with a code.

In Store Promotions: Stores and packaging are currently using QR codes but NFC offers more opportunities for expansion of this technology, particularly among smart phone users who would not be considered first adopters. Using programmed stickers you can not only direct the in store consumer to view your site, they can enter a competition, upload information of their own, participate in a survey, sign up for a free trial, initiate AR or redeem a voucher. The added bonus is that analytics software can be linked to the sticker, so that you can track consumer behaviour from store to store, invaluable from a marketing perspective.

Merchandising: When purchasing a high end consumer good like a car, the customer is often given additional items like brochures, servicing books, key rings, caps and other merchandise that reinforces the brand and ensures the customer feels valued and special. Incorporating an NFC sticker into the servicing manual or keyring could further enhance the relationship with the customer by encouraging an extra level of communication, a feedback loop or access to an app that retains their loyalty.

Mobile Wallets

People don't leave home without their keys, their wallet and now just as commonly their mobiles. Of course everyone is always looking for simplicity in their life and taking one less item, namely a cumbersome wallet might be the way of the future.

As early as the end of 2012, Regional Innovation Director for Visa Ben Pfisterer and Regional Innovation Director Matt Barr of Mastercard that there were enough new smart phones around with enabled NFC technology to warrant pushing ahead with the development of contactless payment systems.

In early 2013, Mastercard announced MasterPass, their digital wallet which would use secure cloud software to store credit details. "Every device is becoming a shopping device," said Ed McLaughlin, head of emerging payments at MasterCard. This technology started being rolled out in Australia in March this year.

Innovation in technology encourages development, investment and infrastructure when it can be used in marketing and commercial applications and NFC while not a new technology is now able to really spread it's wings as people become comfortable with the concept of mCommerce. We'll be keeping an eye on this technology and by next year hopefully we can write another article about how it's being implemented by some more big and smaller brands in both marketing initiatives and general user experience scenarios. 

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Sources
http://www.news.com.au/breaking-news/world/mastercard-launches-digital-payment-system/story-e6frfkui-1226585440540#ixzz2M9hzoq3b
http://www.nfcworld.com/country/australia/
http://www.theaustralian.com.au/australian-it/nfc-payment-systems-will-succeed-without-apple-iphone-5/story-e6frgakx-1226473848706
http://lifehacker.com/5943006/what-is-nfc-and-how-can-i-use-it
http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/f