We saw the future, and there wasn’t an e-wallet to be found

Do NFC payments – with their tap-and-go simplicity – herald a revolution of the shopping experience? Or is NFC just an attempt to force more of our daily transactions onto payments platforms where their owners can claim a usage tax? The sales pitch is a promise of simpler, faster and more secure payments, allowing us to grab our goods and quickly get on with what we were doing. The reality is that the payment is only responsible for a small portion of the time wasted during the buying journey. Other trends we’re seeing have much more potential to revolutionise the shopping experience, and they do this by moving the purchase away from the till to allow consumers to transact where and whenever they need. The huge investment in NFC means we can expect to see NFC terminals at most of the shops we frequent. However, at the same time we can expect NFC to be quickly eclipsed by other solutions which do a much better job of streamlining the buying journey.

Vendors are trying to convince us that the future involves NFC, smart phones and e-wallets. You might have seen the adds on TV; a demographically appropriate actor buys something trivial such as a pack of gum or can of soft drink by simply tapping their NFC enabled credit card or phone against a pay point before scampering off to some enriching activity. NFC, we’re told, will make the payment so quick, so easy, that we’ll barely even notice it. No more waiting in queues while the person in front of us fumbles with their purchase. And if we add an e-wallet then we can easily manage all these wonderful transactions via an app of some sort. Life will be good.

The problem with this vision is that it doesn’t align with reality. The next time you’re waiting in a checkout queue somewhere – be it a café, big box retailer or clothing store – spend the time to count how long it takes the people in front of you in the queue to hand over the goods they want, wait for the clerk to tally up their purchases, and to make their payment before they can escape. Was the payment – swiping the card and punching in a PIN – a big part of the time spent? Or was the time dominated by the clerk scanning barcodes into the till to find the total? I’d be surprised if the payment was more than a small fraction of the time spent, as most of the time we waste shopping is sucked up the the need to find the goods we want and tally up their prices; the payment is just an annoyance at the end.

NFC technology might be bling, but all the effort is aimed at the smallest part of the buying problem, the payment. Shaving a second or so off the payment will make little difference to how much of our life is wasted while shopping. The pack-of-gum example is a corner case carefully selected to show tap-and-go in the best possible light. How often do you simply pick up one product next to the till, wave your card near the payment terminal, and then sally forth into the rest of your day? When your at a restaurant? How about when your at the supermarket? Clothes shopping? Or that trip to the big-box hardware store on the weekend? Most of our time is sucked up the the need to find the goods we want and take them to the register (place our order and wait for it to be made), wait while the merchant tallies what we owe them, and then we make the payment. Why worry about slicing another second of an already short payment when there are bigger problems to solve?

The ideal use-case for NFC?

A number of non-payment tools and technologies are emerging which are moving the payment away from the till, allowing us to entirely avoid the need to sign a check, do the chip-and-pin thing, or even tap-and-go. The booming gift card market and and near ubiquitous Internet connected smart phones are allowing us to rethink the buying process.

Amazon's new mobile shopping application, transforming every aisle in every store into an Amazon shopfront

Aisle buying, for example, builds on the consumer habit of checking prices on their smart phones while standing in the aisle[1]. Why just give them the price when, with one more tap on the screen, the consumer could simply pick up the product and walk out of the store, showing a receipt on their smart phone on the way out. No need to visit the register. No NFC required. Amazon realises the potential for aisle buying and has released an app which allows customers to scan a bar code, view the price and place an order, converting every shopping aisle in every retailer into a shopfront for Amazon.

Purchases are moving away from the till, as the relationship between customer and merchant moves from exclusively face-to-face to include online interactions, and interactions mediated via social media and smart phone apps provided by the retailer. Pizza chains already allow you to order via an app – both from home and from within their restaurants – and we’re seeing business-consumer relationships founded on Facebook move into the real world with Facebook Credits and Checkin allowing retailers to interact with their customers wherever they are. Allowing customers to pay via the same channels is only one step further.

Square, for example, provides a till-replacement based on an iPad app. The app allows retailers to do the usual things, effect payments and tally the day’s sales. It also has a nice feature where a merchant can allow an established customer to put a purchase “on account” simply comparing an image of the customer displayed in the app with the person standing in front of them. No money or slivers of plastic pass back-and-forth, there’s no tap-and-go, the transaction is simply noted with the tap on an on screen button. Tesco Korea has taken the idea of aisle buying a step further and created virtual stores in subway stations, taking the store to the people when the people don’t have the time to visit the store. Find what you want, snap a photo of the QR code, and the product is already on its way to your house. It didn’t take long for this idea to catch on, and we’re already seeing virtual shops pop up in other countries, from simple stickers on a shopfront through to the creation of virtual stores in public places.

Woolworths' virtual shop at Flinders Street Station in Melbourne

The problem with all the NFC payment hype is that it wells from a backward looking view of how we use technology. Tomorrow will be the same as yesterday, but with more fins, shinier chrome, and flying cars. NFC requires an huge investment in a new generation of payments technology – technology focused on facilitating traditional face-to-face payments – just when society is starting to move away from this style of transaction.

Our habits are changing, and rather than changing with us payments providers are doubling down on their existing approach, trying to push even more transactions through their existing infrastructure. E-wallets and tap-and-go result in some nice ads, but future of payments lives somewhere else.

References

1. Aaron Smith (Jan 30, 2012), The rise of in-store mobile commerce, PerInternet↑

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