NFC will come of age in 2012

Four years after the first contactless payment device was trialled in the UK, it looks like Near Field Communication (NFC) could finally come of age in the UK in 2012. The technology allows you to pay through tapping your ‘embedded chip’ that’s usually in a card onto a payment device.

The maximum payment is limited to £15 to guard against fraud making it perfect for cafes, delis and corner shops across the UK. It also provides a huge opportunity for brands with media such as bus stop 6 sheet posters, shop signage, vending machines and experiential teams able to transfer information to the chip – and given almost all smartphones manufactured today contain the chip, it provides a frictionless way of delivering content or rewards in seconds without a clumsy sign up mechanism which often proves to be the biggest barrier to deeper consumer engagement.

As with all new technologies, the move towards mainstream has taken time and for advertisers, the trials that have run this year provide no real proof of enhanced ROI or engagement in return for the increased investment. That’s changing and the critical factor isn’t just NFC enabled phones, it’s receptive retailers.  

Participating retailers numbered 69,000 by July 2011, up from 26,000 in January – that’s helped drive transactions, which almost tripled in the first half of this year from 200,000 transactions in January to 567,000 by July.

And it’s not just any retailers; in early 2012 the Co-operative group, Spar and Costcutter are set to join Subway, McDonalds, Eat and Pret who are already using the technology – buoyed on by the increased trip spend that retailers are experiencing (6% increase in EAT) as consumers are no longer constrained by the amount of cash in their pockets and the inconvenience of chip & pin.

With Smartphone market share set to pass 50% in the UK next year, the mobile wallet is likely to make significant inroads into people’s payment habits with yes-wallet.com having launched last month and Google planning a trial of its Google Wallet service early next year.

But there’s no reason why it should stop with phones, trials are already underway with embedded chips in wristbands, watches and even sticky back plastic – i’ll give it less than a year before some bright spark has one embedded under their skin, after all – we’ve already seen Ballantines create an interactive tattoo this year.