Monday, August 16, 2010

NFC needs EZ-Pass Moments

EZ-Pass is a service offered by Department of Transportation’s across the northeast United States. It is essentially a small white box which via wireless communications can read when a car passes a toll area and charges the driver accordingly. It is offered by other DOT’s across the US under different names. This allows drivers to essentially move past toll areas very quickly without typically waiting in long lines. The EZ-Pass moment is when a driver is waiting in line for a toll watches other cars whiz by without stopping. At that moment the driver says to himself, “I need to do what those people are doing because I do not want to wait in line for a half hour”. This EZ-Pass moment was allowed to happen because people do not want to wait in lines and the DOT saves and makes money using this technology.

NFC (Near Field Communication) is a technology which allows cell phone users to make contactless payments via their cell phone. So far this technology has not taken off because there are not NFC transmitters in cell phones with the exception of a very few models and there are almost no NFC readers to make purchases with a cell phone. The reason for this lack of adoption is that the major players in the value chain (wireless carriers, banks, and credit card companies) cannot agree on payouts or implementations of the system. There is also some disagreement whether this is enough advancement to warrant the overall investment in this strategy. This situation has changed somewhat by the announcement by Verizon Wireless, AT&T, Barclays Bank, and Discover Card to create a joint venture and do trials with NFC. Three of largest and most well know credit card companies Visa, Master Card, and American Express did not participate. Still there is enough capability in the current JV to create an opportunity for NFC. Success in the opportunity depends on customers, merchants, credit card companies, and banks to have what amounts to NFC moments. Moments like when the cell phone user says to himself or herself, “I really need to use the cell phone to buy this because it makes life so much easier or it saves me money”.

Here are some NFC Moments:

1. “I do not have to carry this big purse around when I want to run to the store, go out on the town, or go to a business meeting” NFC essentially frees women from carrying around a purse or wallet.

2. “I do not have to run back to my car to fill up the parking meter so I do not get a huge parking fine” NFC allows the user to make contactless payment at a parking kiosk and by inputting their phone number can allow the parking authority to send them a text to extend their parking time or warn them that their time is up. This can be done via SMS as well, but many municipalities use kiosk in their parking areas and using kiosks allows people to be billed via their credit or debit accounts rather than their wireless carrier via premium SMS.

3. “I can get more people into my store via discounts and deals, tell them how much they have saved and say thank you” NFC when used with SMS, or applications can allow people to store coupons and discounts on their phone and in the store’s back end systems. These coupons can be redeemed via NFC in a unified experience over the phone. When customers make their purchase the store can tell them how much they saved and thank them with a message on the phone. Redemption of coupons originated from cell phone has been tried via loyalty cards at point of sale but this method has not gained mass appeal.

4. “I can set up my own loyalty and discount programs associated with my branded charge account or my customer's debit account” Department stores who want to cater to younger people who live by their cell phones can allow them to use their bank accounts via PayPal or other intermediaries to pay for items. Or the NFC payment can debit the customer's charge account with the store.

5. “I don’t have pay 3% to a check cashing agency, I can have a bank account like everyone else, someone can help me keep a budget, and maybe make some interest.” There is a good percentage of the population that is unbanked in the US. They do not have access to the benefits of banking services. These services are offered in 3rd world countries and can be offered in the US via NFC. The added benefit to merchants with NFC terminals that cater to this group is that they will attract more customers. People used to cash their paycheck at bars, and typically they would stay around a buy a few drinks. The same principal applies to convenience stores, supermarkets and drug stores.

6. “My company does not have worry about the fraud issues associated with magnetic stripes” For credit card companies fraud can happen when criminals handle cards as well as put false magnetic strips in terminals. Contactless payment avoids this.

7. “I do not have to miss the train waiting in line for a ticket or token” With NFC the phone becomes an automatic contactless swipe card. A user can automatically pay for train or bus service when they use them. For the transportation authority they can issue less magnetic strip cards, or tokens.

8. “I do not have to wait in long lines at the store” Bar scanning lines can be set up for items and NFC can be the payment method. It will be quicker than inserting cash into the automatic register and safer and quicker than swiping a card. Bar scanning lines are currently being done by Home Depot and some grocery stores with credit cards, debit cards and cash payments.

9. “I do have to pay credit card fees as a small business owner” Small merchants and their customer can exchange funds via their cell phones and receive confirmation via NFC without using a credit card. This is similar to the bump service offered by PayPal.

From my list there are a number of payment systems already in existence that offer contactless transfer of money. What NFC can offer is a standardized method of doing these various payments so they can be used by most phone operating systems, and understood by most people. Interoperability and usability are often the key to mass market adoption.

For NFC to evolve the wireless carriers need to be the first on-board as they typically decide what technology is on a phone. They get the benefit of having the phone as a doubly important item in people’s lives, as a communications device and as a payments device. But they should also expect some type of transactional benefit for investing in the NFC technology and subsidizing the phone.

There are a number of parties who can benefit from NFC: consumers who get a better shopping experience and save money, merchants who want to create more loyalty with customers and want to provide a better shopping experience, transportation authorities who want to save on costs, credit card companies who want to avoid fraud, and the unbanked who want the benefit of banking services. The crucial point is the merchant, customer shopping relationship. If merchants believe they can get more people into their stores and get them to spend more using NFC, and if the consumer values the benefits in cost and time savings of NFC, then it can be a successful service. What moves the process along are the NFC moments.

Wednesday, August 4, 2010

Learnings at Supernova

I attended the Supernova conference at the University of Pennsylvania’s Wharton School. The conference is designed to bring forward thinking ideas and issues to the forefront. A number of these issues were addressed including:

Spectrum needs and bandwidth speeds:

A prevalent topic was the need for additional wireless spectrum. The FCC who was in attendance is in the process of releasing 500 MHz of spectrum through various means over the next 10 years. There was also the expectation from the panel that wireless data traffic is to grow to 30 to 40 times what it is now. The additional spectrum and the way it is used by large carriers may not be the complete long term solution. The panel did agree that unlicensed spectrum was going to play a role in satisfying customer needs.

Some in the panel discussions stated the there was not enough 100 MB access in homes and that the lack of competition was limiting this. Others in the panel argued that the customer was satisfied with the speeds they were getting. The truth is somewhere in the middle, but the fact remains if the bandwidth is available it will be used in some capacity and it will likely be disruptive to some existing economic construct. An example: What instantaneous high quality video conferencing can do to certain industries like travel? A common theme for the decision makers in the audience and on the panels was unforeseen circumstances. Of course, no one can completely know the future but it does behoove businesses to know their core business and look at the impact technology is going to have on them.

Customer and user interaction with web sites and social networks:

The other major topic that was brought up was consumer and user interaction on the web with company web sites. In addition there was a need for better user understanding of filters on Facebook. The general theme being that technology needs to interact more symbiotically with our reactions, thoughts, expectations and feelings. Apple is a company that does this in terms of providing a technology that matches the way we think and organize our thoughts. Company web sites in general leave it up to the user to navigate. In addition, there are people in an organization that can help the customer but technology puts up a barrier to direct interaction via a web site or an IVR system. Technology does not do a great job of introducing these people to customers. For social networks the problem also exists as most people on Facebook do not have a good idea of what people can see or not see about them.

This type of reasoning brought up an impromptu session at the conference called tummeling. A tummeler is a host which knows everyone and can be someone who teaches you about the systems or situation you are in, and introduces you to people who you should meet. Essentially a tummeler is a guide to the inter-workings of the organization. The basic premise of the session was that web sites need a tummeler to guide people through web site, and understand and organize the social network web site for your needs and feelings. The general consensus is that this will be a hard undertaking because the people who design social web sites are technology focused rather than customer focused and that there is a conflict in interest between the social network user and the social network site due to advertising. Competition can change this but right now Facebook is on the top of the hill. Still this type of advancement is required to get more usability and trust out of the web experience. A group that supports the tummeler idea and delivers podcasts on the topic can be found on

Computer enthusiasts meet and unite:

Another interesting topic around making the Internet more personal was This is a bit of a misnomer because of the negative connotations of the word “hacker”, but these are essentially clubs which have work spaces that computer enthusiasts and programmers can come together to build projects and business ideas together, and tryout security ideas on an offline network. Different clubs have different specialties in terms of computer programming. Universities are looking at these types of clubs where computer talent can learn more than in a traditional academic setting. To learn more about these groups go to, and an example of a hackerspace web site is

Companies using social media:

Another interesting panel was around companies that had taken advantage of social media to draw customer interest and help the customer experience. For example:

Vitaminwater and Mountain Dew were discussed for their on line crowd sourcing campaign to design an ideal drink. Mountain Dew used a number of online methods to allow users to cast a vote and share thoughts including Facebook, video submissions and Twitter. is a web site that allows local merchants to create discounts for goods and services for a group of interested buyers. The website puts up a special discount and web site visitors click on the deal if they are interested. Once the deal reaches a trigger point or pre-determined number of clicks then the deal is offered to everyone that clicked. It is a good way for local businesses to create excitement around a deal and give the vendor a way to get people to try and purchase a product.

Publishers who transformed or created themselves as aggregators of information in order to deliver a publication that is profitable. Weis Healthy Bites Magazine was highlighted as an example of this. Gourmet Magazine has also downsized to serve this type of role for interested readers.

A couple of companies were highlighted for using twitter to reach their audience. Jet Blue was cited for using Twitter to advertise bargains. Comcast was cited for improving customer service via its @comcastcares twitter feed. The service has a reputation of cutting through red tape to find a customer solution. The founder of this service Frank Eliason is an example of a tummeler. He allows outsiders or visitors to navigate the Comcast care system and gets them to the right people.

The company Clickable,, is a one stop shop for small business to advertise on the web via traditional methods as well as social networks. They are working with American Express’ small business unit. One of the underlying themes of the conference was how local businesses can take advantage of social networking.

Ending with education

The conference ended with a panel on changes that are going to happen due to the digital world. We have seen this in music and publishing, where revenues have declined and new business models have been needed to take place. The panelist brought up the sense of entitlement that the American workforce has and that it is conflicting with the current economy. One example of this was given by the Director of the Science Leadership Academy, Chris Lehmann where the cost of college and higher education had outstripped the financial viability of families thus possibly denying America of technology talent in the future. But there is always a way around problems and people starting new ideas to make forward progress. Hacker spaces are one of the ways around this educational dilemma.