Cash, check, or credit card?

Use your phone to pay for purchases

by Caroline Q on November 28, 2010

How do customers pay for your product or service? Very soon, the likely answer will be using a mobile phone.

Near Field Communications (NFC) is coming to most smartphones in the next year, according to a Financial Times article on November 19, 2010.

Your phone as a key, a ticket, and a charge card

This simple technology will allow your phone to be used to pay for products in stores, tickets on public transportation systems, and for accessing hotel rooms, theater and sports venues. It will also allow you to get directions without entering your location in a browser, download photos to your computer without a wire or email, connect more immediately to a WiFi hotspot, and see nutritional information about products in stores and restaurants. In the future, it’s likely the technology will allow your phone to become useful in ways no one has thought of yet.

What is Near Field Communication?

NFC operates at 13.56 MHz in the unlicensed radio frequency band.(1) It allows 2-way communication at speeds up to 424 Kbits/second. The range is only 4 cm (about 1.5 inches), making the connections inherently secure because close proximity is required.(2) Manufacturers are planning to include the chips needed for NFC communication in iPhone, Android, and Blackberry phones within the next few months.

NFC is already here

NFC technology is already in use. In Luxembourg and Belgium, Coca Cola vending machines are being outfitted with NFC chips. Using a small plastic tag embedded with a NFC chip and attached to your phone with adhesive, you can buy a Coke. By passing your tag close to the machine, the transaction is completed. Until your phone has built-in NFC capability, you’ll need the external tag to make the purchase.(3)

At the Clarion Hotel in Stockholm, guests can check in, check out, and access their rooms using phones equipped with NFC technology. Once they check out, the “key” is removed from the phone. At this time, the hotel must provide the NFC capable phones.(4) Very soon, this will not be necessary.

Bling Nation mobile payments

In the United States, BlingNation.com, offers mobile payment services. Their NFC tags are free to consumers, and easily connected to a PayPal account. Mobile payments can be offered by any business, anywhere in the United States, using a BlingBox, the company’s point-of-sale terminal.

The city of Palo Alto, CA has joined the program, allowing residents to pay utility bills, long-term parking fees and fines using a BlingTag. The city has plans to add libraries, community centers, and museums soon.(6)

Connect with customers using Bling

An additional benefit, merchants offering Bling mobile payments are connected with their customers using built-in social media tools. At check out, customers have the option of “liking” the businesses Facebook fan page, posting a comment for their friends to see in Facebook and Foursquare, redeeming coupons or participating in promotions available through the system.

Data about customer’s purchasing patterns and connections (analytics) is included, while offering privacy for the customers. No personal information is on the NFC tag. In many ways, the Bling tag is more secure than a credit card or a check, and far safer to carry than cash.

Is your business ready to take mobile payments?

Near Field Communication is changing the way we pay for purchases. Checks and cash are already being used less and less. With mobile payment options, it is likely that credit cards will diminish in popularity as well. NFC enabled mobile payments are quick, easy, more secure, and valuable for merchants when integrated with social media.

(1) Near Field Communication, Wikipedia
(2) About NFC, NFC Forum

(3) Matt Brian, Coca Cola vending machines to support mobile payments, The Next Web Mobile, November 25, 2010

(4) Mobile Phones Replace Room Keys in Stockholm Hotel, Discovery News, November 2, 2010

(5) Sarah Clark, Facebook distributes Bling Nation payment tags to staff amid rumours of a major Silicon Valley NFC plan, Near Field Communications World, September 27, 2010

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