Amongst the many things of which SMEs need to be mindful, being prepared for current and forthcoming changes in technology is imperative.
One of these changes is the adoption of Near Field Communication (NFC), which is expected to change the way businesses receive payments from their customers.
When one considers the popularity of smartphones, and the fact that NFC has been routinely integrated into most modern handsets, it is quite clear that both small and medium businesses will need to cater to consumers’ ever-present device: the smartphone.
Explained simply, NFC technology enables its users to merely swipe their smartphone or NFC enabled device across a reader. With NFC, a mobile phone has to be enabled with an NFC chip and mated with an NFC reader to facilitate payments. The paying party, however, does not require a credit card to make a payment, only a bank account that has eWallet functionality.
The future beckons
According to Deloitte, tentative steps are already being taken into a world in which mobile phones will be a passport to making transactions. The result could be that current retail payment systems will be pushed into redundancy and even bank-issued cards will be a thing of the past.
According to Jonathan Houston, digital marketing lead with the Deloitte Consulting Technology Division, the benefits will not only be felt by consumers who will be able to make payments using their phones and no longer carry cards.
Of particular interest to merchants and SMEs, is that cashless payments would enable them to operate more securely and be less vulnerable to crime, as the volume of cash on their premises would be vastly reduced.
Houston added that ultimately, the pressure will be on financial institutions, business and retailers to prepare for the coming payment revolution. “There is no doubt that consumers, especially early adopters of technology, will be demanding these services the minute they become commercially viable,” he asserted.
Time to prepare
South African businesses though, are in a unique, perhaps even enviable position, of having a fair bit of time to prepare for the inevitable, and get to grips with how the technology could affect and benefit them.
According to Tim Walter, executive head of marketing at Nashua Mobile, mainstream adoption of NFC may be as much as two to three years away. He added that in South Africa, it is the capital-intensive process of rolling out point of sales terminals by stores, hotels, restaurants, services firms and other merchants that will be the big barrier to adoption.
“Retailers and banks will need to see some clearly defined benefits in security, convenience and cost-reduction before they adopt NFC in a big way. We will need to see big retail groups, mobile operators and banks cooperate closely to nurture an NFC ecosystem based on a sound business model that works for all of them – and that could take some time,” Walter elaborated.
However, we may well see other applications for NFC-enabled phones come to the fore in the interim period. Indeed, NFC has a myriad of other uses that SMEs may well be interested in. For example, the technology can be used for applications such as electronic ticketing, loyalty programs and coupons, parking payment, buying goods from vending machines, paring devices to establish Bluetooth or WLAN connections, and more.
How popular NFC will become for such applications depends on market penetration of enabled devices and the benefits companies see in adopting it.
To the point
Even so, all this could offer SMEs across a range of industries a means of engaging with their customers, and leverage off the desire of people to utilise their smartphones in innovative and novel ways. This in itself could provide new opportunities for enterprising SMEs to integrate the technology into their sphere of business.
This article first appeared in the TechSmart SME Guide 2012.