CIO view: Banking on NFC – Gold rush to replace the plastic fantastic?

Ashley Veasey, CIO, Standard Chartered Bank, Hong Kong

Apple is reportedly building up a mobile payments division. Before long, we will start to see other smartphone makers moving towards providing the same, if not better, utility.

But whilst smartphone technology has developed pretty fast, it only enables one part of the payment equation. Low-cost and scalable technology is required at the retailer to capture payments, and this is where Bluetooth Low Energy or BLE is emerging with the potential to supercede NFC.

BLE is a standard that is widely available in new smartphones, and has given rise to new thoughts around mobile payments as it has some unique advantages over NFC. When compared to 'classic' Bluetooth, BLE provides considerable reduction in device power consumption while maintaining a similar communication range. A single watch battery or button cell could power a BLE chip for six months to two years depending how it is used.

BLE, combined with biometric fingerprint sensors for authentication, has positive implications for mobile payments. At the retailer, all that is needed is a tablet or laptop, or even simply a smartphone with Bluetooth connected to the Internet—it doesn't require the retailer to invest in costly POS terminals for NFC. With the emergence of the Internet of Things, BLE appears to be a prerequisite to a new future for retail and how we pay for things.

Imagine a future of retail shopping, where you could walk into your favourite store and immediately receive a smartphone alert welcoming you, and based on your previous spending patterns, you are informed about a new range of products with a special loyalty discount.

You are then guided to the shelf where the products are located, and when you decide on your selection, you then put your finger on the smartphone's biometric sensor to authenticate and approve the purchase. This then appears on the credit card linked to your iTunes account.

This is all entirely possible through using a communications protocol such as BLE, which allows for locating the user inside a store, identifying the product that is being selected, and leaving the premises; and not forgetting the use of 'big data' to give the customer a personalised offer, and finally completing the authenticated payment in real-time. No need to swipe your plastic card or tap your NFC enabled phone.

While the technology is important, what's more important is that we create an experience that addresses a need for the consumer.  NFC, for example, is still a little clunky in requiring an NFC chip embedded in a smartphone or SIM card, along with dedicated POS terminals at the retailer.

Gaining mainstream acceptance of such a future will require banks, retailers and other service providers working together hand-in-hand to deliver an experience that a customer will value over and above mobile payment methods available today using NFC. Without that simplicity, mobile payments face an uncertain future and we might expect to see that little piece of plastic remaining firmly in our wallets.

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