How popular are contactless payments through Near Field Communications (NFC)?

Google Wallet launches

Importance (for retailers in the long-term):

Recommended link: Google Wallet launch announcement

Our commentary on Google Offers launch

If you’re a retailer and have heard about the recent launch of Google Wallet, this is a short update on its relevance as we see it and the bigger picture about NFC and contactless payment that we have been hearing a lot about in 2011.

Well if you’re based in the UK, Europe, in fact anywhere out of the US, Google Wallet is not relevant at all right now.

Currently, Google Wallet is:

  • Only available for owners of a single model – Google Nexus S on a single US phone network – it’s not available elsewhere
  • Its potential reach is much larger since it could be used at 300,000 international outlets that accept Mastercard Paypass including Burger King, Boots and Tesco
  • Uses “Single Tap” process for all these facilities familiar from the launch of the first ever contactless payment through the Samsung Tocco in a partnership from Barclaycard and Orange.
  • Use for low-value payments of under £15 without using a PIN
  • A similar contact-less payment is available through existing cards already
  • NC mobile contactless payment transactions are predicted to grow rapidly in the next few years: $50 billion by 2014 according to Juniper research. However, as with many such predictions, this could be an overestimate if existing usage is considered. Barclaycard announced that in 2010, there were just 1.7 million contactless transactions processed eventhough there were 13 million cardholders and 52,000 contactless terminals in the UK.

Marketing implications of Google Wallet and NFC

The launch of Google Wallet shows that contactless payments will feature large in the future and most mobile manufacturers now have phones available or in product that support NFC. However, it doesn’t seem as if NFC will be included in the future iPhone 5 release, although it does seem inevitable.

NFC also offers great opportunities for sales promotions with Google Offers, a closely related deals service that enables merchants to offer coupons redeemable via the Google Wallet.

In the future we can expect to see coupon promotions for retailer promotions through online, print and in-store. Often these offers will be made available through ads with QR codes.

Here’s an example from a writeup by Digital Trends showing how a coupon will be added to the wallet by clicking on it.

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