As both Best Buy and 7-11 have stopped supporting NFC, Mobile Commerce Daily recently took a look at the reasons behind their decisions and the implications for the struggling NFC technology’s adoption. Their article, entitled “NFC takes another blow as 7-Eleven, Best Buy shut it down”, quoted Pervasive’s own Brian Stein as he explored the reasons behind the shut down, and the implications for competitive support.
“There is definitely some truth to these retailers claims that shutting down NFC helps them save costs,” said Brian Stein, managing director at Pervasive Path, Cleveland, OH. “Maintaining the NFC terminals and higher credit card transaction fees are part of the issue, but there is also the issue of educating your cashiers to accept NFC payments.
“While none of these costs are necessarily crippling to the business, without an offsetting value proposition, the question for these retailers is, ‘why bother to support NFC’?” he said.
“Given that both Best Buy and 7-Eleven are both prominent members of the Merchant Commerce Exchange, any benefits they’d receive from mobile payments, such as consumer loyalty and data insights, will not come through NFC transactions on a third-party app, but rather their own branded/MCX wallet applications, which do not leverage NFC. In this case, encouraging the use of other digital payment methods, including NFC, actually detracts from the retailers’ own offerings.”
NFC is not dead yet, but perhaps this puts it into the nearly dead category. Without broad mobile device adoption, it’s unlikely any new players are going to make the kind of bets that can change momentum and allow NFC to recover. Proponents argue that Google’s added support for Host Card Emulation (HCE) helps to unencumber NFC, it those gains may be too late to save the technology. With HCE only supported on Android devices running the latest KitKat operating system, the adoption of KitKat in the market is only at 2.5%, hardly enough to encourage a bet on NFC growth.
While it is unlikely that Bet Buy and 7-11’s decision will be the tipping point for a mass NFC exodus, we predict that suspect that NFC support will fade away as existing NFC terminals break and either aren’t repaired or are replaced with new terminals which no longer provide NFC.
NFC’s potential demise should not be taken to represent a death knell for the industry. One only needs to look as far as the nearest Starbucks to validate that mobile payments can succeed without NFC.