NFC: A Technology Marvel That Must Overcome Human Psychology

Sometimes, people who spend most of their working hours trying to get technology to do magical things lose sight of the many psychological dynamics. In short, employees and consumers rarely see things the way technologists do, which can cause some wonderful disconnects in the field.

This point was driven home to me this week when I was doing a visiting lecturer gig at a graduate business class at New York University. The interactive discussion wound its way to security issues and the topic of contactless payment came up.

I've been a longtime fan of contactless payment—along with other mobile tactics—because of the potential of these technologies. Near the end of the discussion, I polled the students as to how many had been issued contactless payment cards. No hand went up.

Skeptical, I asked students to pull out their credit cards and look for the telltale wireless symbol. Initially, no one found it, but after a few minutes, one student did and the card was passed around (horrible thing to do during a security discussion, but ....) and suddenly quite a few students realized they had had contactless payment cards in their wallets for untold number of months and never knew it.

Let's put this into context. These weren't technological luddites. These were graduate students in New York City in their 20s and early 30s, almost all of whom could upload videos to YouTube, text-message their friends and add songs to their iPods a heck of a lot faster and better than I could.

Retailers and telcos and others are watching test markets such as New York City and seeing how many consumers are using contactless payment. Their assumptions are based on the number of contactless cards in the population. But if that population doesn't realize that they have a contactless card, there's nothing valid that can be concluded when those people do not use them.

Officials at Citi (the result of the 1998 Citicorp and Travelers merger) discovered this problem some time ago. Ironically, the thinness of the RFID chip and the sophistication of their manufacturing process made the card look identical to every other card. Their solution: add a photograph of a chip into the card's design, to make it a lot more obvious, said Jaidev Shergill, executive VP of Citi's growth ventures and innovation group.

Shergill's group this week announced an unspecified investment in Vivotech, to help push near field communications (NFC) efforts, which Shergill said that he doesn't expect to be a major wireless factor for a few more years.

"About 2011, 2012 is when we're really expecting to see applications in a material way," he said. Until then, 2-D barcode is likely to be the hottest area for mobile E-Commerce.

But will NFC and 2-D barcodes suffer the same fate as contactless? MasterCard this week announced that it was adding some 17,500 new contactless vending machines, for its PayPass program. How many of those NYU vending-machine-fond grad students will even have a shot at knowing they could use those machines?

This is the ultimate geek frustration. Technologists have conquered a ton of huge issues to make contactless work and IT execs and marketing managers and financial bosses got together to agree to push it out there and line up retailers to accept it. And yet it's being flummoxed by a lack of communication.

They've gotten these working devices all the way into the consumer's wallets (typically when a card had to be replaced anyway), but not into their mindshare.

When the conversations turns to these capabilities inside phones—rather than wallets—will marketers do any better?

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