A vast majority of consumers now prefer to use a Near Field Communication (NFC) equipped smartphone or wearable device to pay, rather than a physical card or even cash. More and more innovative digital-first solutions are coming to market, offering an efficient, ergonomic and environmentally friendly payment experience, while also presenting brands with an opportunity for enhanced customer engagement and retention opportunities.
Leveraging these solutions requires careful consideration though. Any new payment solution must be able to integrate within a myriad of legacy systems, incumbent hardware and regulatory requirements. Without due consideration, it risks a breakdown in service, spiralling costs, or even a critical security breach that puts both the implementor and customer at risk.
Regional disparity poses an additional challenge to implementing new payment solutions. Yes, today’s global digital payments ecosystem is more interconnected and interoperable than ever before, but its services are also limited by a number of intractable challenges, the impact of which varies enormously around the world. Access to technology, digital literacy rates, and even personal preference are all variable factors that dictate how each region approaches payments, and cannot be ignored.
So how can businesses balance the fine line between innovation, interoperability, accessibility and integration in a way that delivers the clean user experience that is an essential part of any digital payment?
Ensuring devices speak the same language
The hallmarks of digital payments are that they are simple, seamless and secure. Ever since the early days of contactless cards, trusted industry standards – most notably ISO 14443 – have played a pivotal role in delivering this experience by ensuring vendor and manufacturer-agnostic interoperability between cards and readers. Standards provided a shared common language, ensuring NFC devices could interact and operate.
Now in the digital age, more devices than ever before need to be able to communicate. The market saturation of different payment options and digital wallet providers means that without proper guardrails, the sector is increasingly susceptible to fragmentation. Harmonizing and extending existing card-based contactless standards across digital-first modes such as card emulation and reader/writer plays a pivotal role in ensuring that interoperability and integration remain strong without compromising on security.
Expanding solutions beyond payments
Momentum for digital-first solutions is not limited to the payments space, with digital identity, access control, transport, and countless more use cases each seeing strong adoption. Innovators are always looking for ways to transform the scope and capabilities of the payments ecosystem to meet the changing user expectations of the modern digital world. Future evolutions to the payment ecosystem must therefore consider how it will engage and interact with other connected APIs and integrated services.
This forms what NFC Forum refers to as the ‘Long Arc of Contactless’, the continual adoption of NFC technology that diversifies its use cases and the possibilities it unlocks. Payments has been foundational in creating an environment of trust in NFC as a secure, convenient and reliable solution. From this position, NFC technology can allow innovative digital payment solutions to become intertwined with those in digital ID, access control or transport ticketing, to create rich ergonomic digital ecosystems.
Multi-Purpose tap – The future of contactless
As each of these use cases comes online, the demand to streamline how they operate grows. NFC Forum’s Multi-Purpose Tap is a developing concept that would allow users to leverage the capability of NFC devices to allow both reading and writing of data across a connection, completing multiple actions at the same time. This would mean that transactions that would typically require multiple stages can be completed quickly and easily with ‘just one tap’.
This concept has the potential to revolutionise the checkout experience. Instead of scrambling to find loyalty cards or applicable coupons at the checkout, one simple transaction could simultaneously apply any relevant discounts or promotions, and collect loyalty points, then make the payment, in one single transaction. When tied to a digital identity, it would also validate any age-restricted products.
With multiple different markets and functionalities needing to align, defined and trusted standards play a critical role in specifying the guidelines of interaction between devices. This ensures that different applications do not disrupt or impact another service or component, ensuring that products perform as expected on a consistent basis, and deliver a seamless user experience regardless of the hardware used on either side of the transaction.
Momentum for Multi-Service
The digital push across almost every sector, supported by the landmark concept of multi-purpose tap, engages stakeholders from throughout the NFC value chain, and therefore redefines how each level of the payment stack interacts. Delivering next-generation, multi-service contactless payments requires careful cross-sector collaboration with industry associations such as NFC Forum playing an important role in bringing hardware manufacturers, software providers, end users, payments leaders and other stakeholders together to create interoperable standards that harmonise the ecosystem and help create seamless, secure payment experiences.
Learn more at nfc-forum.org
- Digital Payments
- Embedded Finance