#3 – NFC takes off, spearheaded by mobile loyalty cards

Summary: Finally, 2014 will be the year where NFC would start being a relevant mobile technology for consumers. However, such relevance would not start with mobile NFC payments, digital identity, or ticketing. It would start from mobile loyalty cards.

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Ecosystem complexity and inability to reach global scale have been two of the key limitations for the adoption of NFC mobile services. In the last few months operating system providers and device vendors have introduced few innovations and taken new approaches that are set to change the landscape of NFC applications.

For example, Google (following what RIM had already done) opened up the Android APIs to allow developers to fully use NFC and let any Android app to communicate with Point of Sale (POS) devices over NFC. Such a feature was previously reserved to applications that were hosted within a physical secure environment (e.g. UICC or embedded secure element). In addition to that Samsung added an embedded secure element to every Galaxy 3 and 4 devices, thus removing the need for an operator controlled secure element.

Northstream predicts that mobile loyalty cards will be the first set of applications to benefit from the aforementioned innovations. Now that dependencies on operators are being removed, retailers will be able to create their own application and deploy local NFC loyalty mobile applications, which work with the existing POS infrastructure, without the need of coordination with too many other ecosystem players. In fact, applications will have the flexibility to decide where to keep the user identity/credentials. Cloud based loyalty programs are set to emerge and retailers (or businesses) will have the opportunity to deploy solutions at both global and local scale. Considering that almost every new POS is NFC enabled, retailers can really start deploying mobile NFC based loyalty solutions with cloud based authentication as today.

Northstream also predicts that the adoption of NFC loyalty solutions will pave the road for consumers to accept more NFC based interactions at the point of sales. This will drive the adoption of mobile NFC for other use cases such as ticketing, access control, and payment. Thanks to device vendors push of embedded secure elements, banks have already started deploying credit cards to handsets thus avoiding complex ecosystem setups with mobile network operators.

For the Telecom industry the biggest impact is indeed the shift of focus away from physical and removal of the secure element (i.e. UICC) to embedded/software security and ultimately to cloud based solutions. Northstream also believes that cloud based solutions driven by OTT players are set to finally allow selected NFC applications to scale both at global and local level.

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