Five Ways Austin Can Springboard Mobile Wallet Adoption

by

Analyst, Software Advice

When any new technology emerges, there’s much postulating about “what if’s” and “could be’s.” At this point, that’s about all we have when it comes to near field communication (NFC) in the United States. However, Isis – the joint mobile payments venture between AT&T, T-Mobile, and Verizon – is looking to solidify NFC adoption among the techno-savvy in Austin, Texas.

Austin is one of two announced pilot cities for the Isis mobile wallet technology (with Salt Lake City the second). While NFC is one of the most talked about technology trends for retail and it's expected to be a $214 billion market by 2015, it has yet to pick up any real steam in the states.

Here’s a look at how Isis thinks NFC can change retail:

If any city could put NFC on the map, however, chances are Austin could do it. It is, after all, a college town, state capital, Live Music Capital of the World, and business and tech hotspot. Plus, it’s pretty weird. It’s the perfect blend of entrepreneurs, geeks, hippies, outdoor enthusiasts, and hipsters who love cool, new technology.

Let’s not forget that Austin was the backdrop of Twitter’s “birth” in 2007. Although Twitter had launched about nine months before Austin’s South by Southwest (SXSW) interactive festival, Austin helped put tweeting on the map. Curious SXSW goers took their turn at crafting 140-character messages, following, and retweeting attendees. The result: traffic tripled during the conference. The rest, as they say, is history.

Is Austin’s Funky Vibe Open for NFC Adoption?

According to Isis, Austin was chosen because they think the city will net them the greatest market adoption. Austin’s demographics, business and technology opportunities, and unique culture make it a great launch pad for Isis and mobile payments.

Jaymee Johnson, head of marketing for Isis, adds:

“Isis selected Austin for its culture of innovation, thriving business community, entrepreneurial spirit and early adopters. Austin is home to progressive, tech savvy consumers and merchants – a key demographic for Isis’ mobile commerce program.

Sounds like Isis and Austin will be a good mix, but the question remains: how will this new technology be integrated into the city’s fabric? Beyond the obvious of having a robust infrastructure, long-term success of NFCs requires that consumers find the technology relevant to their daily lives. In the same way we can’t help but tweet how amazing our lunch was, NFC vendors have to create the same level of wide-scale market integration.

So, here are five ways I believe Isis, and other businesses looking to springboard their technologies, can capitalize on Austin’s unique vibe and receive successful adoption.

1. Spread the Word with Festivals and Conferences

Austin hosts the Austin City Limits musical festival every fall and the SXSW music, film, and interactive expo every March. Both of these festivals would be a great launch pad for Isis to promote NFC to a mass audience.

Austin City Limits has been the city’s premier music festival for the past 10 years. Over 75,000 patrons attend each of the festival’s three days. It’s essentially a frenzy of eating, drinking, dancing, singing, and shopping. Oh, and it’s cash only. While seasoned festival goers bring cash to accommodate their favorite activities, they also all bring cell phones. What better way to create NFC buzz than to allow consumers to fly through the lines and wave their phones to purchase a mighty cone?

And there’s the Holy Grail of interactive media, film, and music festivals, otherwise known as SXSW. Selective placement of NFC terminals throughout the SXSW interactive conference could get techies and industry bloggers hyped about the service (it certainly worked for Twitter). While Isis hasn’t said whether they will have a presence at the festival, I think it would be a shot in the foot to skip out.

2. Find Innovative Ways to Integrate NFC With the University

Programs such as the Austin Technology Incubator have been innovating bright ideas for over 20 years. A 2010 graduate of the incubator, Austin-based RFMicron is now one of the leading providers of hardware/software bundles used for RFID-based asset tracking. To incentivize and increase NFC adoption, businesses will have to propose ways to incorporate phones into the retail experience. Combining RFID technologies with NFC payments is one way they can do this.

With more than 50,000 students, The University of Texas at Austin is clearly brimming with opportunity. If you’ve dared step in the city limits on a Saturday in September, then you know there are well over 100,000 football fans that don the city. NFC would be an extremely convenient way to grab a quick box of popcorn before the next touchdown. Add in the fact that UT is #1 in merchandising sales of all U.S. colleges, and has held the top spot for five years. So, why not tap into this fervor, too? Pair NFC with that burnt orange T-shirt everyone is buying and you have great potential.

3. Create NFC Purchasing Habits at Hip Food Venues

Austin has some great food and restaurant opportunities for all occasions and budgets. Like Portland, LA, and many other US cities, Austin has seen a resurgence of mobile food trucks. And while many are cooking up new and innovative foods for cheap eats on the go, they’re stuck to cash transactions for a number of a reasons, including hardware limitations, implementation expense, and a hard-nosed defiance in paying credit card processing fees.

Simply put, business owners would have to understand how NFC could bring more customers to rationalize the investment. A 2010 study by the Journal of Consumer research indicated that consumers were more likely to make an impulsive “unhealthy” purchase on credit than cash. Would the same hold true for NFC? And would this be enough to entice mobile food operators to adopt the technology at the chance of converting the all-things-healthy-and-organic consumers to buy a Hey! Cupcake?

4. Integrate NFC into High-End Supermarkets

We recently wrote about the potential NFC has in a grocery store environment. And when it comes to food, Austin prides itself on having the best of the best. After all, Austin is the world headquarters of Whole Foods and home to other higher-end grocers, like HEB’s Central Market.

Near Field Communications World recently wrote about the innovative use of Quick Response (QR) codes by the second largest supermarket chain in Korea. Using a series of images, the chain recreated a grocery store layout inside a subway station, allowing commuters to take pictures of food they wanted to purchase. The food was delivered to their home that evening.

Combine ideas like this with NFC and you have the ability to instantly track purchases and provide loyalty rewards and coupon promotions – all fuel to add to NFC’s revenue fire. Companies like ViVOtech will need to push retailers to take the plunge to test the waters on NFC payment and promotion opportunities.

5. Attract the NFC Crowd in Merchant Neighborhoods

Austin’s South Congress Avenue (or “SoCo” to the locals) is known for its art mavens, fashionistas, and savvy shoppers. Many frequent the small apparel shops and merchant tables commuting from work, after a bike ride, or on the way to meet up with friends. While strolling the stores, most are taking pictures, texting, or chatting on their phones.

What if someone sent a picture of a necklace to a friend asking her opinion, and then her phone prompted her to purchase the piece of jewelry? Pending friend approval, this sale would close in an instant. To gain widespread adoption, NFC will need to capitalize on such opportunities to easily convert casual browsers into paying shoppers.

Austin’s Adoption is Key to U.S. Success

Given the payment options available at the point of sale, NFC is just another to add to the list. In the same way American Express made it cool to be a cardholder, NFC vendors must capture the same level of enthusiasm to convert cash and card shoppers to mobile payments.

While Austinites are certainly open-minded, savvy, and quick to evangelise cool things (and the infrastructure is certainly strong here), widespread adoption across the United States will require NFC vendors to find that right blend of backbone with consumer readiness and desire.

For now, however, we’ll just have to sit back and continue to ask our “what if’s.” So, what do you think: are US consumers ready for NFC, and is Austin ready to lead the way? Share your thoughts below.

 
  • Samantha White

    I definitely think that Austin could make this happen. As you said, we do have a wide mix of people in and around the city that would most definitely be interested in using the system.

    Personally, it scares me. I don’t like that it’s one more way for somebody to steal my money. As someone who frequently misplaces my phone, it would be just that much easier for somebody to infiltrate my bank account.

    I hate the self checkouts that stores already have, and I hate the idea of never getting personal interaction when making purchases. What about the jobs that will be lost when systems like this are implemented?

    It’s not as if this makes our lives that much easier. We will carry wallets until we no longer have to carry photo IDs and drivers licenses. I like my wallet and I like my cash. I’m anti-technology in a general sense.

  • http://www.facebook.com/profile.php?id=1201460728 Jennifer Rani Gooding

    Very thorough article — much more than just a review on a product, but a realistic look into what it will take for this to thrive. Interesting point on the ‘impulse’ buys being a motivator, too.

  • http://www.fenbrook.com Trevor Crotch-Harvey

    I think NFC deployment will be all about critical mass.  If Austin has several NFC strands going, which feed off each other, it could be well placed to be an early adopter city.  The French government is doing this in Nice, with its Citizi initiative.  This is rather a top down approach, whereas I expect Austin to be bottom up.  Both will have their place and it will be fascinating to see what unfolds.

    This is an interesting article and I’ve reviewed it at length, especially from a UK perspective, on my own blog, which you can see at: http://www.fenbrook.com/nfc-in-austin-texas

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