Introduction
Near Field Communication (NFC) refers to particular standards that apply to smartphones and related devices. These devices apply radio communication technologies to communicate with one another when in close range. The communication between the two devices is done either through a short wave or by a simple touch. NFC technologies include contactless transactions, data transfer and Wi-Fi set up that are facilitated by mobile handsets compatible with NFC software. One of the major functionalities of these technologies includes mobile payments services. This is facilitated by an NFC chip embedded into a store counter, a product tag or a card, and a phone empowered with NFC functionalities for a payment to be affected (Coskun et al., 2011).
Discussion of the technology
Implementation of NFC in a mobile phone is achieved through either complete integration into the handset, SIM card or the MicroSD. Similarly, the application of NFC in mobile phones also takes three forms. First is the card emulation mode in which the NFC devices assume the functionalities of credit cards and debit cards. This, consequently, enables the âmobile walletâ. Second is the reader mode that allows the NFC gadgets to decode the information on tags in a much similar way to the barcode technology. Lastly, the two devices could share information amongst themselves directly. NFC is a form of Radio Frequency Identification (RFID) that is used for short distances of about 4 inches. It is preferred to the ordinary RFID as it enhances security. The radio waves are transmitted only across short distances and, therefore, reduce the possibility of the information being tapped by malicious people using specialised gadgets. One of the major NFC mobile technologies is the PayPass.
PayPass
MasterCard institution had initially come up with the PayPass credit and debit cards where payment for any transactions was effected by a tap rather than the normal swiping of the card. Recently, however, it has incorporated NFC mobile technology in mobile phones so as to assume the same contactless functionalities. Such phones are referred to as PayPass-enabled (Coskun et al., 2011).
Application
The Customer waives the PayPass-enabled phone in front of the detector to make the appropriate payment. The reader receives the payment details and carries out the transaction. The transaction process is similar to that of normal debit cards. (Ahson and Ilyas, 2009)
Rogerâs theory of diffusion innovations model
Rogerâs theory breaks down the diffusion process into innovation, the applicable social system, communication channels relevant to the social system concerned and the time is taken. In our case, NFC technology is the innovation; the social system refers to the users of the technology while channels include the terminals at which the technology is applicable. Time, on the other hand, denotes the period taken for the product to gain popularity in the market. The theory states that the frequency at which customers adopt a product over time follows a normal distribution curve with the cumulative frequency forming an S-shaped pattern. Based on the level of innovativeness and standard deviations from the mean, he classifies the adopters into five categories. The innovators, who are fast to try the technology, makeup 2.5%. The others who include the early adapters, the early majority, and the late majority make up13.5%, 34% and 34% respectively. The laggards are the last to adopt the technology and makeup 16% (Rogers, 1995).
The use of NFC mobile technology has also followed the same curve in the Australian market. There are those customers who are always first in trying out a new product. They include the organisation staff since they are the very fast people to learn of the technology. They have the advantage of receiving the products free or at a subsidised price form the company. This group forms the innovators. Secondly, the early adapters include the elite members of the Australian market with enough funds to experiment on any new product. They look for any service that tries to simplify their life. NFC mobile payment option is one such product. With NFC, they do not have to forget their card at the shopping mall after handing it to over the cashier for payment. Similarly, they do not have to regret a lost opportunity of buying a commodity having forgotten their wallet at home since they rarely forget their phones. This group also includes relatives and close friends to the company staff. The laggards in the adoption of the technology include those who barely use the product. For instance, they do not own a car and, therefore, may never require the services of an Epump.
The diffusion of NFC mobile payment innovation is dependent on the banks, retailers such as Woolworths, some mobile operators and other payment organisations such as PayPal. Customers tend to trust banks and any means of payment approved by the bank is also perceived as trustworthy. The retailers and the mobile subscribers limit the customer by the payment option applicable, thus, limiting the whole process of new product adoption.
Link to managerial theories and concepts
Managerial theories and concepts form the backbone of how different organisations run. NFC technology has greatly improved the efficiency of management theories. For instance, the scientific management theory that expects the top management to concentrate on the scientific part of the job work while the employers concentrate on the labor is greatly influenced. The amount of workload for the employee at the finance section is reduced since the transactions are automated. Moreover, it reduces the human errors that could arise in the transaction process, thus, increasing productivity (Masson et al., 2010).
The contingency theory of management recognises there is no best way of management. Different situations often have different optimal management methods. The suitability of management practice is dependent on the information available to the manager and the decisions reached based on that decision. The use of readers equipped with NFC capabilities ensures all transactions are recorded and the information is available for decision making by the manager.
Life cycle benefits
The life cycle benefits of the NFC technology accrue to several parties in different ways. These parties include the mobile users, the mobile operators, the service providers and the business owners. Mobile users keep track of the different card information more easily and have their spending regulated. Moreover, their security is enhanced through recoverable applications in case the phone is stolen. Service providers, on the other hand, can easily reach their customers more cost-effectively besides being in a position to offer quality services.
Challenges faced by NFC mobile Technology
The main factor that reduces the rate of acceptance of the mobile payment option is insecurity. A large majority of customers are afraid of the risk of having all their access codes in one gadget. The NFC technology allows the user to have several payment options on the phone, for instance, Visa card and MasterCard PayPass. Secondly, there are very few phones that are sold with a proximity radio, which forms an integral part of the NFC technology. The alternative solution is to integrate the chip with the SIM card, although, the antenna always raises the issue. A SIM card may, therefore, fail to capture the radio waves as conveniently as the handset. Similarly, the rate of adoption of the NFC mobile technology is not as fast as expected. The Australian market seems to be responding slowly due to the existence of other payment methods such as ordinary credit cards, debit cards and OTC retail.
Increasing the competitiveness
There are many payment methods existing in the Australian market that include the direct debit cards, credit cards and bill payment that can be used over the internet (Rawani, 2010). In order to remain relevant to the market, NFC technologies keep on improving while adding a number of functionalities. For instance, the incorporation of the card into the SIM card is a new feature that has made the technology more flexible. This will ensure as the companies increase their profits due to mobile purchases, NFC technology also achieves its purpose. Its major competing technology in the mobile sector is the icache geode that is incorporated into the iPhone case. This simply links all the cards into one single gadget-the iPhone case.
NFCâs future in the Australian market
NFC technologies are not new in the Australian market. However, they seem to be the new thing in businesses and many retail centers. People are beginning to purchase handsets with inbuilt NFC functionalities in readiness for whatever innovation they may launch. Googleâs Android, the mobile software creating waves, has also ensured it is compatible with the NFC functionalities (NFC Forum, 2012). This implies that the market is ready for the adoption of the NFC technology, not only in mobile payment but also in mobile ticketing and data transfer. Though the change may not be as fast as expected, the new adoption of the technology by virtually all the payment companies and retail centers such as Woolworths indicates how much the Australian market is eager to use the technology. Therefore, NFCâs future in this market is more than just bright.
References
Ahson, S. A. & Ilyas, M 2009, Near Field Communications Handbook, Taylor & Francis, UK.
Coskun, V., OK, K. & Ozdenizci, B 2011, Near Field Communication (Nfc): From Theory to Practice, John Wiley & Sons, New York, NY.
Masson, P. L., Weil, B. & Hatchuel, A 2010. Strategic Management of Innovation and Design, Cambridge University Press, Cambridge.
NFC White papers 2012, NFC Forum, Web.
Rawani, C. Z 2010, Management Technology and Applications, Research Publishing Services, Chicago.
Rogers, E. M 1995, Diffusion of Innovations, Free Press, New york, NY.