Are you tapping?

Sayonara swipe, so long insert, say hello to tap. How the future could save you time and money.
Laura Aiken
April 18, 2013
By
Adopting the latest technology is not just for the big boys of business. Everyone can put a horse in this race. Today, there’s one defining technology with the best odds in the sports book: near field communication (NFC). You know it as the little sound wave you may have on your bank cards, or as the pay wave option you have seen people using at Starbucks or some gas stations. NFC is the ESP of the account transaction world. One NFC chip enabled device can share anything with another enabled device just by touching it. The information can be exchanged between cards, smartphones, key fobs and terminals.

“Within 12 to 18 months, you will start to see this occurring in restaurants, where payment is made by tapping a card,” predicts Wayne Edwards, a partner in Merchant Mobile Apps. He adds: “We know what’s coming is going to involve mobile payments: what’s possible is anybody’s guess.”

NFC is also the technology behind mobile wallets. Mobile wallets allow users to download their payment and loyalty cards to their phone, eliminating the need to carry them. NFC technology has been around for a while, and detractors have pointed out that it hasn’t revolutionized the world yet, but the short-range and secure wireless system requires an equipment and mentality overhaul that will take time. For the moment, and as it appears from the actions of the major banking players, use of the technology is indeed expanding and moving forward.

Last November, Rogers and CIBC rolled out the country’s first “tap-and-go” digital payment app that allows credit card purchases through a smartphone. The Financial Post reported: “For Rogers, mobile payments represents a potentially massive new market. The wireless giant believes that by 2016, four in five devices will be equipped with NFC technology and total purchases will surge to $14.2-billion.”

RBC announced plans in late 2012 for its own virtual wallet. It is likely all of Canada’s big banks are sewing suits of similar stripes. In the U.S., Wal-Mart stores have been busy piloting a “Scan & Go” program that lets customers pay using their smartphones.

Zomaron Merchant Services, a company that clinched #15 on Profit magazine’s Hot 50 list in 2012, is right on the cusp of hot emerging technology. Zomaron aims to offer better rates and better customer service to merchants. Joseph Jongsma and Tarique Al Ansari founded the company in a joint decision to compete against the banks. 

Jongsma shares the current tide of enthusiasm for the possibilities NFC technology is bringing to the marketplace. For now, he says, we will have pay wave cards and mobile wallet smartphones in the market because older generations prefer to use the physical cards.

Darlene Wallace of Zomaron, a wireless technology vet, thinks men will be the first big adopters of the technology because it suits their need to carry less, being the purse-less sex of course. Convenience and speed will be two big advantages. The system is faster than either swiping or insert/pin payment.

“You’re going to see separate lines for this eventually. People are able to order their coffee and muffin and go into the store and go right up to that line to pay because it will be ready,” says Jongsma.

The latest hardware – terminals and the like – being deployed in the market are NFC equipped, says Jongsma. However, it’s unlikely your service provider is going to send you an upgraded terminal unless your current one breaks down, he adds, so if you want to get NFC-ready you may need to start the ball rolling yourself. As it filters through the bigger chains and big-box shops, more and more customers will expect it. Changing technology doesn’t necessarily mean higher prices. An NFC terminal is pretty much the same price as what merchants are paying now, says Jongsma.

    “If it costs the same, it makes sense to get that technology into your business right away.”

The virtual merchant: ideal for pizza delivery
The market is seeing growing use of NFC, or tap and pay/pay wave technology, and mobile wallets, which download the user’s banks cards to their smartphone enabling it to be used as a payment device. It seems the ultimate fusion of these technologies is the virtual merchant, offered by Zomaron, which may have some big appeal for pizzerias with delivery drivers.

Virtual merchant mobile processing allows delivery drivers to accept payment at the door through their own smartphone. The payment information collected is stored on a cloud, and drivers use a server ID through an app to make transactions. When using virtual merchant, operators would not need to send out drivers with long-range terminals, eliminating the monthly fees associated with these units. Operators can get reports and see live transactions through this system as well.

Wallace notes that the system allows for signature capture and the virtual merchant costs 80 per cent less in hardware costs than what a pizzeria with multiple drivers on the road would be paying today. Pricing is also linked to sales volume.

Currently, virtual merchant is able to process Visa and MasterCard only, as is much NFC technology, but Jongsma says things are about to change. 

  “In July, Zomaron is expected to be one of the only companies in Canada having access to Interac debit, Visa and MasterCard through chip technology through the phone and that’s huge. That’s going to change the market incredibly.”

The new loyalty card
Payment service isn’t the only market tapping into tap and pay. The loyalty program market is also coming up with new ways to foster patronage. Spoonity, an Ottawa-based company founded by Max Bailey and Myron Gomes, offer a tablet and key fob set up for restaurants and guests to facilitate an easy rewards program. Spoonity got rolling in early 2011, then launched in November of that year with four restaurants on board. NFC was selected as the technology of choice due to its simplicity and growth in the mobile space, says Bailey, who suspects it will become the dominant player in this arena.  

Single independents pay between $60 to $100 a month for the tablet, says Bailey, with small to medium-sized restaurants being the company’s target market, but they are also equipped to roll the automated system out for a chain. The cost is linked to features, he says. For small shops, it will replace their punch card, and the amount of report data they obtain varies depending on the package signed on for.    Operators can learn who their customers are, how many are earning rewards, e-mail addresses, frequency and who has stopped coming in the last 30, 60 or 90 days. Then, there is the option of sending those lapsed customers messages. 

Spoonity rewards customers through three spoon levels: a teaspoon for occasional guests, a tablespoon for loyal customers and a big spoon for regulars. The system helps enable servers and delivery staff address customers by name. The company has a little over 100 restaurants confirmed for this year, says Bailey.

While emerging technology can seem like something in the shadows of everyday business, it is only a matter of time before it becomes a customer demand. It seems to be the generally accepted and agreed upon future that one day the smartphone will be the dominant way to pay. It could be the right horse to bet on in the race. Right now, having the latest technology could not only set you apart from the competition, but also save you money. This raises the question, why wait?

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