ARTS executive director discusses near field communications in retail

The National Retail Federation’s Assocation for Retail Technology Standards (ARTS) has always been on the forefront when it comes to advancing the latest retail technology, including introducing standard RFPs for retailers and creating a first-of-its kind Mobile Retail Blueprint, which offers best practices and learning opportunities for retailers around the world entering the mobile space.

When it comes to retail technology, ARTS doesn’t miss a beat.  The Executive Director of ARTS, Richard Mader, has been around since the association’s inception in 1993 and has seen it all throughout his career as a retail technology buff.  With mobile technology rapidly changing the retail landscape, ARTS did not hesitate when recently asked to partner with a group which will ultimately standardize how retailers and customers use near field communications, or contactless payments, in the future.  In a Q&A, Mader explains more about this coveted partnership with the NFC Forum, a group whose sole mission is to advance the use of short-range wireless interactions in consumer electronics, mobile devices and PCs, and shares why consumers should care about near field communications.

ARTS recently announced it will be partnering with the NFC Forum to promote and advance the use and standardization of Near Field Communications, or NFC. What is NFC and who is the NFC Forum?

The NFC Forum is a group formed to advance the use of Near Field Communication technology. ARTS has partnered with this group in an effort to educate retailers about the latest mobile technology developments.

In retail technology speak, NFC is the de facto standard for secure communication between mobile phones and other devices such as retailer point of sale. In consumer terms, NFC allows shoppers to pay for their merchandise through their mobile device. The “mobile wallet” will essentially store a person’s credit, debit card and other loyalty information digitally within the actual device, enabling consumers to simply swipe their phone over a pin pad and secure their purchase right then and there without having to dig through their purse or pockets for their actual wallet. NFC will revolutionize the shopping experience like never before. Near field communications is also known as a contactless payment method.

The NFC Forum isn’t a new partner to ARTS – they were instrumental in assisting with the development of the Mobile Retailing Blueprint. What will this specific partnership entail and what can retailers and their business partners look forward to?

We’re really looking forward to partnering with such a world-renowned group as the NFC Forum. In 2009, in response to membership requests, NRF and ARTS decided to develop a Mobile Blueprint to educate retailers about the existing landscape and projected future of mobile in retail, and one of the first organizations to agree to participate was the NFC Forum. They were essential to the development and instrumental in recruiting the right partners needed to get the job done.

Specifically, this partnership will focus on information exchange through research, case examples, implementation issues and education. Many domestic and global retailers and their business partners will be able to actively participate in the partnership and provide their thoughts and insight about our efforts to create an NFC standard.

Are there plans in place today that could make NFC a reality for consumers in the near future? Who are the leaders in the mobile arena when it comes to being close to offering this type of technology?

Right now, this concept is already a reality in Japan and there’s a chance we could see global implementation through 2011 and next year.

Android, Microsoft and Research In Motion have announced support for NFC and Nokia is beginning to place NFC chips in their phones. Other handset manufactures are also doing so in select phone models.  Unfortunately, very few NFC readers are installed at retailers’ point-of-sale locations – or check-out registers – at this time. It is estimated that only 500,000 of the millions of point-of-sale terminals are equipped to handle NFC purchases right now. Purchase and installation of these devices is a major expense for retailers. Obviously consumer demand will help drive retailers to make this a reality in their current stores across the country, and maybe even across the world.

Do you think the average consumer will bite at this or is it too technical and advanced for them?

A recent survey in Canada reported 34 percent of consumers would rather pay by phone than carry around cash, and BIGresearch recently found that nearly 60 percent of consumers say they would be somewhat or very comfortable paying for their transaction at the store with their smartphone or tablet device. Once shoppers realize the benefits of a “mobile wallet,” just like online shopping, there’ll be even more demand for it.

The NFC Forum lists some key benefits of NFC technology for consumers. I thought I’d share a few:

• Intuitive: NFC interactions require no more than a simple touch

• Versatile: NFC is ideally suited to the broadest range of industries, environments and uses

• Open and standards-based: The underlying layers of NFC technology follow universally implemented ISO, ECMA, and ETSI standards

• Technology-enabling: NFC facilitates fast and simple setup of wireless technologies, such as Bluetooth, Wi-Fi, etc.

• Inherently secure: NFC transmissions are short range (from a touch to a few centimeters)

• Interoperable: NFC works with existing contactless card technologies

• Security-ready: NFC has built-in capabilities to support secure applications

ARTS was created to develop best practices, technology standards and educational programs for retailers and vendors across the world. What can you tell us about movement towards making an NFC standard for members and retailers everywhere?

The Forum has been working for over five years to make this possible. I can tell you from almost 20 years of working with ARTS and technology standards, creating a standard is only the first step. Next you need conformance testing to provide purchasers assurance that the device accurately implements the standards. NFC Forum has recently completed phase one of conformance testing. The third step is marketing. A candle hidden under a bushel does not shine any light – consumers, chip makers, handset manufactures and mobile operating systems such as RIM, Android, Windows and Apple must be aware of the advantages of NFC and in turn, provide the build support necessary for their products. The good news is that the NFC Forum is now focused on the marketing component and has high hopes that 2011 will be a BIG year for adoption of NFC.