IEEE Technology and Society Magazine - Fall 2013 - 27

and applications. NfC applications should configure
the environment so that it is difficult for other applications to access sensitive data, and data exchange
should ensure data integrity, confidentiality, and
non-repudiation.
The second challenge is to change consumer behavior in the payment arena. Some scholars claim that
the consumer barrier to NfC payment is low. This is
because payment requires only an ID and/or PIN, and
does not require a credit card number and/or delivery
address. Some claim that the payment transaction per
se does not differ from conventional payment methods, and therefore learning how to use NfC payments
will be relatively easy. In fact, NfC can circumvent
the learning processes associated with scanning bar
codes and short message service text. An empirical
study suggests that NfC users were satisfied with its
quick response and ease of use [4]. Even though the
consumer barrier to NfC payment may be low, consumers must change their behavior for the successful
commercialization of NfC. Two measures must be
implemented to induce this behavior change. first,
consumers need rewards, such as coupons or lower
commission, for using NfC. Providers of mobile wireless payments can also offer incentives to consumers
for using their mobile phones for transactions by providing discounts, rebates, or loyalty points that can be
redeemed for desirable rewards if the handset is used
to make purchases. Japan's NTT DoCoMo provides
loyalty points that can be redeemed against future
handset purchase if subscribers use NTT DoCoMo's
payment service DCMX. Second, NfC payments
must be smart (i.e., one click should suffice to process
payment, loyalty points, and rewards).
Last, for consumers to adopt NfC for applications beyond payment, the NfC devices must be
automatic, so that consumers do not have to manually set devices functions. Some examples could
be as follows: the phone goes into "good manners"
mode, disabling the automatic camera function when
the user enters a library or dimming LCD brightness
upon entering a movie theater; the read and write
external memory functions and automatic camera
function are disabled when the users is in security
area. These functions must not require intentional
manipulation by consumers and must be aligned with
consumers' intuition for ease of adoption. Mobile
commerce phones have not been widely used in the
past because they required additional subscriptions.
The lesson is that non-payment NfC applications
may vitalize the NfC market.

Direction of NFC Commercialization:
Beyond Payment
A payment system is not a prerequisite for NfC commercialization. Apple can use NfC to accomplish
IEEE TECHNOLOGY AND SOCIETY MAGAZINE

fALL 2013

their objective of a digital platform and establish a
hub to connect the iPod, iPhone, iPad, and iTunes.
Google will use NfC for location-based marketing.
In this case, having payment information will clearly
enhance the quality of the service by deriving optimal
target advertising from two types of powerful information: payment and location. Although payment
has been nominated as the first candidate for an NfC
application, firms do not have to be restricted to payment. In fact, firms must develop applications beyond
payment to hedge the risk of NfC failing to lead the
payment market. Once NfC is embedded in a mobile
phone, it will become the core component, regardless
of its applications (as in the case of cameras and multimedia chips). Whether it was intended or not, NfC
embedding will significantly reduce NfC cost through
economies of scale and will allow NfC to become the
core component of a handset. The commissions from
NfC may be not significant for mobile network operators and the profit from commissions cannot justify
mobile network operators pushing for NfC payment.
Thus, mobile network operators have three options:
1) push the NfC payment application and later expand
into non-payment applications, 2) focus on non-payment applications to create new business model; or
3) enter into the NfC chip market by developing and
producing their own NfC. We emphasize that the priority for NfC application development depends on
the relationship between user preferences (including
end users and retailers) and service characteristics.

Direction of NFC Commercialization:
Prospective New Business
Model - The Local Ads Market
With mobile network operators' participation, a
mobile payment business can identify a consumer's
consumption purchase patterns using location information and past payment history. This is expected to
provide extremely customized target advertising such
as the world has never seen before [13]. for example,
if a woman in her twenties had a meal in a restaurant, she could be offered a coupon for a coffee shop.
Another example would be issuing a discount voucher
for a shop in a shopping complex to a customer of
another shop in the complex. The profitability of businesses with low operation rates and high fixed costs
(e.g., cinema) are expected to increase through targeted ads, and increased profitability is expected to
attract more advertisers. This phenomenon is observed
in today's widespread social commerce. Advertisers
post products/services on sites at large discounts to
attract customers to their businesses. The businesses
can retain these customers in the future and generate
future revenue. The NfC case is expected to be similar. from the user's perspective, receiving a coupon
that suits his/her needs is more useful and acceptable.
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Table of Contents for the Digital Edition of IEEE Technology and Society Magazine - Fall 2013