Article

Commentary: Is the US ready for cashless kiosks?

Mobile payments and NFC is on the way; how quickly will the kiosk sector get on board?

August 15, 2011

by Richard Bernstein

Phoenix Kiosk

Is the industry ready to build kiosks compatible with cashless payments?

If we lived in Japan, the answer would certainly be "yes." Cell phone-based payments have become the standard means of paying for just about anything in Japan. The Times Online notes that of Japan's six competing cashless payment systems, "many" are built into wireless phones. In total, Japanese consumers are estimated to carry some 120 million cashless payment chips.

In the United States, companies like PayPal are making it easy to make purchases and swap money using only a mobile phone. Rather than trying to replace credit and debit cards, American companies like Square and GoPayment are equipping phones to work with them.

While there is not yet a true "standard," there are several companies eagerly striving toward it.

NFC is a short-range, high-frequency, wireless communication technology which enables the exchange of data between devices over about a 4-inch distance. This technology is an extension of RFID that combines the interface of a smartcard and reader into a single device. An NFC device can communicate with both existing contactless infrastructure already in use for public transportation and payment. NFC is primarily aimed at usage in mobile phones.

There are currently three specific uses for NFC:

1. Card Emulation – the NFC device behaves like an existing contactless card.
2. P2P mode – two NFC devices communicate together and exchange communication.
3. Reader Mode – the NFC device is active and reads a passive RFID tag, for example using it as an interactive advertising campaign.

What this translates to (application wise) are endless opportunities:

1. Mobile ticketing in public transport, such as using your phone as a boarding pass.
2. Mobile payments where the device acts as a debit/credit card.
3. Smart posters/billboards that generate additional information (targeted or otherwise) where space may be limited.
4. Electronic ticketing for sporting events/concerts.
5. Electronic keys that replace car/house/office keys (a security code system may be utilized for applications that demand it).

Points to Consider:

1. Almost everyone carries their mobile phone with them everywhere they go. Traditionally, fast, convenient, on-the-go payments and consumer activity require some type of additional hardware. By integrating payments with a device that is already on the person, the problem of available hardware is solved.
2. This technology is here and already exists in both hardware and software form. Standardization is the current bottleneck preventing these technologies from rapidly moving forward.
3. By enabling payments via smartphones, the number of payment options increases. Cash, plastic and now smartphones will ensure options are available when you might not have access to the others.
4. Mobile payments will never be as universally accepted as cash. Cash is king, accepted everywhere. It will take a bit of time for mobile payments to become universally accepted as common place.
5. Security will always be a concern when linking to financial accounts. However these concerns are consistently being addressed and will be made very safe to use. A new development will allow owners to "load funds" onto their phone. This "stored value" approach as well as PIN security may ease security concerns.

In Summary

Mobile payments are here and have been well adopted in many parts of Asia. The U.S. has traditionally been slower at adapting to changes and technological advancements. However slow that adaption process is, there will always be early adopters eager to peruse these advancements.

It will not be too long before mobile payments are the norm in kiosk solutions. Companies should always be looking toward what the future holds and be one step ahead. 

Bernstein is director of marketing at Phoenix Kiosk, with more thana decade of marketing, management and writing experience.

For more information on current and future kiosk trends, visit our Trends/Statistics research center.