NB: This is a guest article by Minoo Patel, senior director for travel transportation and logistics projects at NIIT Technologies.
One of the latest trends driving the mobile travel technology industry is the advent of Near Field Communications (NFC).
In short, NFC is a combination of hardware – in the form of a microchip in a smartphone – and software that enables one’s phone or tablet to act as a kind of electronic wallet.
The idea is for a consumer to be able to access his credit card information on the smartphone, thus turning the device into a virtual wallet that can be used for purchases at participating locations.
However, in order for this to work, the merchant needs specialized hardware that can communicate with the NFC chip within the phone.
With the recent announcement of their Wallet solution, power-player companies like Google, Apple and Microsoft have all signaled their belief in this technology.
Surveys of manufacturers of NFC-based mobile devices and their partners signal that we could see up to 300 million handsets in use, and NFC-based payments reaching a staggering $50 billion within the next three years.
In today’s travel technology landscape, NFC technologies hold immense relevance for the airline, railway, hospitality and rental car industries, since they can be used anywhere the customer needs to make a purchase.
This includes situations where one would otherwise reach for a credit card, a loyalty program card, a passport or driver’s license, a pre-paid card, a coupon or an incentive voucher.
For instance, such eWallet technology will soon become useful at airport kiosks, on-board an aircraft for food and beverages or for onboard entertainment and also for check-in and security checks at the airport, for access to lounges and limited access facilities.
In terms of using NFC for coupons and vouchers, the paperless aspect of eWallet technology is sure to catch on, as consumers no longer have to worry about paper clippings and losing tangible objects.
Not only does this technology make a lot more environmental-sense, the added consumer-convenience makes it more likely that customers will use the coupon or voucher. This higher potential conversion ratio, furthermore, provides a significant incentive for airlines and travel companies to invest in this technology.
Moreover, eWallet solutions offer travel providers a wealth of consumer data that would not have otherwise been available or would have required intensive data gathering technologies to procure.
Such information when combined with other data about customer location, travel plans, travel situation (i.e. delays, cancellations, unfulfilled upgrades, missed connections, etc.), and allows the travel company to instantaneously market to customers in ways that would not have been possible before, thus opening up new channels for ancillary revenues through cross-marketing with vendor partnerships.
While the benefits of NFC technologies are clear, it would be remiss to ignore the risks. We all know that information security is a continuing concern, as with most new and emerging technologies.
The idea that so much personal information can be located inside a single device sparks the most concern. There is also, the concern of unauthorized access to the device’s data.
One way NFC technologies address this risk is that the hardware and software function together only in very close proximity of each other – approximately 1.5 inches or less. So, if proper user identification is checked, the opportunity for unauthorized access to information is limited.
While the practical business applications of NFC technologies are still in nascent stages and questions still prevail about its ability to perform in large-scale situations, the potential of this technology is enormous, offering value for both the travel provider and the consumer.
As eWallet technologies continue to mature, providers will find applications of the technology that provide consumers with a value proposition they find appealing. We expect this technology to become as integral an element of the travel technology ecosystem as the smart-phone is today.
As Groupon and other similar services have shown, consumers are willing to try new services and utilize new technologies if there is enough meaningful financial incentive.
The trick for today’s travel providers will be to mine the reams of "big data" produced by eWallet transactions and other travel related transactions to deliver solution offerings targeted at addressing their immediate situational needs, and revolutionize how customers are marketed to today.
NB: This is a guest article by Minoo Patel, senior director for travel transportation and logistics projects at NIIT Technologies.
NB2: Pic from Visa Pay Fare project in NYC.