Apple is well known for its "reality distortion field," a term applied to products that seem to appeal more because of Apple's aura of coolness than for the actual features of the product. But Apple Pay is not a case of Apple suddenly making mobile payments cool consumers were already on board with the technology, even if they didn't know what to call it.
Many in the payments industry looked to Apple to kick-start Near Field Communication use for payments, considering the tech too cumbersome to deploy without iPhone compatibility. But consumers surveyed before Apple Pay's unveiling preferred NFC by a wide margin over options such as QR codes and Bluetooth, according to Strategy Analytics.
In a survey of approximately 1,074 North American consumers with a range of pre-existing knowledge about mobile payments technology, 45% said they had used contactless NFC technology through their smartphone to make a purchase, while more than 75% said they were "very satisfied" with the overall NFC experience in a store.
NFC stood out in various categories regarding the shopping experience, including using the technology for messages about in-store deals and earning loyalty points, said Christopher Dodge, associate director of user experience practice for Strategy Analytics, during a Feb. 12 webinar to discuss the research. The NFC Forum commissioned the research, but that was not disclosed to participants to avoid swaying opinion. All of the consumer surveys took place prior to Apple Pay's debut in October 2014, but it did not deter NFC from standing out.
"It would not really be fair to say how much higher NFC would rate if Apple Pay had been available," Dodge said. "There is no doubt that Apple Pay has created an even greater awareness of NFC, but anything we would say about how it would have affected this research would just be an assumption."
Still, the numbers favoring NFC over other methods such as QR codes is good news for other NFC-driven wallets like Google Wallet and Softcard.
It also suggests the Merchant Customer Exchange should pursue NFC more vigorously. The venture, which is backed by major retailers such as Walmart and Target, will use QR codes to execute payments when its CurrentC system launches this year. It's hedging its bets in the wake of Apple Pay's debut, saying it may reconsider NFC. But some MCX retailers have turned off NFC readers at the point of sale in a show of loyalty to the joint venture.
"There are places within the retail environment where multiple interactive technologies exist and certainly QR codes, within some regions, are something consumers are very comfortable with," said Matthew Bright, retail working group chairman for the NFC Forum. "NFC is a new technology to some consumers, but once they are introduced to it, they develop a preference for it very quickly."
Even though QR codes are considered an older technology, some retailers may view it as a gateway to omni-channel experiences in their stores, Bright said.
The Strategy Analytics numbers could sway some opinions, as 43% of consumers said they would prefer NFC to provide quick access to information about deals and loyalty rewards in the store. Only 25% chose QR codes as the preferred method, with some detractors saying QR codes on a wall or at odd angles make it difficult to scan with a smartphone.
Consumers like NFC even more as a way to enable "simple and quick access" to information related to a specific product, such as purchasing products needed for a certain recipe. Fifty percent chose NFC, while 23% preferred QR codes for that task.
More than 60% of consumers expressed an interest in using NFC as part of a digital shopping cart to keep track of products and complete the transaction. In a similar manner, 60% of consumers were interested in using NFC to order and pay for replacement parts or accessories for products, such as ink cartridges or toners, simply by tapping on an NFC sticker on the products at home.
Consumers did not indicate any concerns about NFC or QR code security, but expressed privacy concerns about Bluetooth, the technology that retailers often use to communicate information between point of sale hardware and phones.
"They did not like the idea of a technology tracking them or watching where they were inside of a store" and then unexpectedly pushing a message to them, Dodge said.
However, retailers should be aware that NFC can integrate with Bluetooth to help consumers make payments, obtain product information, or receive merchant deals in the aisles of the stores, Dodge added.