American Marketer


Mobile payments beyond NFC: The case for beacons

July 29, 2016

David Fernandez is CEO of Netclearance David Fernandez is CEO of Netclearance


By David Fernandez

Point-of-sale proximity payments use beacon technology that allows mobile payments to be accepted not just using NFC technology such as Apple Pay, but also Bluetooth and Wi-Fi, enabling frictionless payments and making it more convenient for customers.

Having a POS system in place with multiple options of Bluetooth, Wi-Fi and NFC means the system is phone agnostic and can operate outside the walled gardens of Apple’s NFC technology. This makes it a far better proposition for retailers. It is not only cheaper but faster, and less time paying means shorter queues at the tills.

Overcoming security fears
A point-of-sale proximity payment is inherently more secure than even Apple Pay as it can avoid credit cards altogether, meaning tokenized cards details do not need to be held in a payment database – a theoretical weak link in Apple Pay. Payments are taken directly from the payer’s bank account, with the ability to check the balance before making the payment.

Banks can make sure they keep the customer
It is no secret that banks have concerns that tech giants such as Apple and Google are entering their sectors with mobile wallets and payment solutions.

As mobile payments become more popular, the risk of banks falling behind is very real, especially as the likes of Apple build on their consumer relationships to add more features to their mobile wallets.

Banks need to explore ways that they can retain their customers’ loyalty.

Take mobile virtual network operators (MVNO), for example, which once upon a time had all the influence over their mobile phone customers.

Fast forward to 2007 and Apple iPhone is launched. Exclusive contracts with operators were signed – AT&T in the United States and O2 in the United Kingdom – and the operators’ worst nightmare of becoming dumb pipes began turning to reality.

Gone are the MVNO heydays and Apple is now the brand most synonymous with mobile innovation. How do banks avoid the same fate?

Banks can ward off tech firms and disrupt the industry if they look at innovative ways to use existing technology quickly.

Alternative POS proximity devices have a strong future
There are a few early movers such as Danske Bank in the Nordics that has the MobilePay application using a phone-agnostic beacon payment technology to accept payments at retailers. It has more than 2.9 million active users and has been installed on an estimated 90 percent of Denmark’s smartphones. The payment system has also been rolled out to Norway and Finland.

DENMARK IS well on its way to becoming the world’s first cashless society and MobilePay shows that frictionless, tech-agnostic and highly secure POS systems are winning the hearts and minds of the customer, and delivering real value to merchant and bank.

David Fernandez is CEO of Netclearance, San Diego. Reach him at