Since the offset of NFC technology, several companies and startups have centered their businesses around this technology. We set-up this month’s #TechTrend Thursday edition to discuss NFC technology and its viability. Near field communication (NFC) is a technology that enables smartphones and other devices to establish radio communication with each other by touching the devices together or bringing them into proximity to a distance of typically 10 cm or less.
#TechTrend Thursday an m:lab East Africa initiative that focuses on technology trends in the mobile developer world and mentoring sessions for upcoming mobile developers by incubated startups, individuals or established tech companies.
Several presumptions guarded the discussion:
- Why is it that most startups/companies that use NFC technology have been forced to change their business model especially in Kenya?
- Does NFC technology have potential to disrupt economies like GSM or the internet; that have changed how the world does things or will just be another file sharing technology like its similar counterpart bluetooth?
Is NFC the next disruptive technology in Kenya or just a file-sharing utility? This was perhaps the most questionable presumption. Startups changing their business model; big industry players seem to struggle, was this a fair presumption or a myopic view of the capability of the technology?
In Kenya, one of the major ways people have interacted with the technology was in the introduction of cashless fare since the announcement mid last year after the partnership of the government and the matatu owners association (MOA). BebaPay (partnership with Google) was the first to get into the space followed by others like my1963, Equity Card, KCB Card among others. BebaPay however backed down a few years ago leaving the several banks and Safaricom to take-up the battle for the market share.
Its however been notable that the partnerships made between the players as well as the approach been taken involves combination of several technologies to make it work.This has been done in various ways like integration with MPESA, introduction of chipped NFC card, partnership with MasterCard and VISA for pre-paid cards including others. In my opinion however the uptake has not been as envisioned by the various players in the industry. So what went wrong?
Well, apart from file-transfer and money transactions, the technology has far more uses that have proved successful in other parts of the world other than what we seem to use it for here in Kenya. In London for example, the transport sector widely uses the technology.
Some of the universal uses of the technology include: purchase of items e.g. Passbook on the iPhone and Google Wallet , inventory, retail, access control, smart posters, and other utility operations such as sensing and storing digital data. In attendance was a student from KEMU and Strathmore who shared how they use NFC enabled cards for access control at the gate, library or dining hall.
Different suggestions pointed out that the matatu industry, as much as the potential was great, was the wrong go-to market to introduce the technology. Some of the general factors include fear that came about with ‘tapping’ to pay; as well as different socio-economic problems like touts syphoning money from the matatu owners and corruption.
Security has also been one of the greatest challenges when it comes to uptake of the technology, but has been countered by adding layers of security through apps that allow authentication.
In regards to Kenyan startups using the technology, it was true that they have been forced to change their business models so as not to totally depend on NFC technology. Most startups however are still in the pilot stage and we can’t therefore downplay the technology as a whole.
NFC readers that can print out receipts are also quite expensive for many startups who would wish to role out on wide-scale. The startups were also challenged not to limit themselves to NFC on cards but also think of ordinary forms of things we carry daily like wristbands, keyholders and stickers e.t.c.
One of the startups also pointed out that NFC technology is not a ready-to-use technology and therefore costly to hire programmers to build a stable solution/product.