Contactless May At Some Point Include Functions Beyond Payment, the NFC Forum Says

Contactless transactions were supercharged by the pandemic, and now slightly more than half of U.S. cardholders are using the technology when they pay with either cards or wallets, according to Mastercard Inc. research. With that kind of momentum behind them, researchers are looking at ways to expand near-field communication technology, enabling a tap or wave to trigger a range of functions beyond payment.

Such an expansion at a single tap may include receipts, loyalty points, and personal identification, according to the NFC Forum, a payments trade group that performs research on tap-and-pay technology to set up specifications and enable interoperability. The Wakefield, Mass.-based group early Monday announced it has released its first paper on what it calls “multi-purpose tap.”

The forum expects multi-purpose tap to “revolutionize the contactless user experience,” it says in its announcement, by including multiple purposes beyond payment. These could include, for example, allowing cardholders to pay with one tap for multiple legs of a mass-transit ride.

“Multi-purpose tap will bring even more convenience to contactless user experiences by making it possible for multiple transactions to be seamlessly conducted over the course of one single tap,” says Mike McCamon, the forum’s executive director, in a statement. His group so far has been working on feasibility studies and honing use cases for the technology, according to the NFC Forum release.

Outside experts are encouraged by the news but caution there are practical hurdles the effort will have to overcome. “There is some demand for it. It is feasible,” notes Cliff Gray, principal at Gray Consulting Ventures LLC. “The trick is I have to go on my phone and select which alternative payment I want to effect when I tap. NFC doesn’t know.”

Others are optimistic about the NFC Forum’s move but, like Gray, add a note of caution. “Two-way communications via NFC is a powerful idea,” says Thad Peterson, a strategic advisor at the consultancy Datos Insights, in an email message. “The concept of linking loyalty and receipt applications to the purchase transaction will simplify the transaction process and eliminate a lot of technical overhead. Other applications such as validating a customer’s age at the moment of a liquor purchase is another good use case. That said, it’s still a concept and it will take awhile to get it to the street, and it will require a lot of new interfaces and applications to optimize its value.”

Worldwide, tap-and-pay transactions (in many cases, it’s actually “wave-and-pay”) are expected to total $7.4 trillion in volume this year, according to Juniper Research. That number will more than double, to $15.7 trillion, by 2029, the firm forecasts, adding that the growth will likely be led by ticketing and so-called softPOS, or transactions carried out with an ordinary smart phone acting as the merchant’s payment terminal. The device can interact with either a contactless card or another phone.

Mass transit presents a particularly ripe opportunity, observers say, while several train lines have already adopted the technology or are preparing to. In the latest development, the Southeastern Pennsylvania Transportation Authority, based in Philadelphia, early last month adopted contactless fare-payment technology from Elavon Inc. The line is the seventh-largest U.S. transit system, with 45.6 million riders yearly.