Nokia recently launched its new smartphones, the Nokia 700 and 701, which apart from the usual features the phones also offer NFC (Near Field Communication) connectivity. Interestingly, Nokia did not choose to keep them as mere vestigial features (RIM’s new Blackberry phones also feature NFC) waiting for the eco-system to evolve, but instead marketed them with NFC tags for apps at its stores and phone packaging. It also collaborated with the makers of the movie Ra.One, and PayMate, which offers mobile payments in India to offer related content including ringtones and wallpapers, through the use of NFC tags. We spoke with Ajay Adiseshann, founder and MD of PayMate, who informed MediaNama that the Ra.One NFC campaign costed $100,000 and was the first step to introduce NFC in the Indian market.

The Ra.One campaign:  PayMate installed 20,000 tags across Nokia outlets, shopping malls and movie theatres. The software which talks to NFC hardware i.e a terminal and the tag, has been developed by PayMate, while the hardware was picked up from overseas manufacturers. While the downloads in this campaign were free, the same mechanism could be also used for paid downloads.

Banking on Content: Adiseshann reiterates that content is an interesting space to debut NFC since friction is less and there is no baggage associated with retail payments. Organised retail outlet payments is the next step, however he insists that voice and IVR will remain the preferred channels for mobile payments.

Infact, Adiseshann feels that the potential of NFC based physical retail of content is more, since the return of investment would be better plus the revenue share will be in favour of the content distributor. He says that the next step would be to deploy NFC in organised retail. However, one should not feel ape the western markets which have a much more evolved retail sector, and think that the technology could be deployed in the same way. It is a little more complex since contactless payment terminals would need to talk to CRM software and vice-versa. The cost of deployment might not make it feasible initially.

On being asked why PayMate chose to remain in the background, Adiseshann responds that the company was testing waters with the technology initially and that the next logical step for it would be to involve itself being more upfront and customer facing.

On an NFC based Payments product: PayMate is in talks with some players in the area, however it did not disclose the names citing NDAs. Since it already has a payment product in the market, involving banls would not be a problem, making it easier for users to link accounts or debit/credit cards. The company hopes to launch a product in the next three to six months.

On hurdles that NFC faces: According to Adiseshann there are no regulatory problems and the encrypted nature of the technology makes it secure. An additional verification step can also be employed. However, from a technology perspective, a lot would depend on how soon device manufacturers integrate NFC on their handsets. Also, the way terminals and tags are deployed in order to keep costs feasible would be crucial.

Making non-NFC smartphones/feature phones NFC capable: Adiseshannmentions that a special SIM card can act as a secure element for an NFC enabled phone but will not make the phone NFC capable. However, certain SD cards can house an NFC radio and controller. We feel that to really make NFC mainstream in a market like India which is dominated by feature phones, it would be necessary to develop an economical mechanism to convert non-NFC phones to NFC. PayMate also shares the same view.

Prepaid product in the pipeline: PayMate is partnering with larger companies and has started out in a small way with rewards and recognition programs for corporates and their employees, informs Adiseshann. It is in talks with a couple of potential partners including companies in the retail business as well as with payment companies. He mentions that the partner need not be from the telecom sector. The company intends to launch the prepaid product by the end of the next quarter.