Fast Company

Google's Eric Schmidt Reveals NFC Smartphone Plans: It's All About Advertising

Google NFC

So far, 2011 is shaping up to be the year wireless payment tech changes how you'll pay for everything, with Apple and Google leading the charge. Now Google's Eric Schmidt has just made some of his firm's plans clear for us: It's all about ads.

Schmidt was speaking to what the New York Times describes as a "small group of reporters" after his keynote presentation at the Mobile World Congress event. He noted that "NFC has been around for a long time but everything has just started to come together," which supports the increasing number of tech news headlines that reference NFC (near field comms) or wireless payments. Google's even built NFC transmit and receive systems into its Nexus S Android phone in anticipation of the coming revolution, and included NFC tags in its Google Places promotion, Nokia's promised to bake NFC support into all its smartphones (though we have no insight into if this has changed thanks to the recent deal with Microsoft) and Apple's expected to lead the pack with NFC in the iPhone 5.

NFC technology could turn your smartphone into your wireless credit card, ATM card, PC login physical key, metro ticket, and even front-door key--but its the wireless payments possibilities that could change shopping forever. That's because it's potentially more secure than current systems, it enables sophisticated tricks like automatic collection of store loyalty points, and it reduces the need to carry a wallet.

But actually, the cleverest bit about NFC payment systems is that when you plop your iPhone or Android phone onto a payment mat at the checkout, as well as handing over the secure data for your credit card ID, the phone could talk to the store's computer systems--telling it useful data about your shopping habits, and also receiving data in the form of an app, an ad or something else. The short-range radio system could easily transmit enough data to run a small app on your phone, or deliver an advert that's tailored to your shopping preferences.

And it's exactly this sort of opportunity that Google would like to exploit (because despite what you may think Google's business isn't search at all--it's digital advertising). Schmidt was explicit about this: Google could work with ad partners to "extend offers to phones with NFC chips," and advertisers had already communicated their interest to Google. The idea is that at the point of sale, ads and an enticement offer would be communicated to a shopper's smartphone to extend brand awareness, and to attempt to create re-visits in the future.

In fact Google's so ad-focused that it's not interested in the terminal-side part of the equation, the wireless hardware, computer and network infrastructure needed to make NFC payments work, and work in sophisticated ways that surpass the simple way we use plastic cards now. Schmidt thinks this is a business the existing card companies will dominate, as they already possess much of the necessary digital infrastructure and merchant clientele. Instead Google will concentrate on enabling the phone side in terms of software, hardware and ad-distribution systems, targeting neighborhood stores in particular--a large, often overlooked market for cheap and easy digital payment transaction systems (and one that systems like Square are busy trying to leverage).

It all makes sense: Google tried (and failed) to buy Groupon recently, hoping to amp up its digital payments and loyalty scheme powers--and NFC vending systems would enable it to bypass Groupon-like systems entirely, as it could handle the loyalty and ad systems itself on a per-consumer basis.

The only fly in Google's ointment may be Apple, which is expected to include NFC tech in its iPhone for 2011, and has aggressively patented the area of NFC-related logins, loyalty schemes, and wireless credit payments. None of the "small group of reporters" seems to have quizzed Schmidt on this matter. Yet.

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2 Comments

  • Martin Soler

    This could be quite interesting, even though I am not sure I would appreciate to have all that data on myself going around and ads popping up even more. The success of Google adwords was that they were less intrusive than what was happening on the internet at the time. So in this case less is more. About Groupon, they model is quite tough for the people selling, groupon takes a 50% commision on anything sold through their system! And I can already imagine that as they get more successful they'll want more and in a year or so they will be upping that to 60%... soon the people selling wont have the means to keep it going.

  • ritasu

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