February 17, 2015 RFID, NFC and BLE: What Are They, and Which One Should Retailers Use? RFID, NFC and BLE stand for Radio Frequency Identification, Near Field Communication and Bluetooth Low Energy, respectively While RFID is commonly used for tracking and tracing along the supply chain, many recent applications of NFC and BLE focus on enhancing consumers experiences in stores Beacons are often considered more intrusive Both beacons and NFC devices support encrypted mobile payments NFC provides finer location granularity Not all phones support NFC, but most are BLE- enabled While QR code is only mentioned in passing in this paper, readers should note that it performs similar functions to NFC, but in very different ways DEBORAH WEINSWIG Executive Director Head Global Retail & Technology Fung Business Intelligence Centre deborahweinswig@fung1937.com Fong Lau Coordinator, Management Theories & Business Models Fung Fung Business Business Intelligence Intelligence Centre (FBIC) Centre publication: RFID, NFC and BLE: What Are They, and Which One Should Retailers Use? fonglau@fung1937.com 1
RFID, NFC and BLE: What Are They, and Which One Should Retailers Use? THE FUTURE OF MOBILE CONSUMER ENGAGEMENT RFID, NFC and BLE are wireless technologies that communicate information between devices. While they all promise to enhance the in- store experience, and the technologies look similar at first glance, retailers must choose carefully which one (or more) to deploy depending on their specific needs. First thing first: let s go through what the acronyms stand for. RFID RFID stands for Radio Frequency Identification. It employs radio signals for different tagging and tracking purposes, and is currently in widespread use all over the world. Inventory and package tracking are two of the most common applications of RFID technology. Many retailers have already integrated RFID into their price tags for supply chain optimization. Solutions in this area include, in the upstream, an RFID tunnel that tracks and counts products at distribution centers; and within stores, tools that can scan thousands of on- shelf inventories in minutes. RFID tags can even integrate with the retailer s point of sale (POS) system to provide quick checkout. Fashion retailers are also increasingly employing what is known as the Magic Mirror, a dressing- room mirror that reads the RFID tags of any product brought into close proximity and displays related information, often in interactive and multimedia formats. RFID is a one- way communication system in which data flows from the tags to the reading equipment. The technology works well at distances of many feet, which makes it particularly useful in situations where close contact between tags and reader is not possible. However, the long transmission range of RFID also presents security risks, as it makes it easier for others to intercept the communication. This concern is solved by its extension, the NFC technology. NFC NFC stands for Near Field Communication. Developed upon the RFID technology, NFC is typically used across a very short distance. Unlike RFID, which has effective ranges measured in feet, NFC operates at a maximum range of about 4 inches (10 centimeters), making the communication much more private and therefore particular suitable for purposes such as payment. NFC can be set up for one- or two- way communications. This gives rise to a whole range of new applications: In reader/writer mode, an NFC reader (often a smartphone) detects and pulls information from an NFC tag. This works a lot like RFID, but in closer range. In a retail context, consumers can tap smartphones on NFC tags next to products on display to get additional, often interative information. 2
In card emulation mode, the NFC- enabled device acts like a smart card and communicates with an external reader. This enables contactless encripted payments and ticketing by NFC- enabled devices without changing existing infrastructure. In peer- to- peer (P2P) mode, two NFC- enabled devices communicate with each other so that users can quickly share information and files with a touch. For example, users can share digital Black Friday coupons for a local superstore with friends by just tapping their phones. Frost & Sullivan anticipates that NFC- enabled mobile phones will reach 863 million units in 2015, or 53% of all smartphones worldwide. It is worth noting that after the study was released, Apple added NFC to its latest models, the iphone 6 and 6 Plus, but currently Apple s NFC functionality is locked exclusively for payment (Apple Pay) only. Android s innate mobile payment solution, Google Wallet, also uses NFC. BLE and beacons BLE stands for Bluetooth Low Energy, which connects mobile devices wirelessly and consumes considerably less battery power compared to previous generations of bluetooth technology. One major application of BLE technology is beacons, which are small wireless devices that constantly broadcast radio signals to nearby mobile devices. An appropriately designed mobile app can detect the signal and react, triggering a location- based action in the app. Apple s iteration of the beacon technology is trademarked as ibeacon. Currently, ibeacon is not yet being produced as a stand- alone physical product, but exists as a standard that is compatible with Apple s ios. Compared with Android s beacon implementations, ibeacon integrates better with iphones and ipads and can wake up relevant apps even when they are not running in the background. Similar to NFC, BLE can also be used for payment and consumer engagment, but with operating ranges measured in feet, it provides less location granularity. 3
A CLOSER LOOK AT NFC vs. BLE (BEACONS) People are often confused about the difference between NFC and BLE, as both have similar applications in the context of retailing, especially when it comes to engaging consumers through mobile devices within stores. The two technologies have subtle but crucial differences, as presented below based on a summary prepared by Retail Customer Experience, Pyrim Technologies and Mobile Payments Today. February 17, 2015 NFC BLE Supported smartphones User experience Location services Energy efficiency Privacy Security Android, Windows Phone 8 and Blackberry One to one: Consumers tap their smartphones on NFC tags affixed to objects with which they wish to engage. They initiative the interaction and control the timing. NFC provides finer location granularity, as it operates at a maximum range of about 4 inches (10 centimeters). Each NFC tag creates its own power when in the presence of an NFC- enabled smartphone. No batteries are required. Less intrusive: A consumer s movements can only be monitored based upon the NFC tags with which he or she engaged. No third party can monitor engagements unless it supplied the tag contents. NFC supports both secured and unsecured data communication sessions. Secured sessions are designed to emulate contactless cards, e.g. credit cards, ID cards, etc. ios, Android, Windows Phone 8 and Blackberry. One to many: BLE beacons repeatedly transmit a discovery packet. Consumers respond to notifications that are generated from being in the presence of a BLE beacon. BLE has an effective range of up to 330 feet (100 meters), and it determines a user s distance by measuring signal strength of a BLE beacon as received by his or her BLE- enabled smartphones. Each BLE beacon contains a battery that can last up to two years before it will need replacing. More intrusive: A smartphone app can be configured to continuously monitor a consumer s movement as he or she moves among BLE beacons, regardless of who deployed the beacons. BLE beacons broadcast outbound signals. There is no inherent security risk embodied in these transmissions. Any risk will lie within the app that uses these signals. Price $0.10 to $0.60 per tag $20 $35 per BLE beacon sensor Mobile payment Upon checkout, the consumer tells the checkout clerk that they wish to pay for the sale via credit card. The consumer opens their mobile wallet, selects the desired card and then taps their smartphone on the retailer s payment terminal. Note: This solution only requires that the retailer have a contactless payment terminal. All other infrastructure remains unchanged. Upon entering a store, the consumer s payment app senses a BLE beacon. The app responds by passively checking in to alert the retailer s POS of the consumer s presence. At checkout, the consumer tells the checkout clerk to post the purchase to their mobile payment account, which is visible on the clerk s POS terminal. The clerk verifies the consumer s identity and completes the transaction. Note: This solution requires changes to the retailer s POS and changes to the checkout process. Coupons, offers & product info A consumer observes a marketing oriented call- to- action presented on a static or digital sign. The consumer places their NFC- enabled smartphone on an NFC tag that is either affixed to or placed near the signage. The offer is presented to the consumers, which they may optionally save to their mobile wallets. Upon entering a store the consumer s shopping app senses a BLE beacon. Their app checks for the availability of an offer. If one exists, it sends the consumer a notification. The consumer acknowledges the notification and then either saves the offer to their mobile wallet or disregards it. Source: BLE vs. NFC: The future of mobile consumer engagement now!, created by Retail Customer Experience, Pyrim Technologies and Mobile Payments Today (edited and modified). 4
A WORD ON QR CODE (AND CURRENTC) A QR code (for Quick Response code) is a two- dimensional bar code that stores short pieces of information such as text or a Web address (URL). It was invented in 1994 as a means to track vehicles during the manufacturing process, but is now more commonly seen in marketing and print advertising. In essence, QR codes perform the same function as NFC in the one- way reader/writer mode. Spearheaded by Walmart, major brick- and- mortar retail chains (which together operate more than 110,000 retail locations and process more than $1 trillion in payments annually) formed MCX (Merchant Customer Exchange) in an attempt to sidestep payment fees charged by other payment service providers, such as credit card companies and Apple Pay. MCX has developed an alternative mobile payment solution called CurrentC, which uses QR codes displayed on a cashier s screen and scanned by the consumer s phone or vice versa to initiate and verify the transaction. KEY TAKEAWAYS FOR RETAILERS Privacy: Beacons are often considered more intrusive, as they can broadcast content and track user movements continuously. On the other hand, customers have to initiate interactions with NFC tags Payment: Both beacons and NFC support encrypted mobile payments, but the risk of an NFC transaction being intercepted and interfered with is smaller due to the close proximity between NFC tags and readers when in use. While NFC has the advantage of being pre- installed in a growing number of new POS terminals, BLE beacons give customers the freedom to pay anywhere they want and thus avoid waiting in line Cost: The price of the cheapest NFC tag is 20 times cheaper than that of the cheapest BLE beacon sensor. BLE beacons also require battery replacement every six months to two years, whereas NFC tags do not require batteries at all Location sensitivity: NFC provides finer location granularity. ibeacons have a range of 164 feet (50 meters), whereas NFC s optimal range is 1.5 inches (4 centimeters) User base: Not all phones support NFC, but most are BLE- enabled. Apple has added NFC to the iphone 6 and 6 Plus, but currently the functionality is locked exclusively for Apple Pay. Summing up, retailers already using RFID for supply chain optimization can extend its use inside stores to track inventory, provide quick checkout and present product information with RFID- enabled Magic Mirrors. Beacons can be the most effective solution for retailers seeking only to provide storewide announcements and advertisements. Because of its location sensitivity, NFC can provide consumers with product- level information. It also provides the most secure communication among the three technologies covered, and is best suited for payment applications. 5