Thursday, December 18, 2008

NFC / Contactless commerce startups surviving the downturn

Withering on the vine is among the most frustrating experiences for entrepreneurs and investors alike. With the economy in a swoon, a lot of startups are on the ropes. NFC-based / contactless commerce has been just around the corner for a while now. Related startups have participated in many a pilots and have been idling waiting for commercial deployments and resulting revenues. Banks have their own set of problems, and do not expect to participate in commercial deployments any time soon.

These startups should not wait anymore for phone vendors to offer NFC-based phones in volume or for merchants to deploy contactless infrastructure. The silver lining among these dark clouds is that merchants are willing to participate in programs that excites their customers and brings them in to their stores. An alternative way for a user to interact with the merchant infrastructure is to go through the cloud. It would seem like a round-about way to get something done while you are only a few inches apart. However, interacting via the internet will get the revenues right now.

SMS-based mobile commerce has been around for a while now. Instead of having the mobile wallet [ID] on the device, move this ID to the service provider's platform. You don't even need the telco to be actively involved in such an offering. Wallet-in-the-sky with SMS-based interactions can be retrofitted with existing NFC platforms with little effort. Some of the implementations I have seen get the messages across 'near' instantaneously. The user experience does not necessarily have to be clunky. The wow effect can still be delivered to the customer. The retailer's expectations can still be met.

This is but one example of what I am proposing. There are quite a few variants of the above architecture. Such an offering is not sexy. For folks who have been living in the magical world of contactless commerce, the above suggestion is a significant let-down. The consolation is that the dream might live on, and could survive to fight another day.

What are your thoughts? How are you improvising to survive this downturn? What are your suggestions on what the contactless commerce startups should do to become cash flow positive in the near-term.?

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