RFID: You've Got To Hand It To Consumers
June 21, 2007 - RFID Connections

Bert Moore

Editor

 

Articles often talk about the ways in which RFID will help improve delivery of goods through the supply chain to the consumer.  While these improvements will certainly help ensure a good supply of the right products on store shelves, the benefits, to consumers, are essentially invisible -- something happening behind the scenes about which they know little and care less.  Thus, despite these very real benefits, RFID doesn't generate much "buzz" at the consumer level.   So how do you get consumers excited about RFID?

 

Call it Ubiquitous RFID, call it Near Field Communications (NFC), call it RFID-enabled vending, call it whatever you want -- what it comes down to is putting the power of RFID directly into the hands of the consumer to provide immediate and tangible benefits.

 

We are already seeing the emergence of this application of RFID in the proliferation of contactless payment options -- from the ExxonMobil SpeedPass to the current MasterCard, Visa and American Express cards to highway and parking lot "payment" tags.  There are also older forms of RFID in common use: car immobilizers, garage door openers and pet ID tags which provide daily benefits to consumers.  And, while all these offer speed, convenience, and security to the consumer, they still represent the "old" paradigm in implementing RFID: asking a consumer to carry a dedicated RFID tag.

 

The new paradigm, already being rolled out in selected applications in Asia and Europe, reverses this logic: it gives the consumer an RFID reader in the form of a cell phone or other personal electronic device.

 

In this new paradigm, consumers would use the RFID reader in the personal electronic device to read a tag in a parking meter, vending machine or other device that offers some consumer-oriented product or service.  The cell phone might then access a web site to learn more about the item or authorize an electronic payment for the product or service. Devices might also be configured to serve as "stored value cards."  In other words, the consumer might transfer a certain amount of "cash" to the device via an ATM or home computer.  This cash value would be debited directly from the device for relatively low-value transactions such as vending machine purchases or parking meter fees.

 

Another application which revises, but doesn't reverse, the old paradigm is the use of the personal electronic device as a "temporary RFID tag."  Some hotels in Europe, for example, now program a guest's cell phone with an ID code that serves as the room "key."  Future applications along this line could allow cell phones to serve as "tickets" to movies, sporting events or even air travel.

 

Both of these approaches to RFID allow consolidation of a wide variety of services onto a single device.  And, whichever way this new paradigm is implemented, it will provide specific benefits to both consumers and merchandisers.

 

First and foremost, it puts the power of RFID in the hands of the consumer.  And, while consumers will more likely credit cell phone companies rather than RFID companies with these new services, it will provide consumers with a level of convenience they will come to expect and even anticipate becoming more ubiquitous.  In other words, it might create some excitement on the part of consumers.

 

Equally importantly, however, the new paradigm addresses a number of privacy concerns.  The consumer has to make a conscious decision to either transmit a "temporary RFID tag" code or to read a tag.  The device cannot be interrogated for its code or have any interaction unless the consumer chooses to interact with an RFID-enabled device.  And because these interactions will all take place over a very short distance, the potential for skimming and eavesdropping is significantly reduced.

 

This is also one instance in which privacy concerns and marketing intelligence converge.  Because individuals do not have to transmit their "tag" ID or use the reader unless they want to, merchandisers will get more accurate data since every interaction will represent a conscious choice on the part of the consumer.  In other words, it will differentiate actual interest from casual interest or mere proximity.

 

There are, of course, some possible downsides to this use of personal electronic devices for financial transactions and access.

 

Those concerned with privacy issues will point out, correctly, that such applications might eventually eliminate the option for consumers to make small cash purchases and would further enable tracking by "Big Brother" by forcing people to carry cell phones or other devices that can be linked to an individual.  However, the proliferation of disposable cell phones, which many currently use to protect their privacy, would likely help address this concern.

 

Perhaps a more common concern is that cell phones and electronic devices are frequently forgotten, lost or stolen.  As electronic payments via these devices become more ubiquitous, the potential for theft increases. 

 

Therefore, the evolution of these applications should have some built-in safeguards such as PIN numbers, biometric activation of the device or an emergency number to call to deactivate the device and possibly even "electronically shred" its data so that the memory module could not be read by another device. 

 

Indeed, as more and more business people use PDAs and enhanced cell phones to store business information and even allow access to corporate IT systems, the need for enhanced security on these devices is quickly becoming as important as it is for laptop computers.

 

Whatever one's view of RFID, the current trend does seem to indicate that RFID will be used not just within the supply chain and to cover "the last 100 meters" of replenishment, but the last 10 cm as well.

 

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Comments on this column?  E-mail me: b.moore@aimglobal.org

 

 

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