Adoption of Near Field Communication (NFC) for Mobile Payments in the UAE: A Merchants' Perspective

Adoption of Near Field Communication (NFC) for Mobile Payments in the UAE: A Merchants' Perspective

Mohanad Halaweh (College of Business Administration, Al Falah University, Dubai, UAE) and Hashem Al Qaisi (College of Information Technology, University of Dubai, Dubai, UAE)
Copyright: © 2016 |Pages: 19
DOI: 10.4018/IJEBR.2016100103
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Abstract

Near Field Communication (NFC) is one of the emerging technologies that enables mobile devices to wirelessly exchange data at short ranges. NFC technology has great potential, making it convenient to process payments through mobile phones. The aim of this research is to explore the challenges and factors which influence the adoption of the NFC payment system by merchants and retailers in the UAE. This paper presents the results of semi-structured interviews conducted amongst the UAE merchants and retailers. The analysis of data revealed a lack of knowledge, awareness and experience, from both merchants and retailers, about the NFC mobile payment system. Security, promptness and business sustainability were found to be important factors for merchants to contemplate before adopting the new technology. Furthermore, technology infrastructure, switching cost, availability and ecosystem complexity impeded the spreading of NFC mobile payment technology in the UAE market.
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Introduction And Motivation

The development of and advances in mobile and communication technology has contributed to changing individual lives and business transactions. Today, billions of people are expected to have mobile phones in their pockets for various, integrated purposes of use. In the future, more multifunctioning, connected mobile devices are expected. The creation of NFC-enabled technology has placed considerable attention on mobile services. This technology has been embedded in most new mobile phones. Juniper Research forecasted that there would be a rapid adoption of NFC and that one in five users worldwide would have an NFC-enabled phone by 2014 (Juniper Research, 2012). NFC technology has been used in various industries such as retail, automobile, medical, transportation and manufacturing. In this research, the focus will be on using NFC technology enabled by mobile phones in the payment for goods in the retail industry. Mobile payments are outlays for goods, services and bills with a mobile device that takes advantage of wireless communication technologies (Dahlberg et al., 2008).

In the UAE, according to the International Telecommunication Union (ITU) report on information security in 2013, mobile penetration has jumped from 14% to 170% in 2012. Nearly all residents in the UAE use mobile phones, which means that 85% of the population is almost always connected, in addition to cheap services provided by telecom operators (ITU, 2013). This indicates that there has been a new technology boom in the UAE, which in turn, might add business value to the technology and retail markets. Another recent survey published by the American website Mashable showed that UAE ranked first globally in the use of smartphones with three out of four people in the country owning a smartphone (Ministry of Higher Education & Scientific Research, 2012). However, the number of merchants offering payment through NFC technology is still limited. Although a lot of research has been done on customer adoption of mobile payment, there is no research on NFC adoption from merchants and retailers either in the UAE or worldwide (Halaweh, 2012; Dahlberg et al., 2008). Finding out the current status of NFC mobile payment in the UAE makes this research more relevant (in terms of the time the technology is used) and significant (to allow adoption by retailers and merchants).

The problem with the research can be concluded by saying that, while many users are equipped with advanced smartphone that are NFC-enabled, the number of merchants who offer NFC payment is very low in both the UAE and worldwide. In addition, most research focuses on customer adoption of this technology, while the merchant perspective has been unobserved. Little work has been conducted focusing on the business side, especially in the UAE. Therefore, this study explores the challenges and factors which influence the acceptance of the NFC payment system to fill this particular gap.

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