Application of NFC and iBeacon Technology for Reduction in

Check-Out Time during Payments

A dissertation submitted in partial Fulfillment of

the requirement for the award of Degree in

BACHELOR OF FASHION TECHNOLOGY

Submitted By
ADITYA KOHLI
ANURAG PANDEY

Under the Guidance of

ASS. PROF. AMIT PHOGAT

Department of Fashion Technology

National Institute of Fashion Technology, Gandhinagar
2016
 1. Introduction

1.1 Title of the Project

Application of NFC and iBeacon Technology for Reduction in Check-Out Time during
Payments

1.2 Background

NFC is a short-range high frequency wireless communication technology that enables the
exchange of data between devices over about a 10 cm distance.

NFC is an upgrade of the existing proximity card standard (RFID) that combines the interface
of a smartcard and a reader into a single device. It allows users to seamlessly share content
between digital devices, pay bills wirelessly or even use their cellphone as an electronic
traveling ticket on existing contactless infrastructure already in use for public transportation.

The significant advantage of NFC over Bluetooth is the shorter set-up time. Instead of
performing manual configurations to identify Bluetooth devices, the connection between two
NFC devices is established at once (under a 1/10 second).

Due to its shorter range, NFC provides a higher degree of security than Bluetooth and makes
NFC suitable for crowded areas where correlating a signal with its transmitting physical device
(and by extension, its user) might otherwise prove impossible.

iBeacon is a protocol developed by Apple and introduced at the Apple Worldwide

Developers Conference in 2013. Various vendors have since made iBeacon-compatible
hardware transmitters - typically called beacons - a class of Bluetooth low energy (LE) devices
that broadcast their identifier to nearby portable electronic devices. The technology
enables smartphones, tablets and other devices to perform actions when in close proximity to
an iBeacon.

iBeacon uses Bluetooth low energy proximity sensing to transmit a universally unique
identifier picked up by a compatible app or operating system. The identifier and several bytes
sent with it can be used to determine the device's physical location, track customers, or trigger
a location-based action on the device such as a check-in on social media or a push notification.

One application is distributing messages at a specific Point of Interest, for example a store, a
bus stop, a room or a more specific location like a piece of furniture or a vending machine.
This is similar to previously used geopush technology based on GPS, but with a much reduced
impact on battery life and much extended precision.

Another application is an indoor positioning system, which helps smartphones determine their
approximate location or context. With the help of an iBeacon, a smartphone's software can
approximately find its relative location to an iBeacon in a store.

With the help of these two technologies, customer instore experience can be enhanced by
drastically decreasing the check-out time (reduction in queue time) and providing geolocation
of products inside the store (reduction in time for finding the product). It also opens further
scope for omnichannel retailing in concepts such as personalized pricing.

1.3 Need for system

In India, people spend 40% of their instore time standing in queues for billing and check-out.
The concept of NFC payments and ibeacon application is widespread but there is no such
initiative by any retail chain regarding implementation.

1.4 Advantages of the system

1. Less time for check out – The NFC based payments take 1/10 th the time of a regular
POS transaction, hence it saves queueing time as well as billing time.
2. Same Security – NFC renders the same security as the payments are authorised by
customer and it only occurs when phone taps the NFC POS pad.
3. Less Personnel Interference – NFC enabled payments do not require much personnel
interference as the consumer is the one in control.
4. Less Time Searching the Product – Each and every customer sets foot in a store for
a dedicated purpose. With the help of iBeacon, it is possible to let customer know
his/her way to the product he/she desires thereby reducing product searching time.
5. Purchase History – Customers only form of previous purchasals is the bill but with an
application, purchase database can be maintained in the app for the customer indicating
the products purchased, their article code, their price, store code and other details.
6. Back-end Analytics – The back end retailing can be boosted by analysing the
demographics of customer for every store and planning the merchandise accordingly.
1.5 Research Objectives

1.5.1 Primary Objectives:

To develop an application based on NFC payments and ibeacon for reduction in check-out
time.

1.5.2 Secondary Objectives:

1. To analyze data from the app and plan merchandise for each store according to the
demographics.
2. To reduce the time for searching product by indicating product location in the application.
 2. Literature Review

2.1 Apparel Sector in India

Apparel is one of the basic necessities of human civilization along with food, water and shelter.
The Apparel Industry reflects people’s lifestyles and shows their social and economic status.
The Apparel and Textile industry is India’s second largest industry after IT Industry. At
present, it is amongst the fastest growing industry segment and is also the second largest foreign
exchange earner for the country.

Indian textiles and apparel have a history of fine craftsmanship and global appeal. Cotton, silk
and denim from India are highly popular abroad and with the upsurge in Indian design talent,
Indian apparel too has found success in the fashion centers of the world.

Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021 from
US$ 40 billion in 2014. Readymade garments remain the largest contributor to total textile and
apparel exports from India. In FY15 the segment had a share of 40 per cent of all textile and
apparel exports. Cotton and man-made textiles were the other major contributors with shares
of 31 per cent and 16 per cent, respectively.

Rising government focus and favorable policies is leading to growth in the textiles and clothing
industry. Foreign direct investment (FDI) in textile sector increased to US$ 1,587.8 million in
FY15 from US$ 1,424.9 million in FY14. The Ministry of Textiles is encouraging investments
through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS).
To promote apparel exports, 12 locations have been approved by the government to set up
apparel parks for exports. As per the 12th Five Year Plan, the Government plans to provide a
budgetary support of US$ 4.25 billion to textiles. Free trade with ASEAN countries and
proposed agreement with European Union will also help boost exports.
2.2 Apparel Retailing in India

The Indian retail market is expected to demonstrate a promising year-on-year growth of 6% to

reach USD 865 billion, by 2023, from the current USD 490 billion. The share of apparel in
India’s retail market is 8%, corresponding to a value of USD 40 billion. In addition to fashion
apparel, the growing demand for fashion accessories makes the Indian fashion market both
interesting and lucrative.

The Indian fashion retail market has witnessed several fascinating changes and challenges in
recent years, which are indicators of the country’s evolving fashion retail market. The
challenges associated with these changes need to be addressed in the most efficient and prudent
manner in order to harness the concomitant benefits.

2.3 Trends in Indian Apparel Sector

The trends emerging within the Indian fashion market can be broadly classified into four
categories, depending on their associations; these are discussed in the following sections.

2.3.1 India’s Macroeconomic Scenario

The sound growth of the fashion products market, driven by the 8-to-9% GDP growth and
positive investment sentiment, looks like a thing of the past. The growth story of one of the
largest emerging economies, India, has required severe revision. A growth rate under 5%,
coupled with double-digit inflation, has dampened consumer demand for fashion items. As a
result, the Indian fashion products consumer has become a cautious spender; demanding value
for the money spent. In many cases, the Indian middle class has started trading down by shifting
to either products available at a lower price-range or to lowering purchase volumes if within
the same price range. The recent inflation in food and vegetables’ prices has added to the woes
of the Indian consumer.

Food being an irreplaceable item has eaten into the share of non-food items in recent years. In
addition to the weak economic sentiment, the worsening political environment and an
increasing lack of confidence in governments and institutions has negatively impacted the
country’s overall business competitiveness. As a consequence, the retail market is also hit in
terms of business growth.

With no sign of any substantial recovery in the macroeconomic sentiment or any respite from
inflation in the near future, the trading down by Indian middle class will continue in the coming
months. Non-food items, including fashion, are expected to bear the adverse impact of this
trading down.

2.3.1.1 India’s Quarterly GDP Growth

2.3.1.2 India’s Demographic Dividend

The demographic dividend of India is tilted in favor of the consuming age group. In contrast to
the increasingly-aged populations in the West, Japan, and even China, India is expected to
become the world’s youngest emerging economy by 2020, with around 64% of its population
in the working age group. This young consuming class has new aspirations and is more open
to experimenting with fashion brands and modern designs.

In addition to such a favorable age group, the Indian fashion retail market is expected to deal
with heterogeneous consumer group. The Indian fashion consumer has been traditionally
heterogeneous as a result of income disparities, the influence of ethnic clothing, regional
preferences, etc. But in recent times, heterogeneity in taste, choice, and preferences has
increased substantially even within consumers in the same region and same ethnic group,
belonging to the same income level and age range.

The Indian consumer is now conscious about his/her personality and selects such fashion
products as might suit his/her personality the best. As a consequence, exclusive ethnic wear
brands are multiplying in a market which is also accepting western wear fashion items more
readily.

2.3.1.3 Retail-specific Policies

The government’s decision to allow Foreign Direct Investment (FDI) in multi-brand retail is
considered one of the most radical and reform-oriented decisions taken in recent times.
However, despite the approval of the Indian parliament, the country is yet to witness any major
inflow of FDI in multi-brand retail. The declaration of the major opposition party to the effect
that it would disallow FDI in multi-brand retail if it comes to power, combined with rules
specific to backend infrastructure and local sourcing have been the most contentious issues.

The policy governing FDI in multi-brand retail necessitates substantial investment in backend
infrastructure. At present, most domestic retailers have not made substantial investments in
backend infrastructure. Most of them outsource apparel manufacturing as well as logistics to
third parties. However, a select few have their own manufacturing facility. Most domestic
retailers own warehouses in different regions of the country and possess the IT infrastructure
needed to manage inventory and operations. Investments in backend infrastructure
development could be a challenge for many international, multi-brand apparel retailers seeking
entry into India through the FDI route.

The policy also requires retailers to source at least 30% of their products from such domestic
sources as medium and small scale industries. It is expected that, due to the presence of the
vertically-integrated textiles and apparel industry, local sourcing will not be a constraint for
international retailers.

Despite the initial reluctance of retailers, it is crucial to note that many international retailers
will enter the Indian market through the FDI route within a couple of years. This will open up
an opportunity to learn international best practices and thus improve India’s overall business
performance. The fashion and fashion accessories industries are also expected to benefit from
better product designs and improved deployment of technology.

2.3.2 Consumers’ Buying Behavior

One of the most critical factors determining the success of fashion retailers in India is the ability
to gauge trends in consumer purchase decisions. The Indian fashion consumer is undergoing
an evolution and is rapidly adapting to international fashion statements. Increasing disposable
incomes, exposure to international events and fashion icons, and rising confidence levels are
driving the changes in the consumer purchase behavior. Some distinct consumer trends
expected to impact the Indian fashion market are:

2.3.2.1 Increasing Time-poverty

India’s core consuming class is experiencing an ever-increasing time-poverty. The richer

sections of the society are able to outsource most of their activities to the poorer sections who
work as domestic help, shop and office attendants, etc. Routine activities that do not require a
personal presence, e.g. cooking, vehicle servicing, grocery purchases, etc. are outsourced to
others. Being an emerging economy with a large rural population, there is no shortage of people
who might work as domestic help or attendants, at relatively lower wages. On the other hand,
these poorer masses lack substantial purchasing power to contribute to the retail economy.
However, the worst-hit section is the middle income class, as, for them, it is a clear trade-off
between the time required for their regular employment and the time needed for routine, yet
necessary, activities that are generally time-intensive.

2.3.2.2 Shift from Need-based Purchasing to Aspiration-based Purchasing

There was a time when fashion items were being purchased as and when required. Now-a-days,
fashion clothing is more than a basic need; it is a reflection of aspiration, personality, and one
of the biggest status symbols. The Indian fashion consumers can tell the difference between
unbranded and branded apparel. They are able to decode the messages communicated by
different brands on different occasions. The aspirational youth is also influenced by peer groups
working with multinational companies and having international exposure. Though basic
textiles and footwear continue to be a part of the consumer’s basket, the demand for aspirational
fashion clothing and fashion accessories has increased substantially in recent years.

2.3.2.3 Growing Value Consciousness

Although the fashion consumer is willing to spend more on clothing and accessories of choice,
the consciousness of value received for the money spent has increased manifold. The weak
economic outlook and higher inflation rates have also contributed to this heightened value
consciousness. There is a distinct differentiation between pre-2008 and post-2008 India. Even
while long-term faith in the growth and consumption story of India stays intact, the short-term
scenario appears bleak. The fear of job loss, stagnation of personal income, increased spending
on food, etc. have a profound impact on the purchasing behavior of consumers. The consumer
is inclined towards value and affordability, but, at the same time, there is an inherent need for
a fashionable look.

2.3.3 Shift in Primitive Retailing

No longer than 10 years ago, ecommerce was expected to become the sales channel for the
future. Online entrepreneurs, as well as established retail companies rushed to open online sales
facilities. Fast forward to today and ecommerce is not enough anymore. Neither is any other
channel, on its own. The battle between brick and mortar stores and online pure-plays is no
longer relevant.
Consumers drive a revolution in retail, empowered by connected devices. Using the mobile
devices, they expect cross-channel service in the web store, on their mobile, social media and
when dealing with phone order operators.

Probably the biggest enabling technology has been the rise in smart phone usage. Its adoption
created a bridge between previous siloed operations. Previously, companies added separated
structures for sales channels, the ecommerce team, the mcommerce team, the social commerce
team and of course the central retail unit team.

Once technology was available, and Omni channel became a possible course of action,
consumers deemed it not only possible, but expected. However, there is a huge gap between
consumer expectations and retailer abilities at the moment. First there are organizational
challenges, such as boardroom buy-in, as well as employee training and culture adoption.

Second there are technological barriers that need to overcome. “What technologies should we
use”? “How can we integrate existing software”?

These are common questions within retail companies contemplating change.

Challenges are often found outside the company, just like within. Getting suppliers and partners
on the same is essential to implementing actual Omni channel policies and processes. Getting
customers to know about these new found benefits is just as important. Marketing and
communication is essential when finally, companies are ready to roll-out Omni channel
implementation.

2.4 Enabling Technology

Omni channel is the result of a tectonic shift in retail, a pressure on retailers to redefine their
business models and a combination of new technologies.

Among those technologies – two of them really stand out. First, there was the mobile browsing
revolution, ushered in by the launch of the iPhone and subsequent innovations and market
shifts. The smartphone and later on the tablet changed the way consumers interact with brands,
get informed and ultimately purchase.
The second biggest change in retail was big data processing. With increasingly better
connectivity, larger processing power, improved database software and analytical processes,
consumers and retailers alike accessed a pool of information previously untapped.

2.4.1 Mobile Devices

Mobile has transformed retail and it is bound to be even more influential in the future.
According to vServe, 50% Indian adults now own a smartphone, as opposed to 18% in 2013.
Even though mobile shopping is still in its infancy, mobile devices are heavily used to compare
prices, read product reviews and browse for, if not buy, products online.

When it was first introduced to the market, the mobile phone had an autonomy of 30 minutes
and needed 10 hours to recharge. Its abilities were basic at best but the whole idea of mobility
stuck and gained ever more traction. Phones got smaller, increasingly autonomous and smarter.

Now the smartphone is accessible and ubiquitous. Even though the mobile penetration has
slowed, there will be 4.95 billion mobile users in 2016, eMarketer estimates. 2.28 billion of
them will be smartphone users. The 69.4% mobile penetration will shift users from the good
old feature phone (phones without QWERTY keypad, touch screen or advanced operating
system) to the smartphone. It is expected that almost 50% of all mobile users (2.5 billion) will
be a smartphone user in 2017. According to vServe smartphone penetration in India by town
class.
This change is noteworthy as it marks how disruptive smartphones have been to retail. Internet
connectivity, rich media applications, location based services and mobile payment systems are
all factors pushing retailers into an Omni channel era. According to Stat Counter estimates,
71% of all internet traffic in India today comes from mobile, while 29% comes from desktops.
Today’s smartphone user is not yet fully empowered in his use of mobile technology. Recent
data shows that although a large number of consumers use the mobile to browse the internet
(75% in India) and install applications (62% in the India), only a few use their phone for more
advanced options.

Mobile phones, have made steady inroads in rural India at a pace that desktops and broadband
have never been able to. Portability, affordability and ease of use has made them the favorite
device for Internet access in rural India. Mobile is largely responsible for the rapid proliferation
of Internet in the country. However, it is also mobile which has been the biggest growth catalyst
for Internet in rural areas. According to a recent i-Cube 2015 report, rural India had 31 million
active internet users in 2012. Close to 4 million or 13% of these were mobile internet users.

However, in 2014, while the number of active Internet users in rural India went up to 58 million
and the number of mobile internet users grew to an astounding 36 million taking a 62% share
of the active Internet user base in rural India. As of June 2015, these users have further
increased to 53 million making up for 65% of the active Internet user base in rural India which
is pegged at 81 million.

According to an AT Kearney estimate, by 2017, 80% of users in India will access internet via
smartphones. For these smartphone users, everything they do in their digital life today revolves
around a smartphone. Today, it is not just about connecting with friends over social media,
playing games or watching videos on smartphones. These users are now transacting more on
their smartphones, recharging services, shopping online, booking a cab or movie tickets,
ordering food among other activities. Every transaction that went from physical to digital is
today being carried out on smartphones.

This has led to a tremendous jump in mobile users transacting via mobile internet and this
figure is only expected to go northwards. Estimates suggest that the number of mobile users
transacting online via smartphones will grow nine-fold by 2018, crossing 150 million.

The Smartphone Addiction, According deloitte mobile consumer survey, about 28 percent of
smartphone owners look at their devices at least 11 to 25 times a day, while 22 percent of them
check their phones at least 26 to 50 times a day. Interestingly, more than 17 percent of the
respondents look at their smartphones at least 51 to 100 times a day. About 78 percent of
smartphone owners check their phones within 15 minutes of waking up while more than half
check within 5 minutes. This ritual is repeated at the end of the day with more than half (52
percent) checking their phones within five minutes before going to sleep every night.

Share of smartphone user among mobile phone user in urban India. (Source: Nielsen informate
mobile insight 2013)
India overview of smartphone user:

Smartphone incidence across zones:

Mobile Banking / e-Commerce on the rise, According to the research, phone owners in India
are highly interested in in-store mobile payments and mobile money transfers. Given an option
of in-store mobile payments, 71 percent of those surveyed said they will use the facility. Also,
54 percent of them said they are interested in mobile money transfers. However, barriers for
in-store payments uptake still exist. The most common reason given for not using phone to
make a payment was fear about security—cited by 39 percent of respondents. This was
followed by “I don’t see the benefits from using this” (19 percent), and “I don’t know any
stores that allow this” (19 percent). Smartphone user utilising mobile data service weekly vs.
user planning to in next six month.

India will overtake the US as the second largest market for smartphones in the world by 2016
as smart mobile devices become affordable, global research firm eMarketer said on December
22.
"India will exceed 200 million smartphone users, topping the US as the world's second largest
smartphone market by 2016 due to increasing penetration of affordable smart mobile devices
in the country," the US-based research firm said in a report.

By this yearend, China will have 519.7 million smartphone users, followed by the US at 165.3
million, India with 123.3 million, Japan with 50.8 million and Russia with 49 million.

"China will continue to lead the world rankings in 2016 with 624.7 million smartphone,
followed by India (204.1 million), the US (198.5 million), Russia (65.1 million) and Japan
(61.2 million)," the report said.

The number of active smartphone users globally touched the one billion mark (1.31 billion) in
2013 for the first time, with China in the lead at 436.1 million, followed by the US (143.9
million), India (76 million), Japan (40.5 million) and Russia (35.8 million). (Source: Indo-
Asian news service.)

Only 30% US mobile users and 43% of Chinese users are ready to shop online by mobile. Even
fewer use location based services or barcode or QR code scanning.

NFC (a technology allowing mobile payments using the device in store) / Mobile Wallet is
rather negligible with only 3% in the US and 4% in the UK. Asian countries are more inclined
to adopt this new payment method.

Don’t let the numbers fool you, however. There is a growing trend in terms of advanced mobile
usage and it is only a matter of time until mass market adoption of advanced mobile features
will empower the consumer even more.

Some tech companies are pushing the limits of mobile device usage further and some of them
will be increasingly relevant to the retailers everywhere. Here are some of them:

2.4.2 NFC (near field communication)

Near Field Communication (NFC) is a short range wireless communication technology that
emerged only a decade ago. NFC fulfils the need to provide secure, short-distance, and implicit
paired communication capability in smartphones. The strength of NFC technology arises from
its ease of use by triggering the communication just with a simple touch in a short distance,
and terminating the communication immediately as the devices detach. One of the most
important aspects of NFC technology is its inherent security, since the communication range
is extremely short. In NFC communication, bringing two devices very close to each other starts
communication and separating the devices beyond a certain limit terminates the
communication immediately.

Near Field Communication is probably the most expected and promising technology for Omni
channel retailers worldwide. The technology allows, among others, tap-and-go payment
services that have the potential to transform payments, identification services and even
personalized marketing.

2.4.2.1 NFC Availability and Scope

A tipping point is yet to be reached – even though NFC has been around for quite some time,
widespread adoption is yet to be reached. But there is hope. One in four smartphones shipped
in 2012 were NFC compliant and the trend is encouraging. By 2017, 1.55 billion NFC enabled
smartphones will be shipped annually.

2.4.2.2 Working of NFC

NFC technology is a short-range half duplex communication, which was jointly developed by
Philips and Sony in late 2002 for contactless communications. NFC relies on the inductive
coupling principle between transmitting and receiving devices, and differs from far field RF
communication, which is used for longer-range wireless applications.

NFC communication occurs between two NFC compatible devices placed within a few
centimetres of each other using the 13.56 MHz operating frequency (Figure 1). It provides easy
communication between various NFC devices on ISO/EC 18000-3 air interfaces, with transfer
rates of 106, 212, and 424 Kbits per second. The device that starts the communication is called
the initiator, while the respondent is known as the target. NFC smartphone and NFC readers
uses their own power, hence are active devices, whereas an NFC tag uses the power of the other
party, and hence is called a passive device. All initiator devices are usually active devices,
however a target device can be either active or passive, depending on the operating mode.

NFC smartphones are the irrevocable component of NFC communication, which is typically
composed of various integrated circuits such as the NFC communication module depicted in
Figure. The NFC communication module is composed of an NFC Contactless Front-end (NFC
CLF), an NFC antenna and an integrated chipset referred to as an NFC Controller (NFCC)
whose function is to manage the emission and reception of the signals, and
modulation/demodulation.
2.4.2.3 NFC Operating Mode

NFC technology benefits from various elements such as smart cards, smartphones, NFC tags,
and card readers. Various standardization bodies define how NFC technology should be
integrated into smartphones and other related devices in all layers. The common vision of all
NFC standardization bodies includes the ease of access, interoperability, and security. The
communication protocols and standards are defined as operating mode specific:

2.4.2.4 Reader/Writer Mode Communication Essentials

In reader/writer operating mode, a smartphone initiates the communication as an active device,

and can both read from and write to an NFC tag. NFC tags are some form of passive RFID
tags. Figure provides a protocol stack illustration for reader/writer mode.
Physical Layer: The RF layer of the NFC communication is based on the ISO/IEC 14443 and
JIS X 6319-4 Felica contactless smart card standards. Depending on these existing standards,
the NFC Forum defined additional specifications for the physical layer, which are the analog
specification, digital protocol specification, and activity specification. The analog specification
is related to the RF characteristics of NFC devices and determines the operating range of
devices. The digital protocol specification refers to the digital aspects of ISO/IEC 18092 and
ISO/IEC 14443 standards, and defines building blocks of communication. The activity
specification defines the required activities which set up communication in an interoperable
manner based on the digital protocol specification such as polling cycles or when to perform
collision detection

Data Link Layer: In this operating mode, a smartphone is capable of reading NFC Forum-
mandated tag types, which are Types 1–4, as defined by the Tag 1–4 Type Operation
Specifications. These specifications indicate the commands and instructions used by
smartphones to operate the NFC Forum mandated tags.

The NFC Forum also defines standardized NDEF, the data exchange format between two NFC
devices. The NFC Forum mandated tag-enabled read and write operations on the data link layer
by using the NDEF and Record Type Definitions (RTDs) from/to a tag. NDEF has a binary
message format that encapsulates one or more application specific payloads into a single
message. NDEF is also defined as a standardized format for storing formatted data on NFC
tags and for transporting data across a peer-to-peer NFC link.

An NDEF message contains one or more NDEF records. Records can be chained together to
contain large payloads. A record is the unit for carrying a payload within an NDEF message.
Each NDEF record contains values describing its payload, payload length, and payload type.
The length of NDEF records is variable, and definitions of NDEF record fields can be found in
the specifications. The most important one is the Type Name Format (TNF) field, which
indicates the structure of the NDEF record. The NFC Forum provides various record types for
NDEF messaging format such as smart poster, text, URI, signature.

Application Layer: Smartphone applications in reader/writer mode may create their own data
exchange format, or may also optionally use NDEF. Smart poster applications are examples of

NDEF-based applications and handle the tag data based on NDEF specifications. On the
contrary, non-NDEF-based vendor-specific smart poster applications are also possible.

2.4.2.5 Peer-to-Peer Mode Communication Essentials

In peer-to-peer mode, two smartphones establish a bidirectional connection to exchange data.

In this mode, smartphones can exchange any kind of data such as business cards, digital photos,
or any data specific to an application. Figure provides a protocol stack illustration for peer-to-
peer mode.

Physical Layer: The RF interface is standardized by ISO/IEC 18092 as NFCIP-1 and ISO/IEC
21481 as NFCIP-2, which enables request-response model between two active devices, and
also ISO/IEC 21481 as NFCIP-2, which detects and selects the communication protocol that
will be used in peer-to-peer communication.

Data Link Layer: To support peer-to-peer communication between two NFC-enabled devices,
the NFC Forum has standardized LLCP. LLCP provides a solid ground for peer-to-peer mode
applications and enhances the basic functionalities provided by the NFCIP-1 protocol.
According to the NFC Forum, LLCP provides five important services: connectionless
transport, connection-oriented transport, link activation, supervision and deactivation,
asynchronous balanced communication, and protocol multiplexing.
Another important protocol in this layer is the Simple NDEF Exchange Protocol (SNEP) that
allows an application on an NFC-enabled device to exchange NDEF messages with another
device in peer-to-peer mode. The protocol makes use of the LLCP connection-oriented
transport mode to provide a reliable data exchange. Similar to the reader/writer mode
applications, peer-to-peer mode applications also use the standardized NFC Forum’s NDEF
messaging format and RTDs.

Application Layer: Peer-to-peer mode applications may optionally run over SNEP or other
protocols. Up to now, diverse applications have been performed in peer-to-peer mode due to
its highly standardized nature and various use case scenarios such as printing a file from a
smartphone, business card exchange, etc. It is also possible to see some novel applications that
combine NFC and Bluetooth technologies to create secure peer-to-peer applications such as
secure money transfer between mobile devices.

The NFC Forum also provides Reference Application Specifications to promote NFC-based
applications and services such as Personal Health Device Communication for the acquisition
of personal health data from personal health devices using NFC and Connection Handover to
establish an alternative wireless communication such as Wi-Fi or Bluetooth between two NFC-
enabled devices. A variety of applications can be enabled by using the Connection Handover
protocol, such as printing to an NFC + Bluetooth printer, or streaming video to an NFC +
WLAN television set.

2.4.2.6 Emulation Mode Communication Essentials

In card emulation mode, as the user touches a smartphone to an NFC reader, the smartphone
behaves like a standard smart card; thus, the NFC reader interacts with the SE directly. Figure
provides a protocol stack illustration for card emulation mode.

Physical Layer and Data Link Layer: The RF layer of the NFC communication is based on
both ISO/IEC 14443 Contactless Smart Card and JIS X 6319-4 Felica standards. It uses digital
protocol and analog techniques similar to smart cards, and it is completely compatible with the
smart card standards based on ISO/IEC 14443 Type A, Type B and Felica. Moreover, it uses
the NFC Forum’s analog, digital protocol, and activity specifications for the physical layer,
which are already mentioned above.

Application Layer: Card emulation mode includes proprietary contactless card applications
such as payment, ticketing, and access control. These applications are based on the ISO/IEC
14443 Type A, Type B and Felica communication interfaces.

The most common mode is Emulation Mode Communication Essentials for mobile
payment.

NFC technology is made up of several components, which makes it part of a large business
environment, cutting across boundaries of many organizations from diverse business sectors.
Its large value-chain includes several industries and organizations such as MNOs, banking and
payment services, device manufacturers, software developers, other supplementary merchants
including transport operators and retailers. All stakeholders in the NFC ecosystem have already
experienced and agreed on the fact that NFC services to end users cannot be provided by a
dominant single actor; so collaboration of the participants is vital.

The standardization of NFC technology is already achieved and valuable developments have
occurred, creating a considerable increase in commercially available NFC-enabled
smartphones.

According to a forecast by IHS Technology, NFC will be included in 64% of the smartphones
shipped in 2018, up from 18.2% in 2013. Moreover, researchers predict that global shipments
of NFC-enabled smartphones in 2018 will be four times higher than in 2013 which means most
of the smartphone manufacturers have begun to adopt NFC technology in their products as a
de facto standard.

This technology can be widely used in retail to identify users and provide personalized pricing.
Payments are easily accessible when connected to customer bank accounts and/or credit cards.
NFC can change the way we buy tickets, redeem coupons and ultimately interact with retailers.

Price cuts, driven by manufacturing economies of scale and increasingly intense competition
as well as convenience, are driving the exponential growth of smartphone usage.

In US, as well as Europe, NFC is implemented but not yet popular. Changes in consumer
behavior are expected to increase NFC adoption for both US and Western Europe countries
from 2% in 2012 to a bold 25% in 2017. If the estimates will come true, payments processed
by NFC enabled devices will reach $180 billion in 2017.

The ecosystem involved in determining NFC success is of course, complex but complexity
seems to be a surmountable barrier for those involved. Large companies in the field of telecom,
banking and tech giants like Apple or Google have big stakes in the game.

Opportunities are attractive s NFC makes possible numerous applications previously

impossible or hardly worth the effort. Imagine a customer entering a showroom, checking in
to receive personalized information or personalized prices and recommendations based on the
previous purchases. The consumer would be able to discuss options with a virtual assistant
inside the store, get data on inventory in other close by shops and eventually purchase and pay
just by touching his phone against a NFC payment terminal.

Same customer would find paying using his NFC enabled phone easier than paying with his
multiple cards. Many accounts could be unified into one
payment/identification/personalization tool. Security wouldn’t be an issue: The SIM card
inside the phone stores the customer credentials and allows better spending tracking and budget
analysis.

Imagine the same customer, now interacting with, and multichannel approach to marketing.
Ads would recognize him or her, providing relevant information, vouchers and
recommendations instead of boring or untargeted ads Vouchers could be redeemed and stored
on the phone without any hassle and complementary products would be easily accessible.
Location of these products can be the same store or showroom the customer visits or the store
across town.

He could leave public or private ratings or messages for his friends, who would also be able to
read these messages using their NFC enabled mobile device.

Maybe the customer has tried on that red sweater the fashion retailer, just marked as a promo.
But she wants the blue one instead, which can be found in the few blocks away. Of course, she
can spend time to get there or just preview on the mobile app, check the inventory and order it
/ pay for it by mobile by the time she arrives home - it would already be there.
We can’t talk about mobile payments without considering mobile banking, given the rapid
growth of mobile devices substituting for debit/ATM cards as well as other payment cards.
Almost all major banks, and many smaller banks, now offer some form of mobile banking
application to support customers’ demands to be able to interact with their financial accounts
anytime, anywhere. (Forrester Research, The State of Mobile Banking 2012).

Gartner also estimates that the number of mobile payment users will reach more than 448
million by 2016, and that the highest penetration will be in Asia Pacific, followed by Africa –
further emphasizing the important role mobile technology plays in the developing as well as
the developed world.
Increased use of tablets and smartphones is creating a convergence of e- and m- payments,
posing new challenges for Payments Services Providers (PSPs). In 2015, m-payments are
projected to grow at 60.8 percent while e-payments growth is forecast to decelerate to 15.9
percent annually over the next year, as more people use mobile devices to make payments. This
trend is adding to the pressure on PSPs to modernize their payments processing infrastructures
to support the wide-range of customer-facing innovations.

Due to increase use of smartphones mobile payment is becoming much easier & popular:

The survey of Consumer & mobile financial service 2015 reveal which one of the following
security aspects are you most concerned with while using mobile payment:
Consumers mainly expressed concerns about the security of mobile banking were asked to
specify what aspect was of greatest concern (figure 5). Some reported fears of data interception
(22 percent), phone “hacking” (17 percent), and lost or stolen phones (9 percent). While
additional specific concerns were noted by small numbers of respondents, the most common
response was that they were concerned with all of those security risks occurring (43 percent).

The survey also indicated the Activities you would be interested in doing if concerns about
mobile payments were addressed:

In another survey Mobile banking users, however, rated mobile banking as “very safe” (14
percent) or “somewhat safe” (53 percent) in maintaining their personal information. Only 5
percent of mobile banking users indicated that they “don’t know” how safe mobile banking is
at protecting their personal information.

In a survey Some consumers appear to be open to greater use of their phones as a tool to get
the best prices in their shopping activities: 24 percent expressed an interest in using their mobile
phones to compare prices while shopping; 26 percent indicate that they would like to receive
and manage discount offers and coupons; and 24 percent would like to receive location-based
offers. They also expressed an interest in using their phones to store gift cards or track
loyalty/reward points (19 percent) and to manage their personal finances (13 percent).

India, the second largest smartphone market globally, is expected to witness a mani-fold growth
in the number of smartphones to over 650 million in the next four years, a study by networking
solutions giant Cisco said.
The country also considered one of the world's fastest growing Internet market, is expected to
see the number of tablets hit more than 18 million by 2019, according to the US-based
firm's Visual Networking Index (VNI) global mobile data traffic forecast for 2014 to 2019.

According to the report: "In India, the number of smartphones grew 54 per cent during 2014,
reaching 140 million in number and the number of smartphones will grow 4.7-fold between
2014 and 2019, reaching 651 million in number."
The number of tablets grew 1.7-fold during 2014, reaching 2. Million in number and is
expected to grow 9.2-fold between 2014 and 2019, reaching 18.7 million, it added.

There will be 895.6 million (67 per cent of India's population) mobile users by 2019, up from
590.3 million in 2014, a CAGR of 8.7 per cent, CISCO forecasted.

By 2019, there will be around 11.5 billion mobile-ready devices/connections, including 8.3
billion personal mobile devices and 3.2 billion M2M (machine 2 machine) connections (up
from 7.4 billion total mobile-ready devices and M2M connections in 2014), it said.

"The ongoing adoption of more powerful mobile devices and wider deployments of emerging
M2M applications, combined with broader access to faster wireless networks, will be key
contributors to significant mobile traffic growth in the coming years," Cisco VP Products and
Solutions Marketing Doug Webster said.

This mobile-centric environment will give service providers a new landscape of challenges and
opportunities to innovatively deliver a variety of mobile services and experiences to consumers
and business users as the IoE continues to take shape, he added.

With the increase use of smartphone in India, the application of NFC technology can be used
to reduce Check-Out Time during Payments and Real Time Analysis of In-Store Retail Data.
The NFC based payment mainly use apple pay & Google wallet for transaction. It also include
Debit card, credit card & net banking for payment option.

2.4.3 iBeacon Technology

Beacons are small, Bluetooth-enabled devices that attach to a wall or countertop inside a store.
Beacons are proximity-based, meaning they send Bluetooth signals to a customer’s
Smartphone once she is within 50-100 meter of the device, automatically triggering
personalized coupons, special offers, and loyalty rewards. Typically, one beacon is needed for
every 5,000 square feet of store space.

The term iBeacon and Beacon are often used interchangeably. IBeacon is the name for Apple’s
technology standard, which allows Mobile Apps (running on both iOS and Android devices)
to listen for signals from beacons in the physical world and react accordingly. In essence,
iBeacon technology allows Mobile Apps to understand their position on a micro-local scale,
and deliver hyper-contextual content to users based on location. The underlying
communication technology is Bluetooth Low Energy.

Bluetooth Low Energy is a wireless personal area network technology used for transmitting
data over short distances. As the name implies, it’s designed for low energy consumption and
cost, while maintaining a communication range similar to that of its predecessor, Classic
Bluetooth. Difference between BLE & regular Bluetooth:

 Power Consumption: Bluetooth LE, as the name hints, has low energy requirements. It
can last up to 3 years on a single coin cell battery.
 Lower Cost: BLE is 60-80% cheaper than traditional Bluetooth.
 Application: BLE is ideal for simple applications requiring small periodic transfers of
data. Classic Bluetooth is preferred for more complex applications requiring consistent
communication and more data throughput.

2.4.3.1 How does BLE communication work

BLE communication consists primarily of “Advertisements”, or small packets of data,

broadcast at a regular interval by Beacons or other BLE enabled devices via radio waves. BLE
Advertising is a one-way communication method. Beacons that want to be “discovered” can
broadcast, or “Advertise” self-contained packets of data in set intervals. These packets are
meant to be collected by devices like Smartphone, where they can be used for a variety of
Smartphone applications to trigger things like push messages, app actions, and prompts.

Apple’s iBeacon standard calls for an optimal broadcast interval of 100 mtrs. Broadcasting
more frequently uses more battery life but allows for quicker discovery by Smartphone and
other listening devices. Standard BLE has a broadcast range of up to 100 meters, which make
Beacons ideal for indoor location tracking and awareness.
2.4.3.2 How does iBeacon use BLE communication

With iBeacon, Apple has standardized the format for BLE Advertising. Under this format, an
advertising packet consists of four main pieces of information.

UUID: This is a 16 byte string used to differentiate a large group of related beacons. For
example, if Coca-Cola maintained a network of beacons in a chain of grocery stores, all Coca-
Cola beacons would share the same UUID. This allows Coca-Cola’s dedicated smartphone app
to know which beacon advertisements come from Coca-Cola-owned beacons.

Major: This is a 2 byte string used to distinguish a smaller subset of beacons within the larger
group. For example, if Coca-Cola had four beacons in a particular grocery store, all four would
have the same Major. This allows Coca-Cola to know exactly which store its customer is in.

Minor: This is a 2 byte string meant to identify individual beacons. Keeping with the Coca-
Cola example, a beacon at the front of the store would have its own unique Minor. This allows
Coca-Cola’s dedicated app to know exactly where the customer is in the store.

Tx Power: This is used to determine proximity (distance) from the beacon. How does this
work? TX power is defined as the strength of the signal exactly 1 meter from the device. This
has to be calibrated and hardcoded in advance. Devices can then use this as a baseline to give
a rough distance estimate. \

2.4.3.3 Reasons to Use Beacons

Reasons small retailers should consider using beacon technology.

Customer convenience. Since consumers use their mobile apps to comparison shop while in
the store, it makes sense to divert their attention away from competitors like Amazon and
Walmart by triggering an offer at the moment when they likely have purchase intent. Even if
they are not checking out other retailers, your customers will appreciate receiving a discount
or loyalty reward.

Enhance shopping experience. “A store has got to be much more than a place to acquire
merchandise,” said Ron Johnson, former CEO of J.C. Penney, in an article at Harvard Business
Review. “It’s got to help people enrich their lives.” To his way of thinking, merchants need to
move away from a transaction mindset to one focused on enhancing the shopping experience,
giving customers more than they expect. Beacons do that by providing personalized coupons,
offers, and rewards.

Affordability. The low-cost (or, in Facebook’s case, free) use of beacon technology makes it
affordable for most any small business.

Compete with large retailers. Typically, technologies like beacon are something only larger
retailers can afford. Your ability to use them helps level the playing field.

Customer intelligence. Beacon-enabled apps collect data on customers’ spending habits and
product preferences, enabling you to create more personalized, targeted offers.

The retail space is the first to envision a future for beacons using for everything from in-store
analytics to proximity marketing, indoor navigation and contactless payments. Think about a
customer who is looking at a new TV and he/she gets a text with a 25 percent off coupon for
that same TV and then pays automatically using an online account.

The rise of technologies like the beacon, heat mapping and information kiosks have painted a
high-tech picture for the future for retail. Major brands such as Lord and Taylor are already
taking advantage of these technologies to create a unique in-store experience, send personalized
marketing messages to customers, and design floor displays that maximize sales. These cool
technologies are very Jetsons, and will certainly change how people experience retail. And
retailers recognize this; a recent report from Business Insider indicates that beacon
technologies are expected to see a five-year compound annual growth rate of 287 percent.

Retailers and brands alike have been experimenting with push marketing for years, but the
technology and support from major phone manufacturers was lacking. Bluetooth Smart brings
three essential features to the beacon experience:

An intelligent wireless connection to authenticate and manage interactions

An extremely power-efficient connection that doesn't drain the user's phone battery

Nearly ubiquitous support from phone manufacturers and mobile operating systems.
The analysts forecast the global ibeacon market is set to grow at a CAGR of 200.3% over the
period 2014-2019. The integration of online and offline analytics is being used to analyze
conversion rates to maximize e-commerce and in-store sales. Beacon technology is being used
to collect information in sectors like retail, healthcare, and transit systems to discover insights
into people's behavior. If a retailer has a 360-degree view of customer behavior, they can use
actionable insights to boost sales.
Generally, offline customer behavior is only analyzed at the end of the shopping process,
during payment when loyalty cards are used and invoices generated. Currently, customer
behavior is measured only online, but now in-store analytics using iBeacon technology can be
used to get a clearer view of customer's buying patterns along with online browsing patterns.
Mobile devices are becoming an integral part of today's urban and semi-urban lifestyles across
the world. As more people acquire devices for everyday use, the market for mobile applications
should grow in tandem. Rising urban populations, higher disposable incomes, and greater
awareness of the capabilities of electronic devices and apps are cumulatively pushing growth
in the iBeacon market.
Danova named retail the first and most obvious market for this technology and provided
encouraging data from mobile marketing firm, Swirl, which reported that already 67% of retail
shoppers had received an in-store alert, and of those shoppers, 81% opened or read the alert,
and 79% made a subsequent related purchase. Some analysts have suggested that the best way
to approach the app development would be to partner with established lifestyle or shopping
apps. Swirl’s data also suggests that shoppers are most likely, at 65%, to trust their favorite
retailers with their location-based data (Danova).
Digi-day explained the opportunities at hand for stores and brands to collect consumer data and
also to combat the practice of “show rooming,” currently hindering brick-and-mortar sales as
consumers check out products in person and then pull up better deals right on their phones in
store to place orders on sites such as Amazon. Another potential feature for beacon
technology’s application is for stores to push notifications up to brands for bidding, meaning
that they allow the brand that offers the highest profits to present its offer to the target consumer
at the most crucial point of decision making—right in the aisle, before the purchase choice is
made—via Beacon technology.
Chain Store Age published a relevant piece about the evolution of consumer trust and how
brands should be navigating the latest technological opportunities. This article also encourages
companies to use consumer feedback acquired from beacon-based initiatives to redesign stores,
to rethink staff interactions and in-store guidance, and to reinforce the relevance of app
integration and omnichannel experiences. This article also examined a very fundamental truth
emphasizing that consumer trust is the most crucial element to successful applications of new
technology. Declaring that relationships are key to taking risks and making bold business
decisions, the brands “communicate the benefits, deliver a quality experience, and keep
building trust through proactive tech security and strong responses to any breach”.
On average, about 60% of consumers who get these messages respond positively to them. If
there's an offer included, an average of 30% will redeem that offer. Those are much higher
response rates than retailers get by other means, simply because it is so relevant in terms of
location and timed to what those individuals are looking at in the store.

More than one in four high street shoppers, 28 per cent, would like for the shops they visit to
know exactly who they are when they walk in, based on location-based technologies such
ibeacon, in a survey commissioned by Sales force UK and conducted by Harris Poll.

In addition, about one-third, 32 per cent, of high street shoppers now expect the shops they
visit to know what prior online research they’ve done on the retailers’ websites – including
their wish lists, any abandoned carts, and their related social media activity – so they can
receive better service.

It’s no longer the affluent who expect VIP treatment when their pocketbooks are out, more than
a third, 39 per cent of high street shoppers would be willing to share data around their personal
preferences with a retailer to receive faster and more convenient service once they are in the
shop.

A further, 43 per cent indicated that they would be more likely to shop at a certain retailer based
on the technology that the store associates use to assist customers.

This year, beacon will help bib retailers collect data, push coupons, and generate billions in in-
store sales.

Beacons are among the most important new mobile technologies helping real-world merchants
win back sales. These low-cost devices communicate with Smartphone apps indoors through a
Bluetooth signal. Last year saw tons of retailers testing beacons, including Macy's and Target.
This year, hundreds of big retail chains are turning those devices on and using them to
communicate with mainstream consumers in store.
Here are a few of the primary drivers that expect to spur beacon adoption:

We expect beacons to directly influence over $4 billion worth of US retail sales this year at top
retailers (.1% of the total), and that number will climb tenfold in 2016.

Many early adopters who opt in to receive beacon-triggered messages will likely be coupon
clippers. Half of beacon-triggered messages sent currently are some form of coupon, according
to Shop kick. Mobile coupons are a significant part of this market. Mobile couponing app
company RetailMeNot claims that its offers alone influenced $3.5 billion in retail sales in 2013.

Loyalty programs will also be important drivers. Beacons and loyalty apps could be used
together to reward customers for all sorts of location-based actions, even just walking into a
store. Brick-and-mortar stores will use mobile payment apps and in-store technology to
establish integrated online and offline loyalty programs among their own customers.

Since beacon-powered apps will collect valuable data on consumers' in-store activity, they
could result in highly personalized and targeted offers, which will reinforce the above
programs. Once a consumer opens an app in-store, the data on their clicks and location can
help retailers target them with offers customized to their location in a store, or based on past
in-store shopping behavior.
This shows that beacon will increasingly raise the sale in the retail store in the coming year.
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