Is NFC going to tap into your wallet?
NFC is a new wireless technology that allows devices to communicate with each other over short distances. The data transfer between the devices occurs through one of two means: either a short wave or, as is more common, a touch or tap (just like you would do with an Oyster Card in the UK).
So, the communication doesn't have to occur between two handheld devices, such as two phones. It can also work with a mobile device and a target of some kind - for example, a point-of-sale system at a store's checkout counter or even something as simple as a tag, sticker, poster, decal or card with an NFC chip embedded. In the case of these simple targets, batteries are not required to power the NFC chips. Instead, the chips are in a passive state, waiting to be activated by another device that can generate a RF (radio frequency) field.
In mobile phones, there are three different ways that NFC can be implemented:
- Fully Integrated into the handset: One example of a fully integrated NFC handset is the Google Nexus S, Google's latest flagship phone built in partnership with Samsung.
- On a SIM card: NFC can be integrated into a SIM card - the card that identifies a mobile subscriber on an operator's cellular network.
- On a microSD card: NFC technology can be integrated on a microSD card, which is a removable storage card that uses flash memory.
Some example use cases for NFC include:
- Mobile payments (phone acts as a credit or debit card at point-of-sale)
- Mobile ticketing (you pay for a boarding pass on a public transport system with your phone)
- Smart posters, cards, stickers, etc. (you can tap your phone to a tag embedded in some other object like a card or poster to get access to additional information; for example: tap a movie poster to see a trailer; tap a business card to pull up the contact info on your phone)
- As a substitute for keys (unlock your hotel room door with NFC)
- Access to a network or as a quick way to make a connection (make a Bluetooth connection or log onto a Wi-Fi network by tapping your phone to a tag)
There has been lots of speculation about NFC becoming a dominant payment option. Visa is predicticing that 20 million UK contactless cards will be in circulation by the end of the year. Mastercard has also researched this area and found that 62% of people surveyed are open to using their mobile phone as a wallet. Juniper research has gone further and is forecasting that NFC phones will be responsible for more than $75 billion in global sales by 2013 and that 300 million mobile phones will be NFC capable by 2014.
The stats are impressive, and with retailers such as McDonalds deploying 1200 contactless terminals across its UK restaurants, and Starbucks following suit, NFC looks like it may well live up to the forecasts.
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