Last year mobile payments finally became a reality with the Google Wallet service, but it won’t be the only game in town. Isis, a conglomerate of AT&T, T-Mobile, and Verizon Wireless, will be entering this space in 2012 with its own service. The real story, though, is the enabling technology behind tap-and-go payments, called Near Field Communication (NFC).
NFC is capable of much more than simply buying goods. It relies on circuitry to transmit and receive data between very short distances and is compatible with existing RFID (Radio Frequency Identification) tags, which are already widely deployed across the country. What makes NFC really exciting is its potential.
The growing adoption rate of RFID technology is step one in NFC’s coming of age. Analyst firm ABI Research estimates the RFID market has increased 11 percent over last year. The second factor at play is the swift integration of NFC into smartphones. According to Nick Holland of The Yankee Group, a whopping 40 million NFC chipsets hit the market in 2011.“While the vast majority of these chips went into handsets, we expect NFC to quickly cascade into other devices this year.”
NFC is integrated into such devices as the Samsung Nexus S and the Samsung Galaxy Nexus. Unfortunately, users can’t do much with the feature yet. In fact, Verizon Wireless didn’t allow access to Google Wallet on the Galaxy Nexus. The carrier cited data security concerns as a factor in its decision to not include access to the service. Verizon’s announcement came shortly after an analyst firm discovered credit card vulnerability in the way Google was storing data. Others believe the carrier blocked the service because of business reasons.
Despite some concerns, NFC may catch on quick simply out of convenience. For example, the NFC Forum and Bluetooth SIG have published a developers guide to using NFC for quickly pairing Bluetooth devices. So NFC will work hand in hand with other popular technologies.
Google sees NFC’s potential. Baked into Android 4.0 Ice Cream Sandwich, Google’s Beam feature uses NFC to let users do some nifty tricks, such as transferring videos, pictures, contacts, and websites by touching two Android phones together. For example, a YouTube video shared via Beam will pick up on another device exactly where it was last played.
In regards to Beam and NFC, a Google rep told us, “Beam takes a technology like NFC, which has always been associated with something like mobile payments, and found an infinite number of use cases.”
The NFC Forum envisions a host of other uses for NFC, including using your phone as your airplane ticket, exchanging business cards, opening car doors, and scanning info on posters. In the future you might also use NFC to log into your PC securely.
The future looks bright for NFC, but at the moment the cost of NFC chips prevents the technology from reaching critical mass. “By 2014, we expect the number of NFC-enabled handsets [in use] to be 20 to 30 percent. The costs are going to come down rapidly, at which point you’re going to see developers really experiment with it.”