Is NFC the Next Big Thing for smartphones? I am not so sure.

Is NFC the Next Big Thing for smartphones? I am not so sure.

Summary: The race to NFC is hot enough to imply it will bring great benefits to smartphone owners, but the way things like this work I am not so sure it's all that.

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Near Field Communication (NFC) has been around for a while, and smartphone makers seem to be hot to get the technology embedded in their wares. Google has even incorporated the ability to handle NFC hardware right into the Android platform, starting with Froyo or Gingerbread, I forget which; Apple is rumored to be putting NFC hardware into future iPhone models. The race to NFC is hot enough to imply it will bring great benefits to smartphone owners, but the way things like this work I am not so sure it's all that.

Basically NFC enables gadgets to communicate with other equipment when brought in very close contact (4 cm. or less). The simple act of bringing two such devices together triggers a programmed function. The typical usage touted for NFC is to replace the bank cards we currently use, enabling the smartphone to become a method of payment for purchases. Wave the smartphone at the terminal and your money is transferred to the service or product provider. It looks good on paper, but I suspect it won't be that straightforward for a while.

There are a lot of banks that will have to get on board with NFC, and a standard implementation of it at that. For the customer to benefit the process has to work the same across all of these institutions for a start. Then all of the retail organizations have to embrace it equally for the process to become standard for the customer. There are so many companies involved I'm afraid this will take a very long time, if it happens at all. It can easily become a frustrating process if the NFC-equipped smartphone owner has to keep track of which retailers and restaurants accept this method of payment and which don't.

Until everybody gets on board with a standard implementation of NFC for payments, customers will still need those plastic bank cards in the wallet just in case. That's not a big deal, but it means consumers will have two things to keep track of that can be abused if lost or stolen. Many of us have seen family members, or even ourselves, racing in near panic to find the smartphone that was left somewhere while running errands. That scenario would become real panic if that smartphone left on a counter somewhere is a direct tap into the bank account.

That points out the security aspects of NFC for payments in general. There will probably be a security step to prevent abuse of the system, much like the PIN number used with bank cards today. I suspect the process will entail waving the smartphone at the terminal and then entering some security code to prove it's really you making the purchase. Not a big deal, but not really any different than what is done today without NFC.

The payment scheme is only the primary purpose that NFC can serve, I'm sure that enterprising companies will find all kinds of ways to make money off the use of the technology. Until I see what those are I'm not very excited about NFC. I suspect that it will end up being used for advertising somehow, as that always seems to be the initial push with new mobile technology. I hope I am wrong about this, as I like the idea behind NFC. I just can't get excited about it yet.

Got some good use cases for NFC that you'd like to see implemented? Leave a comment in the TalkBack to share them. I am very interested in how this tech can be leveraged.

Image credit: Flickr user simon_music

Topics: Mobility, Hardware, Smartphones

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26 comments
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  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    I'm not so sure either. Banks will need to upgrade their infrastructure to support this. Also there is the huge matter of trust and scenario of if someone loses their smartphones and how the NFC payments can be shut off.
    LoverockDavidson
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @LoverockDavidson - Who cares about the banks and their infrastructure? If the financial institutions see revenues hockey stick because of NFC, they will spend to upgrade their infrastructure. <br><br>The issue here is consumer and the vendors adoption. These two parties will need to be courted, heavily. Vendors will have to pony up dollars to refit their POS systems. That refit is not inexpensive. Consumers, as you mentioned will need to have their security concerns addressed before they start "swipping."
      ramonbnuezjr
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @LoverockDavidson
      Thats not likely to happen. Banks are BROKE. Their share prices are still in the bottom of the toilet. They don't have the money to expand infrastructure. Not to mention banks are notoriously slow at adapting new technology. They were one of the last industry to migrate out of COBOL/DB2 (and not completely)...and for good reason. NFC is ripe for abuse.
      rengek
      • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

        @rengek
        Just an FYI there for you, medical data transaction processors still use COBOL too
        aiellenon
      • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

        @rengek Migrate? Most of the banks still have something running COBOL.
        mm71
  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    I don't think that NFC as a technology is the next big thing. I simply see it as an evolutionary stepping stone in the mobile graph. The next big thing is getting consumers and vendors to adopt NFC.

    Companies such as Sprint, Visa and Isis are all racing to get the mobile wallet in place. I for one love the idea of a mobile wallet service. Unfortunately, it requires some heavy financial lifting from the vendors. Additionally, vendors must witness a cost savings coupled with a revenue increase, before adopting the mobile wallet. Even more taxing is getting consumers to buy in -- they must be shown the value of using such a service.

    Both barriers of entry pose difficulties not just for the mobile wallet but any services that hangs off NFC.
    ramonbnuezjr
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @ramonbnuezjr
      many places already have NFC credit card devices, look for the symbol to "touch" your card to the machine instead of swiping it, most gas stations have it now, and Exxon even has it at the pump, you can sign up for a free key fob that taps your checking account when you wave it over the tiger at an Exxon or Mobile gas station. The hardware is already out there at enough places to make it viable.
      aiellenon
  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    While I agree that NFC does have some lifting burden before it will become widespread in the US, I am not sure the burden is as bi as others think. Most POS hardware vendors already have NFC systems available. Several chains have even implemented NFC already (e. g. McDonald's).

    I look to two previous examples that show NFC will work for mobile payments. The first is Starbucks. Although not NFC, their iPhone app to pay via barcode is being used (just sit in a Starbucks and be amazed). Sure, the hardware was already in the store, but they had to custom write the software to make it work, something retailers won't be required to do for NFC.

    The second example is Mobil gas stations, and now ExxonMobil in both the Exxon and Mobil brands. Mobil developed a NFC payment system years ago that worked similar to a toll tag. ExxonMobil expanded to a key-fob system that works at most of the gas pumps for either brand. Here they are implementing readers and NFC wands, but consumers use them and ExxonMobil loves them. (They love them more if you link an ExxonMobil credit card, but I don't think that is a requirement.)

    So, will NFC take off? Yes. Will it be in the next year? Probably not for mobile phone versions, as the phone hardware cycles are too long. But within 4 or 5 years, I suspect that most of us will at least have the option of activating a mobile-phone based NFC payment system, and it will work reliably.
    jglopic
  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    Nobody I know of is addressing one simple question: What problem is being solved by NFC?

    If there's not a pressing need for this technology, why are we bothering? I don't see anyone other than the tech companies clamoring to enable NFC - why should I care what _they_ want to do? If this is the latest example of a "cool technology" that is only present _because_ it's cool, then you can keep it. We've got enough trouble keeping our credit and debit cards from being abused by criminals; why give the miscreants another area of vulnerability?
    Den2010
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @Den2010

      For one thing, you should be able to replace not just one card, but all your cards. Most people do have more than one. I want to get rid of my Safeway card, my Sam's club card, all of them. Also, you're only required to use a PIN at the ATM. I can tell you from experience, that if someone breaks into your locker at the gym and takes your credit card, they WILL probably be able to use it to make purchases, even when the cashier supposedly checks ID!
      tkejlboom
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @Den2010 " If this is the latest example of a "cool technology" that is only present _because_ it's cool, then you can keep it."

      When i read that, the first thing i thought of was the iPad
      Scarface Claw
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @Den2010 Good point. I expect the answer is to streamline the amount of plastic a customer ports around. Anyway, I don't see this so much as revolutionary as iterative.
      questionsall
  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    IMHO, this is not such a difficult transition from swiping a credit card. I think this technology will be here faster than you suspect, because a major part of the infrastructure is already in place for it.
    ITOdeed
  • Three Things

    I worked for a major auto parts retailer for 10 years, in the Store Technology department. Comments:
    (1) I'd hate to see what regulations PCI (Payment Card Industry) would impose on this technology and how hard it would be for retailers to guarantee WIRELESS security - even with a 2 inch range.
    (2) The same retailer was examing use of on-screen barcodes for store loyalty cards when I was leaving their employment. NFC could serve in this role as well.
    (3) There would be a huge opportunity for people to virtual pick-pocket!
    Sedric7777777
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @chelvey@...

      Such a guarantee would be pointless and absurd. The benchmark is making it slightly better than it is now. Right now, any idiot can grab your card and swipe it. Three year olds can do it.
      tkejlboom
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @chelvey@... <br><br>The virtual pickpocket could be foiled by either encorporating one time use encryption keys into the system, so after a few seconds, any sniffed credentials would no longer be valid, or by requiring the user to turn on the NFC transmitter for each transaction, or enter a pin number on the phone before the phone would send credentials over NFC.
      colinnwn
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @chelvey@...

      two quick notes...
      1. 4cm is not 2", 2.5cm=1" so it is closer 1.33" which is a pretty short distance, practically requiring touch
      2. you can get "key ring" an android app that stores all of your key chain cards with a barcode in your phone, it even is capable of displaying a scanable code for vendors to use instead of having to type the number in.
      aiellenon
  • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

    Pretty sure Japan already does this with their phones
    masat01
  • Current and potential future uses of NFC

    Currently, NFC is implemented for public transit debit cards, college debit cards, key fab entry into buildings, elderly care bracelets, embedded posters, etc (see wikipedia). Hundreds of millions of "smart" cards and buttons (Mifare rfid) are currently in use today that use the same 13.56 MHz frequency as NFC. Japan is successfully using these rfid cards as loyalty cards in grocery/retail but the retail places have their own custom, expensive rfid readers.

    The potential power is when the NFC readers become cheap, like in a phone. With an iPhone or Android phone, imagine a doctor tapping a patient's NFC-compatible bracelet (currently these bracelets sell for $2) then bringing up their medical records on the doctor's phone (or tablet)?

    For commerce, think about hot dog stands and other small commerce guys who only accept cash today? Now they can do commerce with just a phone because it has an NFC reader and is connected to the Internet. The mobile phone networks were originally looking to go around the credit card companies (ISIS project) but have realized this is a huge task and have recently decided to partner with them instead. Maybe we'll see the credit card companies actually embed the 13.56 MHz antennas in the credit cards - just like the $2 rfid loyalty cards - so these small commerce guys with NFC phones can do commerce without credit card readers. The credit card companies, the small business owners, and the consumers win.
    MarkBieschke
    • RE: Is NFC the Next Big Thing for smartphones? I am not so sure.

      @MarkBieschke
      There are credit cards with this technology in them, I had one from citibank in 2007/2008 a platinum account, but I closed that account when they tripled my credit limit.

      Also isn't this used in the new USA passports also?

      I believe there are driver's licenses in the USA that also have NFC chips in them.

      Best Buy was supposedly implementing NFC into price tags, where you could touch your phone to the tag on the shelf and it would take you right to the web page for the item on Best Buy's website so you could see the specifications and compare the item to another one.
      aiellenon