Near Field Communications (NFC) is a proximity and contactless technology that allows NFC devices to communicate among themselves allowing for various applications such as data or information sharing, payment processing and ticketing to be performed on your mobile phone in a more user intuitive way by simply touching your mobile phone onto another NFC device or tag.
It´s the same technology that powers better known applications such as Google Wallet wherein mobile users with NFC enabled devices can pay for goods and services by tapping their mobile phones to the point-of-sale (POS) terminals at stores.
So let´s understand the technical and commercial aspects that drive NFC and what in our opinion is the driving force behind the technology.
In technical terms, NFC is a RF technology operating at 13.56 MHz and is based on inductive coupling wherein loosely coupled inductive circuits share power and data over a distance of few centimeters.
So to illustrate this with an example, you are walking down the street and see a poster of a movie you might want to check out. You walk up to the poster and touch your mobile phone to an NFC tag located on the poster and your browser automatically navigates to the movie´s trailer. In this case, on the NFC tag a command to navigate to a specific URL (written in NFC Data Exchange Format – NDEF) has been programmed onto it. So, when a NFC enabled mobile phone approaches the tag (at approximately 3 cms or less) the passive NFC tag on the poster is activated by the radio waves of the NFC antenna in the mobile phone and the information transfer takes place. You need no mobile app, like in the case of QR codes, for a NFC driven data exchange to take place. This makes the technology more intuitive, less clunky and easy-to-use.
On the commercial side, stakes are much higher than one can imagine. As a user you can obviously make things easier for yourself by simply tapping to share your favorite song or application or to quickly pay for a pack of chewing gum and run out the store. But behind all this is a ton of cash which incentivizes the value chain behind NFC. Let´s take the Samsung Nexus S NFC mobile phone as an example. Every mobile phone comes with a Secure element which can be embedded into the phone itself, a SIM card or microSD card allowing for secure transaction e.g. payments. In the Samsung Nexus S the secure element is embedded into the phone itself with Google not providing access, currently, to the secure element to external parties. So any secure transactions e.g. payments, are more or less driven or controlled by Google on that handset. Extrapolate this to the millions of NFC enabled phones are might be shipped out every year or to the increasing use of mobile for payments. This gives the party controlling the secure element tremendous power. And this why there is a “NFC war” between the likes of Google and mobile operators. Each side is building its consortiums, industry bodies etc. to out-run the other. But this is just a battle for a pie that is very big thereby testifying the commercial stakes of NFC. So whoever wins, will win big!
Another great use of NFC is for app developers who build NFC into their apps. Users can get access or basically buy an app when they see it on someone else´s mobile phone. No more – remember the name of the app, go to the app store and then pay and download. Remember mobile phone users for the lack of a better word are always-on-the-run. With NFC it is just seamless.
We tend to look at the technology from a user perspective and think the intuitiveness and ease of use of the technology is its biggest plus.
Although NFC is considered to be a sub-set or an extension to RFID in our minds that´s not exactly true, for us atleast. To begin with, RFID has a long range. So imagine your mobile phone that has your credit card info broadcasting this data up to 10 meters! Secondly, like explained above the usage of the secure element in NFC transactions allows for safer transactions for data transmission.
Having said that, the technology and the industry behind NFC is still small and in some countries even smaller. It´s adoptability is dependent on the wide availability of NFC enabled phones or SIM cards, and a common standard across geographies and devices. But for the moment, the rationale for its adoption is quite clear from a user perspective. The question is – will the industry big-weights get behind the technology for the common good or just be big bullies!