NFC technology coming in your next smartphone, 10 ways it will change life for good

Near Field Communication or NFC technology is emerging as the next big feature on future smartphones. The first standards for this communication protocol were accepted in 2010 and now have on-board, not just the mobile phone companies like Nokia, Motorola, Samsung and Blackberry, but also credit card companies like Visa and Mastercard, retailers like McDonald's and Best Buy and a host of others. Technology companies like Intel, Microsoft and Google are also members. The adoption of common standards would help NFC devices to be inter-operable, a necessary condition for wide acceptance.

NFC Technology

The NFC communication technology enables the smartphones to establish two-way data transfer from short distances of under 8 inches. The technology is labelled "just tap and connect". The data transfer is at a low 0.424 Mbps, and the power consumption is very small at only 15 milliamperes.

It is expected that NFC enabled phones would start to take-off in 2011, and by 2014 over 20% of the global sales of over 1 billion mobile phones will be NFC enabled. The days of our wallets or purses bulging with plastic cards and our heads crammed with PIN numbers and passwords could soon be behind us.

NFC technology is not new. It was invented by Sony and NXP Semiconductors in 2002. It is an evolution from RFID technology that has been used for many years and is not very different from other Wi-Fi technologies like Bluetooth. This technology has already been in use in Japan since 2004 where mobile phones are routinely used for making payments for small purchases like a sub-way fare or a grocery store.

Nokia recently introduced its NFC featured phone where the NFC chip is incorporated into the SIM card. This would give the mobile phone service provider the responsibility for managing the NFC feature. This looks logical and should become the accepted industry standard. Earlier, it was unclear who would have this responsibility. In a Blackberry phone NFC retrofit option, the phone maker had partnered Bank of America to build NFC into a mobile phone battery cover. Incorporation into the SIM card is so much neater and every mobile phone has a SIM card whereas things like battery covers vary between phones.

NFC technology is said to have three features, "sharing, pairing and transactions". Each of these features will change the way we perform many routine day-to-day activities.

1. Transactions

Making payments is the first major application for NFC technology. The buyer of a product or service would simply tap his phone against the NFC point-of -sale terminal and the amount due would be paid.

a. Payment of fare on buses, sub-ways

On buses and subways, for example, the queue for payment of fare slows the process. The subway or bus operator could adopt NFC technology. With fare collection by NFC, the passenger can simply wave his phone in front of a terminal and does not even have to break stride.

b. Payment at point-of-sale terminals

Most retailers are wary of queues at check-out counters, as these act as a serious negative to the convenience of shopping at the retailer. The check-out staff are often stressed and lack motivation to speed the process. This is the reason that many retailers have installed self-check out terminals where the shopper does his own scanning, billing and payment. At manned check-out counters, the process of credit card swiping and signature on the electronic pad could be avoided and the check-out time can become significantly faster with NFC.

Another day-to-day need that could use NFC technology is at gas stations, to pay for fuel filled.

c. Other payments that presently need a credit or debit card

Many other payments that presently need a credit card or debit card could get converted to NFC. Payment by credit or debit card usually needs the user to enter a PIN number or a password. Also the card user has to carry multiple cards.

Already Visa with its PayWave and MasterCard with its PayPass have deployed NFC technology on phones linked to the phone user's Visa or Mastercard account. These Visa and MasterCard applications have already been installed with some retailers and food outlets. They are also already deployed at the mass transit stations at Los Angeles and New York city. Some 10,000 taxicabs in NY city now accept NFC based Visa and Mastercard payments in place of the card swipe process. The launch this month of the Google Wallet on their Nexus S mobile phones in partnership with Mastercard, adds another major name to the NFC bandwagon.

d. Loyalty cards

Besides payment cards, we also tend to carry loyalty cards such as frequent flyer cards, discount coupons, or shopping points cards. In addition, we carry plastic access cards for building or garage access, library usage and many other needs. These could all get integrated into the NFC phone.

There are, of course, some security concerns with NFC usage. Without the need for a PIN or password, one concern is that a stolen mobile phone could be used for a buying spree until the credit limit is reached. Sainsbury's, the UK retailer, has suggested a ceiling of approx $ 25 to be set for each NFC transaction and for the user to set a time interval between transactions to overcome this concern. Another technology based proposal, is for the user to be able to turn off and turn on the NFC feature on his phone with a password controlled set of key strokes. This would also address another concern that someone with an NFC reading device could simply walk through a crowd and debit false sales and steal money from unsuspecting NFC phone users. Management of NFC by the mobile phone service provider, as demonstrated by Nokia, would also increase security as the user can get the phone company to immobilize the SIM card and cut off use of the phone and the NFC feature. The phone company already tracks the location of the SIM card.

Many engineers working with NFC technology say that many layers of security are already included and the inherent short distance for communication negates many of the known hacking processes. Others think that NFC would become the next focus of attack by hackers and sooner or later hacking would happen as has happened in other fields.

2. Sharing

The applications beyond transactions are still in early phases of evolution.

a. NFC tag embedded advertising

This is the feature that is attracting great interest from the advertising and marketing people. The challenge in advertising has always been that after you have caught the attention with a great visual or a telling message, how to get the target to take the next step of acting on the message. If the advertisement is on a newspaper or magazine page or even on a poster, the target customer may not have the time or inclination to immediately followup on the action. It is easy to embed NFC code into the advertisement so that the reader can simply tap his mobile phone on it and additional sales information or a URL link can be downloaded into his phone.

Even if he fails to followup, the fact of his interest in the advertisement can be fed back and can be followed up with telemarketing.

b. Downloading of information or data

In our everyday life, we often need to store and retrieve information for short periods of time that can later be deleted. Examples are a train time table or a program schedule. This kind of data can also be NFC enabled so that the phone user can download and store this information on his phone for the time he needs it by simply tapping his phone to the timetable or program sheet.

The same feature can also be used, for example, as the key card for access to a hotel room or a building. Perhaps this could also serve as the key-less car entry in future.

c. Exchange of business cards and such type of contact data

The common practice of exchange of business cards or phone numbers can become NFC enabled. This data can be as detailed as the user wants and can also be customized in various ways. For example, the NFC business card could include a photograph of the person and exclude personal phone numbers and home address. The same information for a family member or friend could exclude the business title and photograph.

The NFC enabled phone could also become the personal ID document and could incorporate a photograph and signature, perhaps even a fingerprint. This could become acceptable for applications like airport security.

3. Sharing

The feature of sharing data between two NFC equipped devices suggests other applications.

a. Use of NFC in gaming applications and for music and picture sharing

Two phone users can use the NFC feature to play a game. A gaming application on one phone could be shared with another phone for playing together. Gaming is a widely used application for multiple players on laptops and tablets. On smartphones, it has usually been solo games. That would change with NFC.

Music and photographs are the other popular data shared by phone users. NFC equipped phones could easily exchange these files which so far needed the phone pictures or music files to be uploaded to a computer.

The application to social networking sites opens up another new set of opportunities.

b. Application to medical data and such non-entertainment applications

The NFC equipped phone can also be used for more critical applications such as medical history and diagnostics. Critical medical data could be on the patient's phone and this data can be read on a monitor in the doctor's office.

Similar applications can be thought of for other professional uses ... perhaps stock market trading, library access and other such applications for which we currently depend on cards and computer access.

c. Access to data on desktop and laptop computers

The NFC device on the phone would also be able to access a desktop or laptop computer to share data or to download programs. The popular use of this feature would be carry work to do at home or during transit without the need for a portable computer. The NFC equipped phone could take over performance features from a tablet computer.

In conclusion, it does appear that NFC technology is the next big thing that could impact many of our day-to-day routine activities. The upsurge in usage predicted over the next 2 years, would make it as common place as mobile phones themselves have become in the last decade.