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Before it became a hot topic sometime early last year, few civilians had come across the term “near field communication” (NFC). Corporations, however, had been excited about the technology’s potential since at least 2004 — when Nokia, Sony and Royal Philips Electronics founded the NFC Forum. Samsung, Motorola, Microsoft and more than 140 other organizations all joined the party shortly after.
NFC allows a device, usually a mobile phone, to collect data from another device or NFC tag at close range. In many ways, it’s like a contactless payment card that is integrated into a phone. In other ways, it’s similar to Bluetooth, except that instead of programming two devices to work together, they can simply touch to establish a connection.
So why are some of the world’s most influential companies so excited about it?
We’ve compiled notes on what NFC is, why its useful and how it’s starting to permeate the product world.
How Does NFC Work?
NFC devices share a core technology with RFID tags, contactless payment cards and inductive-coupling. In the words of the NFC Forum, “loosely coupled inductive circuits share power and data over a distance of a few centimeters.”
According to the Forum, NFC can operate in three modes:
- Reader/writer mode: A reader/writer can collect and write information on a smart tag. “The tag is essentially an integrated circuit containing data, connected to an antenna,” explains a white paper from NFC-developer Innovision.
- Peer-to-peer mode: Two NFC devices can exchange data between each other.
- Card emulation mode: An NFC device appears to a reader like a contactless payment card or contactless transportation card.
What Can NFC Be Used For?
- Transportation: NFC works with most contactless smart cards and readers, meaning it can easily be integrated into the public transit payment systems in cities that already use a smart card swipe.
- Ease of Use: Unlike Bluetooth, NFC-enabled devices don’t have to be set up to work with each other. They can be connected with a tap. If NFC-enabled phones become prevalent, you’ll likely be able to initiate a two-player game by touching two phones together. You’ll be able to link a headset to your phone or print a photo just by touching your device to a printer.
- Smart Objects: NFC can have similar applications as bar codes do now. You can put one on a poster and let pedestrians scan it on their phones for more information. But being able to add more information to any object by integrating a tag has led to some interesting applications that go far beyond billboards. A company called Objecs, for instance, sells an NFC tablet for gravestones. Touching an NFC-enabled phone to the Personal Rosetta Stone provides additional information about the deceased.
- Social Media: Before Foursquare took off, a German company called Servtag was working toward a similar concept for NFC-enabled phones called Friendticker. The company applied more than 250 NFC-tag stickers at various locations in Berlin that users would swipe their phones past in order to alert their friends that they were “checked in” at that location.
While Foursquare may have stolen the thunder for location-based networking, there are still plenty of social media applications for NFC in the works. In 2009, a German university (Technische Universität München) submitted a prototype to the NFC Forum competition that integrated with Facebook. The application,NFriendConnector, allowed people who met in a physical space to exchange profile data through their phones. Their respective statuses would automatically be updated (for example, “I just met so and so”), and they could choose to include their location (“I just met so and so at this bar”). Instead of stalking a new acquaintance’s profile after a night out, this application provides an option to run a matching method based on variables the user provides (such as interest, dislikes and hobbies) while still chatting with them in the bar.
What’s The Fuss About Mobile Payments?
In the news, NFC is most often discussed in relation to mobile payments or “the digital wallet.” Unlike many other wireless technologies, NFC has a short range of about 1.5 inches. This makes it a good choice for secure transactions, such as contactless credit card payments.
Credit card companies, mobile network providers and startups are all gunning for the opportunity to facilitate digital transactions when NFC-enabled phones become widely available.
What Major Players Are Interested in NFC?
- Google: In May, Google revealed a contactless payment system called Google Wallet. Citi, MasterCard, Sprint and First Data partnered on the effort to make an app that enables mobile payments and loyalty cards using NFC. At first, it will support Citi MasterCard and a Google prepaid card and be compatible with the Nexus S 4G.
- Amazon: Amazon is also exploring an NFC-enabled mobile payment system.
- Apple: One of the most popular Apple rumors of late is that the iPhone 5 will be NFC-enabled. The same rumor turned out to be false regarding the iPad 2.
- Microsoft: Not one to be left out of a party, Microsoft is also rumored to be planning NFC capabilities for its next phone releases.
- PayPal: The company has partnered with Bling Nation, a Palo Alto startup that has been installing contactless payment terminals at local merchants since 2008. When users attached an NFC-enabled sticker to their phone, they could swipe to make payments and receive rewards. Previously, Bling Nation users were paying from accounts at partner banks. Since last summer, they’ve also had the option to pay using their PayPal accounts.
- Credit card companies: Contactless payment stations that use cards can easily accept payments that use NFC as well. Thus, pretty much every major credit card company that has started the process of distributing payment stations to provide tap-and-go payments using cards is also interested in NFC-enabled payments.
- Mobile phone providers: Verizon, AT&T and T-Mobile partnered to launch an NFC contactless payment network called Isis last year. Initially, it was partnered with just Discover. Since then, Visa, MasterCard and American Express have signed on.
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