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Near field communication, also known as NFC, has built a sturdy platform for widespread adoption in a large range of applications. The technology delivers ease and convenience by integrating human behavior and current mobile systems. NFC facilitates access of content services and new media spontaneously and perceptively, makes mobile payments safe and secure, synchronizes and disseminates information and makes transportation easy and effective.
In 2010, MarketsandMarkets released a report projecting U.S. mobile payment transactions to reach $56 billion by 2015. The adoption rate of NFC mobile payment in the United States at its infancy possessed an adoption rate of 1.7%. However, the increasing importance of setting up a foolproof NFC architecture led forecasts of compound annual growth rate to surge to 49.2% by 2015. The U.S. alone is expected to account for 10.6% of the global mobile payment transaction market. An ABI Research report showed that 35 million NFC-enabled phones were shipped in 2011, and that number is expected to double in 2012.
Technology behind the concept
The short-range wireless connectivity technology built into NFC is specifically designed to make communication safe and simple between electronic devices. The technology behind this theory is enabled by creating proximity between two NFC-compatible or enabled devices so that they literally touch each other. The model emerged from an integration of contact-free identification and interconnection technologies.
The contact-free card technology has continued to mature and has been adopted by predominant sectors such as retailing, transport and payment. At the same time, smartphones have become a must-have tool in our daily work and personal lives. Adding contactless functionality to smartphones adds even more flexibility and power to these devices. The NFC mobile service leverages already existing network infrastructure and provides seamless convergence. Consumers can make use of an array of NFC services in their lives with an interactive and personalized environment.
Augmenting the popularity of the NFC mobile phone
–Remote multiapplication management: Functions can be managed and executed remotely in real-time, truly defining “anytime, anywhere.” NFC applications can also be stopped and locked when a device is lost or stolen.
–Remote user management: Service providers can obtain NFC service usage records and transmit customized information during transactions to users with their consent. Users can lay access personal data immediately and be proactive on information they intend to receive.
–Interactivity: User interface components of mobile phones such as vibrations, sounds, touch screens, keyboards and displays allow NFC to be an interactive service. Users can check for application availability and activate or deactivate them dynamically through the user interface of their mobile phones.
The omnipotent NFC chip
A recent report by In-Stat predicts dramatic growth in NFC chip shipments over the next seven years beginning in 2011. This growth is primarily linked to the fact that mobile phones adopting NFC technology are witnessing a dramatic increase. The report states that NFC chip shipments are likely to exceed to 1.2 billion units by 2015 and the very same year will observe the technology climbing to 30% global penetration.
The forerunners who are expected to drive adoption in the near future are:
–Google Wallet, which has been launched by Sprint Nextel on Nexus-S 4G;
–Isis Initiative by Verizon, T-Mobile USA and AT&T;
–PayPal’s 3.0 version of an Android app that allows users to exchange money through the Request Money widget.
While mobile payment was considered the most lucrative spectrum earlier, retailers are roping in new options to embed this technology in other areas and reap maximum benefits. For example: usage of NFC-enabled advertisements and posters. Google recently introduced Android Beam element in the new Android 4.0 Ice Cream Sandwich platform to permit users to share pictures, games and other media by merely tapping one NFC mobile phone against another.
A recent poll conducted by Parks Associates in November showed that 50% of U.S. smartphone owners find NFC-enabled mobile wallet applications attractive. Today, at least 16% of smartphone users make use of PayPal or other e-wallet solutions as their favored method for mobile payments. However, a surge of mobile payment vendors have led to a fragmented landscape. The multiple vendors are to be unified in the future where one digital wallet will be used for retail and online payments.
In-Stat suggests that the focus of the NFC market will eventually shift from mobile payment applications to more dynamic and volatile marketing applications. Retailers will begin to test pilot programs in early 2012.
Some operators are working to bring NFC to SIM cards to make the technology an operator–controlled solution. MicroSD and UICC SIM cards with built-in antennas serve as bridge devices to increase mass market acceptance of NFC. Other NFC form factors that have managed to create a considerable dent in the technology marketplace include stickers, tags, cards and key fobs.
NFC 2012 – A day in your life with NFC
–You are traveling to office by train. On your way, you notice a NFC poster publicizing a free concert that night. You touch your NFC mobile phone to the NFC mark on this poster. Information subsequently gets delivered to your phone from where you could reserve seats for the concert and tickets are sent to your smartphone. You send a message to your friends inviting them for the concert and dinner afterward.
–You reach the office and touch your NFC phone to the gate and open the door. Lunchtime beckons one of your credit cards that is stored on your phone. After lunch, you attend a sales conference and exchange business cards with attendees by touching phones together.
–You meet friends at 6 p.m. and reach the concert venue. You touch your NFC phone to the turnstile at the concert entrance to confirm reservations and get yourself admitted. You visit a shopping center where you shop with your credit or debit cards stored on your phone and have dinner.
Integrating NFC into smartphones does not just enable progress beyond mobile payments but also ensures the emergence of a tool fostering application innovation.
–Social networking: Poken was the forerunner in using NFC to permit people to exchange profiles and contact information to build their social network.
–Gaming: Rovio brought in NFC enabled popular online game “Angry Birds” permitting NFC-enabled phones to enter unique levels.
–Location-based services: Installation of NFC tags at local retailers for facilitating easy check-in-process was started by Foursquare.
Final word
For years to come, the growth of NFC will primarily be seen in smart phones and other consumer electronics including PCs, tablets, printers and TVs. Adoption of NFC largely relies on device manufacturers and mobile operators to integrate this as a technology and the developer ecosystem to develop cool new innovative applications. However, for mobile payments with NFC to succeed, the battle for revenue consumption/sharing between banks, operators and credit card companies need to be resolved. Stay tuned for 2012 — the smell of success for NFC is in the air.
