NFC is here to stay – How Near-Field Communication will change the way you pay
Major retailers all over the world are beginning to take notice of a relatively new technology that enables customers to pay for purchases using little more than their cell phone. This technology is called Near-Field Communication, or NFC for short. NFC enables cell phone manufacturers to embed computer chips, which require no power to operate, in to their devices. These chips can be programmed to perform many tasks, such as contact sharing, payment processing, song sharing, embedding messages in to posters, collaboration, and many more uses are being developed as you are reading this. A practical example of how this technology can be utilized includes, a person who wants to learn more about a painting at a local art museum. The museum visitor can simply waive their phone over an NFC transmitter chip embedded in the corner of an art display and the user is instantly shown a video or commentary from the author. Another example includes the purchase of a cup of coffee and some gas. A person who has an NFC chip in their cell phone can walk in to a gas station, waive their phone over the receiver at the register, pay for their coffee, head outside and waive the same phone at the gas pump and begin pumping their gas. All of this can be accomplished without ever reaching for a wallet or purse.
In Japan, retailers, manufacturers and marketing companies have already leveraged the expanding market of NFC enabled devices. Movie posters, train stations, major tourist attractions and many retailers, have placed kiosks and payment terminals in plain-view so that consumers can engage with content and purchase items using cell phones that have NFC chips installed. In The United States, the New Jersey transit authority, has partnered with Google to enable customers to pay for tickets with NFC enabled devices. According to Senior Analyst David Snow, from Juniper Research: “Based on our analysis and interviews with key industry players our view is that the next 18 months will see launches in up to 20 countries. As a result Juniper is forecasting that North America and Western Europe together will exceed the Far East region in under three years based on transaction value.” The report also breaks out the opportunity for value added retail marketing services through coupons and smart posters.
As with any new technology, there are technological limitations and the potential exists for fraud, especially in regards to contactless payment processing. Major technology firms all around the world are working around-the-clock to meet these challenges head-on and deploy this technology to the masses. Many device manufacturers such as Nokia, Google, HTC, Microsoft and Samsung already have devices either released or announced for this year, with many more coming over the next few months.
Contactless payment solutions are not new, in fact, a similar technology exists called RFID, but RFID has a much larger range (typically a few meters). RFID has been heavily utilized as a solution for inventory tracking and other non-monetary transaction-based uses. Chip manufacturers have actually developed dual-purpose chips that have both RFID and NFC embedded so that consumers can interact with both forms of marketing and payment technologies. For instance, if a store had an RFID scanner at the entrance to their store, a customer could enable their phone to “check-in” automatically on social networks such as Facebook, Twitter and Foursquare. While at the register, the same customer could then pay for their order and take advantage of a loyalty program with the same chip, using the NFC functionality. NFC is ideal because it only works at a range of under 4 centimeters. NFC is new in the sense that the chips will now be embedded in the sole device that most Americans carry with them just about everywhere they go, their cell phone. Corporations are ready to leverage this technology and major manufacturers have all announced plans for new devices in 2012. Apple computers, makers of the top-selling single cell phone device in the world, the iPhone, has applied for new patents which hint that they too, will have some form of NFC or RFID embedded in their next generation devices as well; although no official announcement from Apple has been made to confirm this, the patent applications prove they are at least considering it.
It is my belief that retailers who adapt and make this technology accessible to their customers, will reap the rewards of being early adopters. The millennial generation will expect and even demand corporations to have NFC very soon. The fact that HTC, Microsoft, Samsung, Google, Nokia and others, are making devices at break-neck speeds to catch-up with consumer technology trends, indicates that the market will be demanding this type of functionality.










