Imagine entering a grocery store, touching your cell phone to a sticker on the shopping cart and instantly having all available coupons loaded onto your phone—no clipping. What if you could pay for your morning coffee by waving your cell phone or iPad in front of a scanner and having it automatically debit your bank account? Wouldn’t it save so much time if, when you met someone new, you just tapped your cell phones together and, voila, all contact information was exchanged?
The technology that makes all this possible is near field communication (NFC). NFC is a wireless technology that lets devices communicate with each other over very short distances (less than 10 centimeters). For several years now, it’s been used in European and Asian markets as a means for consumers to receive detailed product information, coupons or contact information; pay for products and services; or use their devices as electronic event tickets. NFC is coming to the United States and will have widespread adoption. Nearly every major bank is researching its use as a viable and secure form of payment for transactions.
NFC technology isn’t limited to just cell phones. It also can foster communication between any type of mobile device and a large variety of targets, like point-of-sale systems, information kiosks or passive-state targets like NFC chip-embedded cards, product tags and stickers. These passive-state targets remain in a constant state of readiness, waiting for a powered device to activate them through a radio frequency field. Once activated, they transmit a preprogrammed set of data or instructions to the NFC-enabled device. This is how the sticker on the shopping cart works. It’s passively sitting there, waiting to be activated by a shopper.
In the next two years, nearly every mobile phone released and many other mobile devices will have NFC integrated into them in one of three ways: with NFC hardware fully integrated into the device, with information embedded on the device’s SIM card or with information stored on a microSD card, a removable memory card commonly used to store photos, videos or other data. The current trend is pushing for full integration into devices, but consumer behaviors and security will likely dictate which method takes a decisive lead over the others.
When NFC is fully integrated into the device, it’s done so with two primary elements. The NFC controller lets the phone’s operating system interact with the NFC hardware; and the secure storage element safely stores data or instructions needed to process transactions. There are currently about 20 mobile phones on the market that have embedded NFC technology, with many more to come. The end goal is to evolve the cell phone beyond just a communication and information medium into a fully functional monetary device capable of behaving exactly like a debit and credit card.
When NFC technology isn’t integrated into a phone, NFC-related information and instructions can be integrated into the SIM card, which is the element in every cell phone that uniquely identifies each mobile subscriber on the carrier networks. NFC-related information or functions may also be embedded into or stored onto a microSD card.
In markets where NFC has widespread acceptance, three primary ways of using the technology have emerged: card emulation mode, reader/writer mode, and peer-to-peer (P2P) mode. Card emulation mode enables devices to be used as credit cards, debit cards, security badges or event tickets. This is what lets European consumers pay for coffee with their cell phones. Reader/writer mode exists when devices are used as data scanners to access information embedded in an NFC target, such as a tag, sticker or card, or when they’re used to change the data embedded in a passive-state target—like the sticker on the grocery store shopping cart. This functionality is very similar to barcode scanning technology but can provide much more data or cause the device to take a specific action, like sending an email or showing a promotional video. Reader/writer mode also lets the information on the passive-state target be changed, which could never be accomplished with the use of simple barcodes. Eventually, NFC will likely replace barcodes altogether. Finally, P2P mode is used to establish bidirectional communication to exchange information, such as personal contact information.
What NFC means for you depends upon a number of factors—where you live, where you shop and, ultimately, your willingness to embrace the technology. Although commonplace in Europe and Asia, it’s barely begun to crack the U.S. market. This is about to change. Beyond cell phone carriers, large retail brands, banking institutions, public transportation providers, consumer application developers and many other types of businesses are rapidly developing uses for this powerful emerging technology. Given its commonplace use in European and Asian markets, it won’t take long for the United States to catch up. The significant reduction in device prices and the pushing of this technology by Google with its dominant Android mobile operating system will surely cause a rapid growth in NFC technology adoption within many facets of the U.S. market.
Brian Diamond is chief strategy officer of Qponomics, Inc., a Los Angeles-based mobile coupon and advertising company that’s developed a free application (Qponomics) that lets local merchants advertise coupons directly through mobile devices. Users can also find business information, a map, directions, a link to the advertiser’s website and can dial the phone number with one tap. You can reach Brian at (888) 699-0023, ext. 703 or brian.diamond@qponomics.com.
