NEAR FIELD COMMUNICATIONS (NFC)

NEAR FIELD COMMUNICATIONS (NFC)

Forget keys, purse, wallet or travel cards, eventually smartphones will be the means of paying for small value goods and services including ticketing. Mobiles will be the gateway to a raft of new contactless services from personal advertising, to coupons and information downloaded from chips embedded in advertisements or posters, to access to cars, offices or houses authenticating users in the process.

That at least is the vision of the future albeit one which may take time to realise. It came a step closer at Mobile World Congress where major phone manufacturers announced new Near Field Communication (NFC) enabled mobiles devices and operators followed with promises of trials and deployments throughout Europe.

It is still early days but when Google’s CEO comments people notice. Seeing gold in marrying targeted advertising based on previous buying habits with location and mobile payment, Google added NFC to its latest Android platform Gingerbread and launched marketing services in the US.

Right now NFC is not a European story.
Gartner estimates Asia, Eastern Europe, the Middle East and Africa together lead the world in mobile payment adoption accounting for 81% of global transactions and 69% of value in 2014. Of the total worldwide market of 320 million NFC transactions in 2010, Asia accounted for 300 million mostly in Japan where approximately one million contactless terminals are deployed in retail outlets, trains and subways. “Yet,” says Sandy Shen, research director, Gartner: “although contactless payments are deployed widely, there is not very strong service uptake – two transactions per user per month. NFC phone penetration is over 50% but people are not using it perhaps because they prefer cash. The NFC value add is not that obvious because in developed markets there are many options for paying.” The situation is vastly different in East Africa where Safricom’s successful M-Pesa service allows people without access to banks to transfer money by SMS safely and securely.

But NFC has the potential to support a lot more than just mobile payments opening up a host of new revenue generating applications. “Phones will be used to read smart tags and to download coupons, for ticketing and transport and NFC will have an impact on retail promotions and healthcare or access to buildings and secure areas. These applications will have faster take-up than payments in developed economies,” continues Shen.

Already you can just touch a phone to an enabled advertisement or poster and product or timetable information is automatically downloaded to the phone. Combining already knowing where people are with information about their individual shopping preferences and interests, SMS alerts can be sent to passersby with information about sales of relevant goods.

However for NFC to become a truly mass market technology supporting a host of location based advertising, applications and access requires common standards and collaboration between all players and existing ecosystems.

Pundits predict it will be two to three years before widespread take up but when it does happen it has the potential of opening up a whole new world putting mobiles at the heart of everything we do.