NFC Will Be the Killer App for 2011

As a former smartcard engineer, I've seen many different electronic payment schemes come and go. Payment technology is saddled with the "chicken or egg" problem. That is, you can't justify the expense of the infrastructure without a critical mass of consumers, and the consumers won't bother unless they know the new method will be around for a long time. For this reason, most emerging payment techniques remain in campus settings (e.g. universities, corporate campuses, sporting arenas) and fail to go mainstream.

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But the momentum behind mobile commerce is about to introduce us to NFC, a short-range contactless technology that's been waiting for the right moment to pounce. With NFC-enabled phones, consumers will be able to quickly and easily communicate with retailers to accept marketing offers, pay for goods, and receive loyalty points.

The following news stories illustrate that momentum:


  1. April 2010, Apple files patents for iPay, iBuy and iCoupons that include the use of NFC.
  2. May 2010, The French government-backed NFC trials in Nice commence as a dry-run for a planned national rollout. The trial involves four mobile operators, two banks, and the city's transit system.
  3. June 2010, Nokia spokesperson Anssi Vanjoki announces (and later clarifies) that Nokia will begin including NFC technology in some of its phones starting in 2011.
  4. August 2010, Apple hires NFC expert Benjamin Vigier and continues filing patents for mobile payments, including the use of NFC.
  5. November 2010, Google CEO Eric Schmidt announced Android "Gingerbread" 2.3 will support NFC.
  6. November 2010, AT&T, T-Mobile, and Verizon Wireless announce joint venture to build national mobile commerce network using NFC-enabled phones. The Isis™ mobile wallet will eliminate the need to carry cash, credit and debit cards, reward cards, coupons, tickets and transit passes, fundamentally changing how you shop, pay and save. All with your phone.

Retailers would be wise to begin looking at what it takes to add an NFC reader to their POS. Oracle Retail will be demonstrating integration with the VivoTech NFC reader at the NRF Big Show in January. Stop by the booth and see.

Comments:

Smart phones already are vulnerable to a number of security threats. The Wikipedia entry for NFC enumerates additional threats for this technology.

IMHO, the biggest threat comes from NFC relying on the phone to authenticate the user. There are a number of ways to get around this --yes, you can circumvent the phone PIN... So, if you lose your phone, what protection will you have when someone starts to use it to rack up hundreds/thousands of bucks in purchases?? I bet it won't be the same as the protection you get on your credit cards.

Posted by Tom Chorn on November 29, 2010 at 05:34 AM CST #

Tom, the technology has its shortcomings, but I don't see it as worse than current magstripe cards. Once lost, your phone can be deactivated by your TSM to minimize the damage. Good point, nonetheless.

Posted by David on November 29, 2010 at 05:47 AM CST #

One way to facilitate deployment of NFC services can be through infrastructure, not only POS payment equipment, considering every usage which could benefit from contactless. We have been working on this and are proposing both infrastructure equipment, modules to allow other companies to integrate contactless in their own equipment such as kiosks, and also dedicated mobile devices when needed. All of our products are NFC and Zigbee capable, then you can add mid-range to short range communication, the communication flow being secured between both protocols.
More information on our website http://www.taztag.com
You may also visit us at CARTES in December or CES in January.

Posted by Michel on November 29, 2010 at 07:30 PM CST #

Another option to prevent an unauthorized use of phone is to have IMEI of your device printed on your driving license. heh ...

Posted by chip on November 30, 2010 at 12:59 PM CST #

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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