We've been hearing about near-field communication (NFC) as a way of making our mobile phones more useful for what feels like years. The recent arrival in Australia of phones such as the Galaxy Nexus and apps like the Commonwealth Bank's Kaching make its potential much more visible. But are we ready to embrace the potential of NFC?
Picture by Mac Morrison
While defining the specifications for NFC has taken a long time -- work began back in 2004 -- the basic idea is simple: NFC allows direct radio communication between devices, enabling the exchange of information. That's also true of Bluetooth, but NFC uses far less power and can even communicate with unpowered 'tags', making it possible for an NFC-equipped phone to interact with a wide variety of other objects. Further in the future, we might even see NFC used to make pairing devices with Bluetooth simpler.
Making NFC useful has required two steps: the emergence of equipment like phone handsets which include NFC-enabled transmitters, and the creation of applications which use the specification. Mobile phones which support NFC are becoming increasingly common. In Australia, as well as the Galaxy Nexus, there are already other choices (such as the BlackBerry 9900 or 9360 handsets), and plenty more if you're happy to import your phone.
The big gap in the market is the iPhone, a problem the Commonwealth Bank is addressing by offering an iPhone case that includes a built-in NFC chip. Not everyone will want to pay $55 for the privilege of being able to make fast payments by swiping their phone, but the solution demonstrates that handset support can be achieved in a variety of ways.
The other prominent gap is the fact that while Google's Wallet app supports NFC, that support hasn't been switched on for Australian customers yet. D'oh!
A couple of weeks ago, RIM ANZ (yep, the BlackBerry folks) hosted a discussion panel on the future of NFC, which raised a bunch of interesting issues. Making quick payments rather than fumbling with credit cards remains the most-discussed application for NFC, but as RIM MD Adele Beachley pointed out, that's not the only use for the technology.
We've focused so much on NFC being something that's around payments and who is in the payments ecosystem. I don't believe it's all about payments; it's about data transfer. We need to look wider than simply payments to find the possibilities.
Jamie Conyngham, CEO of Tapit, a company which is developing tag systems for use in marketing, unsurprisingly agrees. He sees that simple ability to (for example) send a URL to a hpone as a major attraction:
NFC is the enabler for easier content access. It enables objects and things that people can tap with their phone and immediately get content. We think NFC is going to be huge in the marketing and communications space We see it as a tidal wave that's going to sweep all phones with it.
You might well be thinking: hang on, can't I do that by scanning a QR code? Indeed you could, but that experience can be variable depending on your phone, camera, app and surrounding lighting. Conyngham says that works in favour of NFC:
You're just getting your phone and tapping things, which is much more natural than using an app and then pointing your camera. There's only that one step with NFC; you tap and you've got the URL.
The payment challenge
Despite those other possibilities, fast payment by swiping your phone remains the most obvious application for NFC in the short term. We've seen the slow emergence of that through PayWave terminals, which enable swiping for low-cost credit card payments. But those systems only become effective when lots of retailers use them, something we saw with the gradual rise to dominance of EFTPOS.
Dustin Kehoe, associate director telecommunications & services for research firm IDC, said that convincing businesses and banks alike to spend money on an NFC upgrade will take some work:
With a payment-based service, you have many parties: consumer, merchant, card issue, the merchant acquirer and the whole payment network. If you're going to go into a new mechanism, everybody needs to make money, otherwise it's not going to work. It's all about getting the model right.
There's a focus with NFC on sub-$10 purchases, Kehoe points out, so ensuring transaction costs are minimal is particularly important.
Getting those systems in place in a wide range of shops will require upgrades to their in-store hardware, as well as convincing retailers to pay any associated fees. Unsurprisingly, that's easier when you're Coles or Bunnings than as a sole retailer. Ben Pfisterer, Visa AP director of innovation and emerging products, acknowledged that issue at the roundtable, but says progress is being made:
The key thing you need is contactless infrastructure, and it's the one thing that often gets forgotten. We accept there's still a lot of hard work to be done. We're seeing massive industries agree to collaborate to a degree they haven't before. I know everyone gets a little impatient but there is a lot of progress. All Australian acquirers provide contactless infrastructure today. We'll start seeing more and more integrated solutions. It will be in all point-of-sale devices. It's not just about the big merchants. It is harder to get to the smaller retailers and we accept that, but we're not just stopping with the big merchants.
Aside from being confident that any given store will accept an NFC payment, another issue for consumers is how to ensure that the right card is used. If you have separate NFC apps for multiple cards and multiple stores, how do you make sure the right one gets charged?
"We understand there will be other products," Pfisterer said. "It comes down to what your preferred interface is. There will be a preferred card and you select your card from a range of cards. Just as you put your preferred card in the front of your wallet, there'll be a similar approach for the phone."
More broadly, compatibility is an ongoing issue. BlackBerry handsets can exchange data through the Tag app; Galaxy Nexus phones can chat to each other via the Beam application. But handsets from different manufacturers can't chat, even though the underlying technology is in place. Sound familiar? If nothing else, that promises a whole new subset of issues for IT managers and support workers to guide their staff through.
Are you excited about NFC, or do you think there's a way to go before it becomes useful? Share your thoughts in the comments.
Evolve is a weekly column at Lifehacker looking at trends and technologies IT workers need to know about to stay employed and improve their careers.