NFC- A Close Enough Future

Imagine this, if you were to walk into a store and instead of paying with a credit card, you could simply “tap” your NFC-enabled-phone with that of the retailer and walk out with your purchase.

Or Imagine this. You buy a new bed that arrives in a box and not assembled. You tap your NFC smartphone on a tag that is on the box and immediately a video plays and shows you how to put the bed together.

Or how about this? You are at an automobile dealer, looking at a new car and decide to buy one. You pull out your NFC-enabled-smartphone, your bank identifies you, with your location and offers you a 5 year personal loan or an option to lease the car.

Fantastic? Futuristic? Fairy Tale like? “Fair”y enough!

O.K, so what is this NFC?

NFC or Near Field Communication is a standards based connectivity technology that tries to harness today’s wireless, contactless technologies. It allows for simplified transactions, data exchange and connections with a touch or perhaps even mere proximity.

NFC is a set of short-range wireless technologies, requiring a distance of 4 cms or less. It is built on the universally implemented ISO, ECMA and ETSI standards.

However NFC alone does not ensure secure communications.

NFC does not offer protection against “eavesdropping” and is vulnerable to data modifications. Apps will have to use cryptographic protocols, perhaps even the industry’s best. Ensuring security of NFC data will require a holistic effort from device providers, customers, application providers and transaction parties. Device providers will have to safeguard NFC enabled phones with better and more powerful cryptography and authentication protocols.

NFC vs. BlueTooth

Though, it may not appear so, it is quite evident after careful study of the specifications, that it is pointless to compare NFC and BlueTooth.

NFC is designed for limited data transfer (max of 424 Kb/s) and a very quick handshake (which we termed as a “tap” in our examples) of 0.1 second. BlueTooth on the other hand has a range of 5 or more meters, operates at 2.1 Mb/s with a longer handshake time, the longest of which can last unto 4-5 minutes.

The difference lies in the simplicity of the solution. With BlueTooth, the pairing dance often fails and is undoubtedly, painful. In case of NFC, the pairing is instant, in less than a tenth of a second. Secondly the distance over which BlueTooth devices typically communicate ranges around 10 meters. NFC can be used only in the “cm” range, even less than 10 cm! And the amount of data that can be transferred is largely limited and can be tightly controlled, using security algorithms.

The way ahead for NFC

PayPal has demonstrated Android-to-Android NFC Payments, in the MobileBeat 2011 event at San Francisco. Clearly indicates that the industry’s best brains are working at it.

It is not hard to imagine how NFC can be integrated into our daily lives. Already millions of people are using NFC to do their day-to-day transactions.

Does it not seem logical, that the folks who offer you discount coupons and QR codes, also accept the redemption of the same, via the “same” device? Doesn’t it make the solution simple and elegant?

In Austria, people are using NFC-enabled-devices for Payments on Public Transport. In France, services ranging from Museum entry fees to Loyalty programs and Event Ticketing are taken care of by NFC. Netherlands even does Employee payments via NFC. And guess what? In Sweden, your Hotel Keys are your NFC-enabled-Smartphones.

Want proof that NFC is catching on in the gaming world? Matthew Wilson of Rovio Mobile claims that there is a great potential to make NFC cool. Rovio Mobile has integrated NFC tags into Angry Birds plush toys. Reading the tag with an NFC mobile device can unlock levels in the game or give you Facebook credits.

Integrating NFC tags into toys is yet another way retailers can drive people to retailers, leading to better sales. Perhaps, retailers can boost their sales, by allowing customers to touch their NFC phone to their displays. Rovio has already taken the first step towards it.

Combining NFC with check-in apps like Foursquare or Gowalla can multiply the sales potential for retailers. Just like how businesses can track the effectiveness of their NFC kiosks, they can also track the “social” effect and the path of their campaigns, like how a specific coupon was redeemed, and how close or far the NFC retailer was from the user’s location, among other data.

NFC devices are absolutely fantastic to play “treasure-hunt” like games, as seen in the Sundance Film Festival held earlier this year. And going by the response, we can be sure, that NFC Devices are going to catch on “like wildfire”.

But, NFC is not without its own concerns.

The first major issue that comes to one’s mind considering NFC is the fact that the “phone” itself is a target for thieves. Let’s take a simple scenario, where you lose your Debit/Credit Card. It would take you, on an average, half an hour to get to customer care and explain your predicament. And then, another half an hour in sorting out the formalities, all the while hoping that the thief hasn’t siphoned off your account. With NFC in place, imagine the mayhem it will cause. By the time you are done with your formalities, your bank-balance will be a thing of the past, by the time you finish blocking your NFC payment system.

The biggest challenge for NFC is that in every single interaction, there are stakeholders and processes that govern it, and the goal of all of them is to minimize the process to a singular action by the end-user.

Standardization, Compatibility and Interoperability are just not the answers. Behind NFC lies a series of interconnections, all of which need to happen with clockwork precision for processes to be streamlined. NFC will require many parties to trust and eventually may become liable for their actions. Who takes the liability when the wrong person gets hold of the NFC-enabled-smartphone? Do I need to trust everybody else involved?

It all boils down to the comfort and convenience of the end-user ultimately. Convenience is pushing all the unpleasant interactions and details into the background, and comfort is the act of showing the user, how to achieve what he wants with the minimum number of key-presses.

Is there a silver bullet? Let’s wait and watch.