In a recent article in Fortune, assessing the rapid growth of mobile commerce in the United States and elsewhere, NFC – for near field communications – was found to hold a prominent, possibly pre-eminent role.
As mobile commerce emerges, companies like Google (GOOG), Square, and reportedly Apple (AAPL) are placing their bets on some form of mobile payment where the users’ smartphone becomes a credit transactional device.
“We’re making a big bet on (NFC) as a company,” Google said. “There is a lot of potential there. Ten years from now we’ll all accept this as a reality.” As an example, Google referenced an NFC trial with Starbucks (SBUX) that nabbed some 3 million users.
Google also sees NFC making every day life easier: walk into a Gap (GAP) store, and if they don’t have your size jeans, you can have your NFC scanned and have that size sent to you.
Another benefit may be real-time, or near real-time feedback, from NFC-enabled coupons. If a customer uses a coupon, it may take up to two weeks for merchants to receive feedback as to how well the coupons performed; with NFC, feedback can be instantaneous. Not only will merchants know sooner, but they can also adjust the coupon on-the-fly to achieve better sales and results.
Many consumers are becoming more familiar with the potential of NFC. This is not surprising given its growing use in smartphones, particularly Android-based devices and Nokia smartphones. In fact, companies such as Nokia, Sony, Philips, Samsung and others have been building out NFC’s infrastructure and services since at least 2004.
NFC allows a device, typically a smartphone, to collect or exchange data at close range from another device, such as a credit card reader, vending machine, subway turnstile or second smartphone. This makes NFC an excellent technology for real-time payments, particularly for rushed customers and those that prefer to carry only a smartphone, but NFC can be used for much more.
- NFC works with most contactless smart cards and readers and can be easily integrated into public transit payment systems. As a rider walks into a bus or subway, for example, their account is automatically debited.
- A company called Objecs, for instance, sells an NFC tablet for gravestones. Touching an NFC-enabled phone to the headstone provides additional information about the deceased. This can be audio, video and/or text.
- Stores can support “check-ins” by allowing patrons to use NFC to let their friends, and the store know they have arrived.
Entrepreneurs will continue to find more innovative uses for NFC, though its use as a payments platform is likely to remain its greatest strength. NFC has a very short range, about 1.5 inches. This makes it a good choice for secure transactions, such as contactless credit card payments. Not surprisingly, earlier this year, Google (developer of Android) revealed launched its contactless NFC-based payments solution, Google Wallet. Citi, MasterCard, Sprint and First Data partnered on the effort, which supports both mobile payments and loyalty cared benefits.
Rumors swirl that Apple will incorporate NFC functionality into its iPhone 5, expected to be released by Summer 2012. Others are rushing into the NFC payments marketplace. Amazon, Paypal, Verizon, AT&T, MasterCard, American Express and Visa have all released NFC payments solutions or announced their intention to offer them.
Long used in Asia, NFC appears to be set to make a big splash in the United States.
Infographic from Mashable below