Why NFC is Critical for Mobile Commerce

Marina Astapchik
IT Trends Research Specialist
January 13, 2012

This year we hear more and more about NFC and its usefulness for mobile commerce and mobile development industry. In fact it’s becoming a popular way to make payments in commerce. Now all the biggest mobile phone manufacturers want to integrate NFC into their products. NFC is likely to become a must-have feature for a mobile phone.

So what’s NFC? And what benefits does it bring for us?
Near field communication, or NFC, allows to make simplified transactions, data exchange, and wireless connections between two devices in proximity to each other, usually by no more than a few centimeters.
Do you think this is a disadvantage of this technology? Not at all, on the contrary, because of that, this technology is both safe and effective. The maximum distance is about 20cm, which ensures that no unauthorized communication takes place. It scores over various shortcomings of Bluetooth such as high power consumption and security concerns. This form of communication also works when one of two devices is not powered.

Besides, NFC is an open standard in the software development industry and has no security protocol so the security of it is the combination of many security standards that a service provider has. You don’t have to worry about security with this technology.

Currently many smartphones on the market already feature embedded NFC chips that can send encrypted data through short distance (“near field”) to a reader located, for instance, next to a retail cash register. Shoppers who have their credit card information stored in their NFC smartphones can pay for purchases by waving their smartphones near or tapping them on the reader, rather than using the actual credit card. A smartphone or tablet with a NFC chip can make a credit card payment or serve as keycard or ID card. NFC devices can read NFC tags on a museum or retail display to get more information or an audio or video presentation. NFC can share contacts, pictures, songs, applications and videos.

NFC expands e-Commerce opportunities, increases transaction speed and accuracy, while reducing staffing requirements. Usually only a personal identification number (PIN) is required for payments over $100 (in Australia) and £15 (in UK). Below there is a list of payments that NFC is being used for already.

  • Mobile payment: A NFC device can make a payment like a credit card by touching a payment terminal at checkout or a vending machine when a PIN is entered.
  • PayPal: PayPal has plans to start a commercial NFC service in the nearest future.
  • Google Wallet is an Android app that stores virtual versions of your credit cards for use at checkout when a PIN is used.
  • Ticketing: Tap a NFC device to purchase railroad, subway, airline, movie, concert and event tickets. A PIN is required.
  • Boarding pass: A NFC device may act as a boarding pass, reducing check-in delays and staffing requirements.
  • Point of Sale: Tap a SmartPoster tag to see information, listen to an audio clip, watch a video, or see a movie trailer.
  • Coupons: Tapping an NFC tag on a retail display or SmartPoster may give a user coupons for products.
  • Tour guide: Tap a passive NFC tag for information or an audio or video presentation at a museum, monument or retail display (much like a QR Code).

Now you understand why NFC is so critical in mobile commerce and for mobile development industry as a whole. It bring us many useful conveniences and the most important is that it is a far more safe and effective than other similar technologies. I believe that NFC will be our “e-wallet” in mobile payments in a day not so far.

Written by Quan Nguyen

For Elinext Group

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