Near-Field Technology (NFC) allows short-range communications between an NFC antenna or engineered SIM card and a receiver. The communication is good only up to a couple of feet, which might help make it a secure connection because eavesdroppers need to be next to the users. It is a technology that first appeared in Taiwan in 2007, and is expected to have a major impact in the US by the middle of next year.
From a hardware point of view, the user needs a smartphone with the necessary antenna or SIM card. For most of us, that would mean a phone upgrade, though a few NFC-ready phones are already on the market (click here for a running list of available phones). With the NFC-ready phone, a user could connect his or her bank through the phone to make purchases with a swipe of that phone. And there is where the debate has started.
A number of high-tech companies (Google, Research In Motion, Apple…) and creditcard issuers (Visa, Mastercard, Wells Fargo…) are keen on the technology. Google jumped into the market with both feet this past May, when it teamed up Citigroup and Mastercard to create Google Wallet, which allows users to enter a credit or debit card in the software to allow the phone to become the de-facto payment card.
At the press conference that launched the wallet, the internet giant claimed it was not going to charge merchants for transactions. “Google instead plans to make its money with targeted advertising and offers. The Web giant hopes to cash in on the move to mobile for Web search and shopping by consumers, using NFC interactivity and other data it collects on shoppers’ locations, buying habits and preferences.”
Though the rollout of NFC transactions is necessarily slow (phones need to be updated and merchants need receivers – whether the iPhone 5 has an NFC transmitter might prove to be the ultimate catalyst), plenty of companies are getting involved and customers generally seem to like the idea.
Other uses for the technology exist, and MIT’s Mobile Experience Lab is leading the way with ideas on how to use NFC:
[vimeo]http://vimeo.com/2028724[/vimeo]
(if only they were as creative with their music…)
Nevertheless, the consolidation of social networking, communication, and finance is not without its darker side. NFC will not only track purchases, but where they were made, when, and with what other purchases – all of which create a matrix of the user as nothing more than a series of economic transactions and potential target advertising. Thus our day could be spent receiving targeted coupons and suggestions for purchases and adverts.
Moreover, as John Dvorak argued in PCWorld earlier this year, convenient sales in the short term might be attractive, but using NFC to turn the phone into a wallet could also prove to be a dog’s collar held by the telcoms:
Good ideas [which includes NFC] can’t be killed. But this “good idea” isn’t about the convenience of paying with a phone swipe, but the idea of running your tab through the phone company. If you think your banker is a gouger with dubious fees and no-leeway, what do you think the phone company will be like? Yes, let AT&T handle all your money for you, and see how that works out in the end.
And what happens either when an AT&T or Verizon gets hold of the other carriers or if a customer wants to change services? Will they happily let go/efface of your financial information?
The days are early for the technology and how people will use it. Dvorak admits be believed such transactions would be carried out via Bluetooth by 2000, though few of us use Bluetooth for much more than in-ear connections to our phones nowadays. But as Google, Visa, Samsung, and Apple develop their technologies toward NFC, be ready to watch it bloom, likely by this time next year. And be warned that a few weeds will spring up along the way.
