The wireless communication and mobile payment technology called near field communication (NFC) technology has been on the verge of changing the lives of cellphone-toting people for, oh, about the past decade or so. But with many small deployments and the entrance of some key players into the growing "digital wallet" market, NFC is finally gaining a foothold.
Today, only a few NFC-capable phones are available in the United States (though it getting good traction in Europe). When Apple did not, despite widespread speculation, include NFC in the iPhone 5, it seemed like the technology's death knell. Not so, says Mikhail Damiani, CEO of Blue Bite, a company that develops advertising campaigns and posters that incorporate NFC and enable a user to quickly download information to their phones by holding their phones up to the posters.
"Because Apple did not use NFC in the iPhone 5, phone makers such as Samsung, Nokia, Motorola and others are all doing a harder push for NFC," he says. Indeed, a raft of new NFC phones that run on the Android and Microsoft operating systems are hitting the U.S. market. "People think that the iPhone has the most market share, but it doesn't. What it has is mindshare."
Now, it's up to Apple's competitors to entice that mindshare away from Apple, and they're hoping NFC will help them do that.
A long road
NFC -- developed through a collaboration between Phillips and Sony -- is based on a small radio frequency identification (RFID) chipset that can be embedded inside a phone (or any consumer electronic device). Unlike a fully passive RFID tag that might be embedded in a product package, NFC technology in a phone supports two-way communication, either collecting or transmitting data.
The U.S. rollout of NFC-based payment applications has been slow, due largely to a long stalemate between banks, payments processors, credit card companies, telecoms, retailers and phone makers over just who would pay for and benefit from enabling fast, convenient payments via NFC.
But those grey areas are coming into focus. In 2011, Google released its Google Wallet payment platform, for which it partnered with all of the major credit cards -- though a limited number of handset manufacturers. Just this week, another NFC-based payment system launched. Called Isis, it is a collaboration between Verizon, AT&T and T-Mobile and it's being rolled out through two pilot programs -- one in Austin, Texas, and one in Salt Lake City, Utah. McDonald's and 7-Eleven are among the nationwide retailers that will be accepting Isis payments, but there are also a number of businesses local to the pilot cities that are supporting the program. Consumers interested in participating must link their Isis accounts to an American Express, Capital One or Chase credit card. There are currently nine "Isis-ready" phones available through the Verizon, AT&T and T-Mobile (the phones must be NFC-based but also outfitted with an Isis SIM card) and 20 are expected by year's end.
Because NFC is compatible with the widely-distributed RFID-powered MasterCard PayPass credit cards, there is already a large network of payment terminals where consumers can use their Google Wallet phones.
Outside the wallet
Aside from payments, NFC enables a range of phone-based functions, from simply directing a device to launch a website, to more handy and novel applications, such as unlocking hotel room doors or automatic peer-to-peer information exchange between two devices. You've likely seen the latter in recent commercials for the Samsung Galaxy S III phone, which show friends sending each other playlists or photos by holding their phones together.
Moo.com, an online printing business, recently began offering business cards with embedded NFC chips. Hold the card up to an NFC-enabled phone and the cardholder's contact information automatically downloads to the phone. The cardholder may also choose to link the NFC chip with a music playlist, or video, or her entire portfolio, for example. It's definitely a snazzy way to grab the attention of, say, a prospective employer. (Assuming, of course, that employer is toting an NFC phone.)
Peapod, a web-based grocery shopping service, recently launched a virtual shopping campaign that consists of posters of select products and printed barcodes that are installed in mass transit stations in seven U.S. cities. By scanning the barcodes on the poster, users launch Peapod's mobile shopping application on their phones and add the items they scan to their virtual shopping basket.
Peapod spokesperson Elana Margolis said Peapod dismissed NFC right away simply because of the low numbers of NFC phones on the market.
That may be true, but scanning a barcode does have its kinks. Dirt or poor light can make the scanning process difficult. "There are a lot of variables to scanning a code," says Damiani. "With NFC, it pretty much either works or it doesn't. So from a consumer experience, it's much easier, a lot more fluid that scanning codes. That is the biggest difference."
Will Apple come around and decide it wants to offer that difference to its customers? There's no way to say if or when Apple will embrace NFC, but, notes Damiani, "We have seen Apple file patents around NFC so they are definitely thinking about it and experimenting with it."
Images: Jason Tester (top); Mary Catherine O'Connor