Near Field Communications (NFC) and Mobile Payments

Near Field Communications (NFC) is being touted as the next big technology disrupter. It is expected to change how we use and interact with location based services, payment systems ranging from gas stations to vending machines and enable killer peer-to-peer communication applications. In that context it might be worthwhile to know more about the technology and try to separate the hype from reality.Wikipedia as always, has a wonderful writeup about what NFC is and how it works. As the article points out, one of the key advantages of the technology is that it only requires one active powered device generating a magnetic field which can power a passive target in the passive communication mode. This means that cheap posters and tags designed to interoperate with NFC enabled devices will do the trick. Google has started distributing many such posters to go with its location based service called Places. People looking to review and rate businesses and restaurants just need an NFC enabled handset and if the business has the poster, just swipe and there you go. Its quite simple and can change how we share merchant based information on our social networks. It is also expected to make the whole social network Checkin process much more simpler. Now the rationale behind a checkin is still questionable and left for a different blog post.The second mode of operation for NFC devices is the Active Communication Mode which is in some ways similar to bluetooth. Devices need to be in close proximity to each other and their respective magnetic fields enable them to alternatively listen and talk. In this case, both devices are powered. This form of NFC is expected to help people with everything from exchanging business cards to secure payments at counters and kiosks.The NFC Forum has all the specs if you want more on the technology.From the industry standpoint, Google is aggresively working on multiple fronts to enable the NFC eco-system. In addition to the aforementioned Google Places posters, Google is recommending handset manufacturers to include NFC in their Android devices and supporting it with its Android API. NFC APIs are available as part of Google Gingerbread platform and beyond. In addition, they are supposedly working on enabling mobile payments with NFC based Android handsets in collaboration with MasterCard and Visa.Apple is also rumored to be working on business partnerships on NFC based mobile payments in addition to including the hardware support on its next version of the iPhone.Chinese operators have been aggresive in NFC deployments. Instead of waiting to roll out the ecosystem along with new handsets with built in NFC, they are selling NFC add on hardware to turn plain vanilla Android devices into NFC capable handsets.Operators around the world have been running NFC trails ahead of the large scale handset rollout to see if there is interest in the technology and understand consumer preferences and behavior patterns with the new capability. This link lists the various NFC operator trials around the world. It is expected that a significant number of smartphones will support NFC both in hardware and software by 2014 and that mobile payments will be the way to go. Given the pace at which the technology is evolving, it would not be a surprise. The current mechanisms of mobile payments are all propreitary and have spotty software support. All this will change when NFC becomes the de facto standard in the next few years. Expect iOS and Android to power the mobile payment revolution and adoption although neither of them are on the board of the forum.