Near Field Communication (NFC) is a form of “contactless technology,” or short-distance communications, between two devices that are not physically connected. NFC is a short-range wireless connectivity technology that allows for simplified and streamlined interactions between consumer electronics, mobile devices and PCs. Such devices can communicate peer-to-peer or on a client-server basis and typically embody a smart card (chip with processing capability) and short-range radio frequency technology.
According to the NFC Forum, NFC operates at 13.56 MHz and transfers data at up to 424 Kbps.
Mobile NFC is defined as the combination of contactless services with mobile telephony, based on NFC technology. The mobile phone with a hardware-based secure identity token (the UICC) can provide the ideal environment for NFC applications. The UICC can replace the physical card thus optimizing costs for the service provider, and offering users a more convenient service. A smartphone or tablet with an NFC chip could 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 a contact, photo, song, application, or video or pair Bluetooth devices.
Several varieties of contactless technology, including NFC, exist today and are designed to operate over very short distances, typically less than 4 cm. This short-range interaction is also key to the inherent security of the technology and makes it ideal for transactions involving sensitive information.
NFC is foreseen as a strong enabler to meet customer needs and drive value-added business models. NFC provides an intuitive and easy method for users to access services, as demonstrated by the rapid deployment of contactless public transport systems globally with many users.
In 2008, GSMA called for full NFC functionality including the standardized Single Wire Protocol to be built into commercially available mobile handsets beginning in mid 2009, in order to ensure that consumers can reap the benefits of mobile payments services. A series of operator trials have demonstrated that consumers can use UICC-based NFC handsets to quickly, easily and securely pay for goods and services in shops, restaurants and train stations. Kris Rinne, Senior Vice President, Architecture and Planning, AT&T, commented that “as one of the first operators to trial mobile payments, we’ve seen firsthand, the willingness of consumers to adapt to this new payment channel which is very much dependent upon the availability of NFC handsets and the associated ecosystem.”
The GSMA has issued a consolidated set of minimum requirements in what is referred to as the “Pay-Buy-Mobile” ecosystem. The GSMA also is working closely with leading financial intermediaries and banks to promote globally interoperable transaction solutions. Both MasterCard and Visa are supporting trials with their PayPass and Visa payWave features respectively, which enable NFC-equipped phones to affect payment transactions at secure contactless point of sale terminals. Motorola, Nokia, Sagem, Samsung and LG are among the handset makers developing phones for NFC-enabled mobile payment services. Gemalto, G&D and KEBT are among the UICC card suppliers supporting NFC-enabled mobile payment service.
The NFC Forum announced a Memorandum of Understanding (MoU) with the European Telecommunications Standards Institute (ETSI) in March 2009, in which the two bodies will align their activities to help the NFC community to implement solutions that comply with NFC-related specifications developed by both organizations.
Mobile payments are a reality for a group of service providers – AT&T, T-Mobile USA and Verizon – who have developed a point-of-sale payment service through ISIS mobile commerce, a joint venture to forward mobile payments. In June 2011, it was announced that Austin, Texas would become the first city to launch the initial mobile commerce program. ISIS-enabled mobile phones can be used to make point-of-sale purchases and redeem offers at participating Austin merchant locations in 2012.