NFC – Near Field Communications

What is it?

Unfortunately, there’s no easy way of explaining it without using tech-jargon. NFC is a short-range, low-power communications protocol between two devices that enables interactions via electromagnetic radio fields. It allows small amounts of data to be transferred wirelessly over a relatively short distance or by physical touch, which is how it is differs to Bluetooth.

How does it work?

For instance, if you have an NFC-enabled handset, like the Nexus S, and you hold it near an NFC tag – say, a poster containing a passive NFC chip – communication between the two NFC chips will commence. That’s it. Simple.

In pure layman’s terms, NFC is a way for your mobile phone to communicate with something else, be it a poster, Oyster point or card reader, so you can consume information, pay for things or load data onto your phone instantly.

What can you do with it?

The three main uses for NFC are sharing, pairing and transaction. Transactions are what you’ll most likely experience first. Just imagine your smartphone as a credit or debit card. If you want to buy something just tap it against a payment terminal and boom, job done. It’s not just your plastic that NFC will replace.

Why you’ll care to share

As for sharing, that will mainly be passive tags sharing info with your phone. This system will work in much the same way as QR codes (those square barcode-like tags scannable by your smartphone camera) are used now. The only difference is you won’t need to take a snap or open an app. Simply tap your phone against say a food tag and you’ll get ingredients info or against a film advert and get cinema opening times.

Why you’ll pair up

The pairing aspect is to do with how you interact with other people’s smartphones. With NFC, you’ll be able to tap your phone against another phone or against phone accessories to immediately configure them. To swap contact info with a new friend or business acquaintance, you won’t need 3G, you’ll just need to tap.

What are the benefits of NFC?
The most obvious benefit of NFC for service-based businesses is that it allows for rapid payment without the need for a card or cash.

In this sense, it’s kind of like the Oyster card in that to pay for something, say a coffee, all you’d have to do is tap your phone on the NFC reader in the shop and it’ll pay for the coffee.

NFC is also extremely attractive to the guys-that-work-in-marketing as well because not only does it create a new way to interact with potential customers, such as interactive posters and the like, but it also opens up even more ways to suck money out of consumers.

Problems with NFC 

Like a lot of things, NFC is dependent of big corporates like manufacturers, merchants, credit companies and networks working together and, generally speaking, playing ball.

But that’s not all. For NFC to truly succeed there will need to be mass installations of NFC-enabled pay stations across the country – something that will inevitably cost money.

Sure, the benefits of NFC are all there but will merchants really pick up on this technology? Will it be any quicker than chip-and-pin once all the security features are in place, such as entering a pin on your device to enable payment via NFC?

We’re not sure – but if there’s doubt, there’s a problem.

Having said that, Google is making big developments in the US and now has MasterCard and Citigroup on board for its NFC program.

That’s one hurdle down, now it just has to tackle the rest – merchants, consumers, networks etc.

How big is NFC expected to be?
When a company like Google and Apple get serious about a technology, it usually turns out to be a big deal for everybody else – just look at Android and the iPad.

Couple this with the huge consumer reach both Apple and Google have with their respective mobile operating systems, and it’s beginning to look increasingly likely that NFC could become a seriously big deal – especially if the iPhone 5 ships with NFC capabilities, as a lot of reports are suggesting it will.

Nonetheless, there are an absolute pile of obstacles that both Apple and Google will have to clear before the technology becomes a mainstream way of sharing information and paying for things.

That said, Apple’s database of over 200 million registered credit cards might make this a little easier.

In the grand scheme of things, NFC is very much like communism – it’s a great idea on paper, but when applied in reality things tend to get a little trickier.

Having said that, progress is now being made, so maybe 2011 will be the year that NFC goes mainstream.