The uptake of smart phones over recent years has enabled mobile users to have instant connection with their friends via social media applications – whether to ‘poke’ people, tell them the fancy places that they just visited, or to share the fact that they just saw their favourite sporting or movie star. All of these functions are alluring, but how about adding some useful functionality as well? By far the leading option is of course payment.
Over the years, new technologies have always been introduced via two enablers: the researcher or inventor who developed the technical background, and the financial support required to develop and improve that technology. In NFC (Near Field Communication), payment opportunities offer high financial support to organizations such as banks and retailers. Hence, payment seems the most promising area to take NFC technology to a leading position. Customers are also willing, and even ambitious to use such a facility, since it enables them to easily purchase new services and items.
What is NFC anyway?
NFC is both a technology and an ecosystem that deals with exchanging –digital- money. NFC technology interaction technique enables touch-based, short distance communication between an NFC mobile on one side, and an NFC tag, an NFC reader such as a POS machine, or another NFC mobile device on the other side. NFC facilitates mobile phone usage of billions of people over the world offering enormous number of use cases including credit cards, debit cards, loyalty cards, car keys, access keys to the hotels, offices and houses, eventually integrating all such materials into one single mobile phone.
Enablers of NFC Payment
NFC technology consists of hardware, software, and service components. Several phone models on the market (such as Samsung, Google) are already NFC enabled, meaning that they include the hardware, software, and services to enable NFC communication. At the same time, significant financial institutions such as MasterCard, Visa, and American Express are providing important specs and infrastructure for enabling mobile payments. We further expect all smart phones to be manufactured as being NFC enabled within the following few years and NFC technology could help drive mobile payment adoption.
Impact of NFC Payment
People are beginning to see the advantage of mobile payment technologies with respect to carrying debit and credit cards, loyalty cards or even cash. Using NFC technology, or NFC mobile phones by customers, will result in usage dropping off for all the current payment tools. Shoppers will no longer need to take the physical card from their wallets in front of the cashier. Additional services such as NFC Loyal will be enabled on this scenario, so that payment information stored on the smartcard can be easily –but yet securely- used by other loyalty applications to enable further services and form new business models.
NFC technology is an emerging and yet truly promising area, which will have an enormous impact on the financial ecosystem as well as mobile technology across the world in just a few years.
Vedat Coskun is co-author of Professional NFC Application Development for AndroidTM, published by Wrox, a Wiley brand (RRP £29.99).
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